Tag: allies

U.S. wants allies to line up against China. Europe is starting to listen.

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The Biden administration is also sharing hosting duties this year with the Netherlands, Costa Rica, South Korea and Zambia to emphasize the breadth of the democratic coalition. And it comes three weeks after the Netherlands joined hands with the U.S. to limit the export of advanced semiconductor technologies to China.
But solidifying alliances with countries in regions beyond Europe has proved just as difficult, if not more so.
The Solomon Islands — a longtime U.S. ally on strategically vital sealanes linking Australia with Hawaii — turned a deaf ear to Biden’s democracy rhetoric by inking a controversial security pact with Beijing in 2021.
Parts of Africa have also been a hard sell, particularly because so many countries there have benefited from China’s large infrastructure investments. While 27 African countries voted in favor of a March 2022 U.N. resolution against Russia’s aggression, 16 others — including South Africa — abstained from the vote while Eritrea voted against it.
In Latin America, Costa Rica is the sole country that joined U.S. sanctions against Russia. And the region’s Mercosur trade grouping denied Ukrainian President Volodymyr Zelenskyy’s request to speak to the body in July.
China is taking its own multipronged approach to courting the globe.
On Ukraine, Beijing is trying to show its friendlier side — but to both Russia and the West. Xi’s visit with Putin produced multiple “strategic cooperation” deals that included an increase in Russian gas sales to Beijing as well as agreements to expand cross-border transport links by building new bridges and roads.
At the same time, China has gone on a global public relations push to paint itself as the country advocating for peace in Ukraine. Beijing is marketing a 12-point potential peace plan. And Chinese Foreign Minister Qin Gang assured Ukraine’s Foreign Minister Dmytro Kuleba in a phone call earlier this month that Beijing wants “a constructive role” in ending the conflict.

China also hosted its very own International Forum on Democracy last week, claiming 300 participants from 100 countries. The group discussed “diverse forms of democracy, slamming monistic and hegemonic narratives on the subject,” Chinese state media reported.

China hosted its very own International Forum on Democracy last week, claiming 300 participants from 100 countries.
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PRNewsfoto/Chinese Academy of Social Sciences
“We uphold true multilateralism, work for a multi-polar world and greater democracy in international relations, and make global governance more just and equitable,” Chinese Foreign Ministry spokesperson Wang Wenbin said earlier this month.
That rhetoric underscores Beijing’s shift from blanket rejection of criticism of its political system to a semantic redefinition of democracy and human rights.
“What the Chinese are trying to do is not fight against democracy and human rights and reject them — they’re trying to pick Biden’s pocket and co-opt them by defining them as what China does,” said Daniel Russel, Obama’s former assistant secretary of State for East Asian and Pacific affairs.
Asked about the Biden administration’s democracy summit, the spokesperson for the Chinese Embassy in D.C., Liu Pengyu, said the U.S. is “trying to divide the world into ‘democratic’ and ‘non-democratic’ camps based on its criteria, and openly provoke division and confrontation.”
As much as Beijing wants to keep trade lanes open with Europe, it is also getting more aggressive toward trading partners that turn against it. China imposed a trade embargo against Lithuania in 2021 after Taiwan set up a diplomatic office in the EU country. More recently, it threatened the Netherlands with possible retaliations for siding with the U.S. on semiconductors.

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( With inputs from : www.politico.com )

March 28, 2023
Biden’s green allies promise lawsuit over Alaska oil project

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Alaska Sen. Dan Sullivan (R) — a staunch Willow supporter — said he was already preparing to help defend the Biden administration from “frivolous legal challenges” against the $8 billion project.
“We are coordinated and ready to defend this decision,” he told reporters Monday.
Biden officials have sought to balance interest in continued leasing in oil- and gas-producing states like Alaska with the president’s clean energy priorities. Environmentalists who have generally backed the president’s climate initiatives have also repeatedly pushed the federal government to go even further by eliminating new oil and gas leasing on federally controlled lands.
Cancellation of the Willow project would have been a key win to block future fossil fuel extraction on public lands. Now environmentalists’ pressure campaign against the project is transitioning to legal action against the approval process by the Interior Department’s Bureau of Land Management.
Trustees for Alaska, which successfully sued to block a Trump-era Willow approval in 2020, is reviewing whether the Biden administration’s green light for the project fully complies with an earlier court order. A federal judge in 2021 blocked Willow after finding that BLM had failed to conduct an adequate analysis of the project’s environmental impacts.
Judge Sharon Gleason of the U.S. District Court for the District of Alaska sent BLM back to the drawing board after finding the agency had not done enough to model the impact of the project on foreign emissions, properly weigh alternative designs or approve a project that provided maximal surface area protections within the leasing area.
BLM’s court-ordered environmental review did address the greenhouse gas modeling concerns, but that doesn’t mean there aren’t other potential problems with the agency’s emissions and impact analysis under the National Environmental Policy Act, said Psarianos of Trustees for Alaska. NEPA requires agencies to take a “hard look” at environmental impacts of major federal actions but does not require a specific outcome for a project.
“We have some big, big questions about whether they actually complied with the NEPA requirement to assess impacts from those greenhouse gas emissions, even if they accurately quantified them,” she said.

Environmental groups will also be looking at how BLM responded within its final approval — known as a record of decision, or ROD — to Gleason’s finding that the agency had misinterpreted its statutory authority to assume ConocoPhillips had the right to extract all the oil and gas that was under its lease.
“The ROD does try to grapple with that,” said Psarianos.
BLM stated that its project screening criteria were “reevaluated and augmented” to address the court’s concerns about the amount of extraction approved under the Trump administration.
“That’s something we’re going to have to look at and dig into and see, whether that’s defensible for them,” Psarianos said.
Environmental groups will also be looking at compliance under other statutes such as the Naval Petroleum Reserves Production Act, which outlines conservation requirements specifically for the Alaska petroleum reserve, also referred to as the NPR-A.
In its new record of decision released Monday, BLM said it had responded to the concerns raised by Gleason, who was appointed during the Obama administration, and was moving forward with an alternative Willow design that “requires the fewest ice roads, fewest total miles of infield pipelines, least water use, fewest vehicle trips, fewest fixed-wing aircraft trips, fewest helicopter trips, and fewest acres of screeding.”
The project design no longer allows gravel fill in a marine area and reduces the number of facilities, water and gravel use, and operational activities. The changes “reduce impacts to important surface resources and subsistence uses as compared to the other action alternatives,” BLM said.
The approved alternative also had the least total greenhouse gas emissions, making the decision to move forward with the project “consistent with the principles and objectives” in 2021 climate orders issued by President Joe Biden and Interior Secretary Deb Haaland, according to BLM.
Willow will include nearly 200 oil wells along with other supporting infrastructure. ConocoPhillips also added three boat ramps to help offset the impacts of the project to the Alaska Native community of Nuiqsut. The tiny city is located closest to the development, and its residents have strongly opposed Willow for its impacts on subsistence hunting and fishing — even as many other Alaska Native leaders have backed the project.
BLM’s final approval includes two fewer drilling sites than what was proposed by ConocoPhillips under the Trump administration. The company had previously warned the Biden administration that approving fewer than three well sites would not be economically viable.
ConocoPhillips praised the Biden administration’s decision Monday, saying it was compatible with White House climate and energy policies.
‘Huge disappointment’
In a separate announcement Monday, the White House said it plans to protect 16 million acres of public lands and federal waters from oil and gas development — although environmental groups say the move does not offset their concerns about Willow.
The Biden administration indefinitely withdrew 2.8 million acres of the Beaufort Sea from oil and gas leasing and announced plans for a new rulemaking to consider conservation measures for more than 13 million acres in the NPR-A that serves as important habitat for grizzly and polar bears, as well as caribou and migratory waterfowl.
“Today’s withdrawal ensures this important habitat for whales, seals, polar bears as well as for subsistence purposes will be protected in perpetuity from extractive development,” the White House said in a memorandum.
Psarianos said that the entire western Arctic deserves protection from oil and gas drilling.
“The Willow approvals … would unlock a large area for industrial development,” she said. “That just in and of itself is a completely unacceptable threat for the reserve, to subsistence and to the climate.”
Environmentalists said the Biden administration’s approval of the Willow project is in line with other oil and gas leasing decisions from Interior.
“President Biden’s decision to approve the massive Willow fossil fuel project is undoubtedly a blow to our collective ability to address the climate crisis,” Jim Walsh, policy director of Food and Water Watch, said in a statement. “But this administration has not yet demonstrated a strong commitment to stopping new fossil fuel projects.”
The Biden administration has already faced a series of lawsuits challenging its analysis of the risks of oil and gas leasing.
That has included litigation over Lease Sale 258 in Alaska’s Cook Inlet, the recent lawsuit against Lease Sale 259 in the Gulf of Mexico, as well as other challenges to onshore leases and drilling permits, said Kristen Monsell, oceans program litigation director at the Center for Biological Diversity.
Monsell said that the Biden administration’s approval of drilling permits on public lands has outpaced the rate under former President Donald Trump.
“The Biden administration has been a huge disappointment,” she said.
Emma Dumain contributed to this report.
A version of this report first ran in E&E News’ Energywire. Get access to more comprehensive and in-depth reporting on the energy transition, natural resources, climate change and more in E&E News.
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( With inputs from : www.politico.com )

March 14, 2023
Pritzker, allies to DNC: We’ll cover the bill — if Chicago gets the ’24 convention

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But what’s gone largely unsaid — at least officially — is the governor’s own riches.
JB Pritzker, a billionaire with presidential potential, is a noted philanthropist and a prolific Democratic donor who cut checks last year for incumbent governors like Michigan’s Gretchen Whitmer and the Democratic parties in Minnesota and Wisconsin.
Pritzker’s team is hoping to lure the party to Chicago with what’s essentially a financially risk-free 2024 convention. Federal funds don’t generally cover conventions, though security for the U.S. Secret Service is funded through a federal grant for as much as $50 million to pay for, among other things, additional police presence. So having a billionaire governor as a stopgap could be alluring.
“The governor has spoken directly to Joe Biden and committed that Chicago has the ability to fund the convention,” Natalie Edelstein, a spokesperson for the Chicago bid, told POLITICO.
Conventions are costly affairs. When the 2012 Democratic convention wrapped, Democrats still owed money on everything from operational expenses to construction work and modifications made to the Time Warner Cable Arena. To deal with the $8 million bill, the city of Charlotte secured a $10 million line of credit from Duke Energy, an electric utility in the region. But Democrats didn’t repay Duke, which claimed the money as a business expense, drawing criticism for leaving shareholders to foot the bill.
Those organizing Chicago’s bid expect the price tag to run between $80 million and $100 million.
A priority for Chicago and Atlanta is fundraising, which relies on four pillars: organized labor, national corporations, political donors and local businesses and leaders.
“If one of those entities is not participating, it becomes almost impossible to fundraise,” said a Democratic strategist who’s consulted on conventions.

President Joe Biden has already sought to nudge his party south, pushing South Carolina up the Democratic presidential nominating calendar, and awarding the convention to Atlanta would bring more attention to Georgia, which swung his way in 2020. Labor leaders in New York have also tried to spike Atlanta over its dearth of unionized hotels and the idea that such a pro-union president would take the convention to a right-to-work state.
Still, some Midwestern Democratic elected officials have recommended Chicago to the DNC, according to letters written by Michigan Gov. Gretchen Whitmer and others.
A potential strike among food workers at Chicago’s United Center, which would be the centerpiece location of the convention, caused some recent concern about the viability of the bid. But the tensions appear to be close to a resolution. UNITE HERE Local 1 and Levy Restaurants have reached a tentative agreement, and union members are expected to ratify it in the coming days.
The effort to bring the Democratic convention to Chicago is also reminiscent of the city’s business community stepping up in 2009 for an ill-fated bid for the 2016 Olympic Games.
But another undercurrent around Chicago’s push for 2024 attention is the persistent concern about the city’s crime, which upended the mayor’s race this winter. Mayor Lori Lightfoot, who was seen as a strong voice to represent the city in a convention, was bumped from the runoff, leaving two candidates at the extreme ends of the Democratic Party about public safety and policing.
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( With inputs from : www.politico.com )

March 14, 2023
DeSantis, Pence allies launching campaign to speed energy approvals

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The effort underscores the importance that Republicans and their corporate allies have placed on using their narrow House majority to fast-track energy projects — even as leading members of the party wage vocal fights on issues such as Chinese surveillance and investigations into Biden’s family. But to pass the Senate, they will need support from Democrats, including those facing tough reelection fights in 2024.
The group is pitching its plan as a bipartisan play to both lower energy prices and quickly build clean power projects to meet Biden’s climate goals.
“I’m not naive to think it’s going to break through where some of the cultural issues are inside Republican debates right now, but I do think it’s an important one for our economy and for the conversation to be had,” Marc Short, the former chief of staff to Pence, told POLITICO. “The permitting reform will highlight what we think are the failures of this administration and the Democratic Congress on energy policy.”
Phil Cox, a consultant to DeSantis’ emerging 2024 campaign, is also spearheading the new effort, dubbed “Building a Better America.” Cox is also a former executive director of the Republican Governors Association.
The new group’s leader is Bill Koetzle, a former Chevron and American Petroleum Institute lobbyist who also worked for Republicans on the House Energy and Commerce Committee, as well as for former House Speaker Dennis Hastert.
Neither DeSantis nor Pence is personally involved in the effort.
So far, the group has raised $2 million, and Short said it has a targeted budget of $10 million, but will ask its corporate and industry backers for more if needed. It plans to use that money for paid media, events and grassroots efforts in local districts to help pressure Congress to pass legislation.
As a 501(c)(4) operation — a tax-exempt organization for promoting social welfare — the new group can raise unlimited funds and is not required to disclose its donors. Short and Koetzle declined to name the source of its funding.

Also involved in the effort is Jonathan Kott, a former chief of staff to Manchin — the lead Democratic voice in favor of changing permitting laws. Kott is a partner at the lobbying firm Capitol Counsel.
Tim Chapman, a senior adviser to the Pence-founded advocacy group Advancing American Freedom and a principal at Cox’s public affairs firm P2 Public Affairs, will also play a key role. Katie Miller, Pence’s former communications director, will run the press operation.
“This truly bipartisan effort will help America once again lead the next century in reliable, affordable and clean energy,” Kott said in a statement. “We need an all-of-the-above approach to meet our climate goals and power our economy.”
House Republicans have indicated they plan to pass legislation next month to reshape permitting procedures. Manchin has said he wants to continue working on the issue in the Senate after his bid to pass a bill faltered last winter.
It’s unclear, though, how much Democratic involvement House Republicans want in their legislative push. That could have ramifications for how the Senate engages with any House-passed measure.
“You’re going to see how leadership allows that process to play out through the committee,” Short said. “I think the industry is behind us encouraging a wide swath of these reforms that all feel like they incrementally move the process forward.”
Short and Koetzle said their campaign is similar to an effort that backed the creation of the revised United States-Mexico-Canada trade agreement during former President Donald Trump’s administration. As a 501(c)(4), they said, it is not overtly partisan.
Yet some of the lawmakers the group intends to target with its messaging carry clear 2024 implications: Among them are Democratic Rep. Elissa Slotkin of Michigan, a candidate to replace retiring Democratic Sen. Debbie Stabenow; and Sens. Jon Tester (D-Mont.), Jacky Rosen (D-Nev.) and Kyrsten Sinema, the Arizona independent who caucuses with Democrats, all of whom are up for reelection next year.
“It is hopefully applying the right pressure that makes sure they vote the right ways that accomplish permitting reform — but if they don’t, then there’s also a cost to them with their voters,” Short said. “That’s not necessarily electing a Republican, but it is acknowledging that there is a cost for them, particularly because they’re in a swing district.”
Other lawmakers on the effort’s shortlist include Democrats whose districts Trump won in 2020: Reps. Mary Peltola of Alaska, Jared Golden of Maine and Marcy Kaptur of Ohio.
Lawmakers in other tight districts are part of the group’s plan, too, such as Democratic Reps. Chris Pappas of New Hampshire, Frank Mrvan of Indiana, Greg Landsman of Ohio, Gabe Vasquez of New Mexico and Sharice Davids of Kansas.
Swing states pivotal to the 2024 presidential contest such as Nevada, Arizona, Colorado and Pennsylvania will attract much of the campaign’s attention. The initial list of targets includes Reps. Greg Stanton (D-Ariz.), Brian Fitzpatrick (R-Pa.), Susan Wild (D-Pa.), Dina Titus (D-Nev.), Steven Horsford (D-Nev.) and Susie Lee (D-Nev.), as well as Sens. Mark Kelly (D-Ariz.), Michael Bennet (D-Colo.), John Hickenlooper (D-Colo.) and Catherine Cortez Masto (D-Nev.).
The small number of Republicans on the list includes Sens. Todd Young of Indiana and Kevin Cramer of North Dakota, along with Reps. Marc Molinaro and Andrew Garbarino of New York, Tom Kean of New Jersey and Don Bacon of Nebraska.
Lawmakers of both parties have acknowledged it takes too long to build major infrastructure and energy projects.
Some Democrats worry that these delays risk squandering $550 billion in new spending that Congress provided in the bipartisan infrastructure law and the $369 billion in clean energy and manufacturing incentives from the Democrat-passed Inflation Reduction Act, H.R. 5376 (117).
A handful of Senate Democrats voiced support for Manchin’s permitting focus during the last Congress out of concern that existing permitting rules would keep billions of dollars of projects on the sidelines and prevent the United States from achieving Biden’s goal of slashing the nation’s greenhouse gas pollution by the end of this decade. But progressive Democrats have rejected both Manchin’s plan and Republican proposals, which they say would weaken communities’ ability to weigh in on new developments and would greenlight new fossil fuel projects.
Republicans, meanwhile, want to quicken the pace for building roads, energy pipelines and mines for rare earth minerals used in batteries and facilities for producing cleaner fuels like hydrogen. They see the effort as a buttress for national energy security and a way to limit the influence of China and Russia over global supply chains.
“This is not just an oil sector plan,” Koetzle said. “This is a program for anybody who’s interested in building something in this country.”
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( With inputs from : www.politico.com )

February 28, 2023
North Korea warns of ‘toughest reaction’ to allies’ drills

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In a statement attributed to an unidentified spokesperson of its Foreign Ministry, North Korea said the expansion of the allies’ drills is threatening to turn the Korean Peninsula into a “huge war arsenal and a more critical war zone.” The statement said the North is prepared to counter any short-term or long-term military challenge by the allies with the “most overwhelming nuclear force.”
“The military and political situation on the Korean Peninsula and in the region has reached an extreme red line due to the reckless military confrontational maneuvers and hostile acts of the U.S. and its vassal forces,” the spokesperson said.
North Korea for decades has described the United States’ combined military exercises with South Korea as rehearsals for a potential invasion, although the allies have described those drills as defensive.
North Korea last year ramped up its own weapons demonstrations as the allies resumed their large-scale training that had been downsized for years. North Korea’s actions included a slew of missile and artillery launches that it described as simulated nuclear attacks on South Korean and U.S. targets.
“DPRK will take the toughest reaction to any military attempt of the U.S. on the principle of ‘nuke for nuke and an all-out confrontation for an all-out confrontation!’” the North Korean spokesperson said, invoking the country’s formal name, the Democratic People’s Republic of Korea.
“If the U.S. continues to introduce strategic assets into the Korean Peninsula and its surrounding area, the DPRK will make clearer its deterring activities without fail according to their nature,” the spokesperson said.
Jeon Ha Gyu, spokesperson of South Korea’s Defense Ministry, said the ministry had no immediate comment in response to the North Korean statement. He said the allies’ latest aerial drills were aimed at demonstrating the credibility of the U.S. “extended deterrence,” referring to a commitment to use the full range of its military capabilities, including nuclear ones, to defend South Korea. He declined to reveal the exact number of U.S. and South Korean aircraft involved in the exercise.
Austin’s visit came as South Korea seeks stronger assurances that the United States will swiftly and decisively use its nuclear capabilities to protect its ally in face of a North Korean nuclear attack.

South Korea’s security jitters have risen since North Korea test-fired dozens of missiles in 2022, including potentially nuclear-capable ones designed to strike targets in South Korea and the U.S. mainland. North Korea’s elevated testing activity has been punctuated by threats to preemptively use its nuclear weapons in a broad range of scenarios in which it perceives its leadership to be under threat, including conventional clashes or non-war situations.
In a news conference following their meeting, Austin said he and South Korean Defense Minister Lee Jong-Sup agreed to further expand their combined military exercises, including more live-fire demonstrations. They pledged to continue a “timely and coordinated” deployment of U.S. strategic assets to the region.
They said that their countries’ resumption of large-scale military drills last year effectively demonstrated their combined capabilities to deter North Korean aggression. The allies had downsized their training in recent years to create room for diplomacy with North Korea during the Trump administration and because of the COVID-19 pandemic.
South Korea and the United States have also been strengthening their security cooperation with Japan, which has included trilateral missile defense and anti-submarine warfare exercises in past months amid the provocative run in North Korean weapons tests.
“We deployed fifth-generation aircraft, F-22s and F-35s, we deployed a carrier strike group to visit the peninsula. You can look for more of that kind of activity going forward,” Austin said.
Tensions could further rise in coming months with North Korean leader Kim Jong Un doubling down on his nuclear ambitions.
During a political conference in December, Kim called for an “exponential increase” in nuclear warheads, mass production of battlefield tactical nuclear weapons targeting South Korea, and the development of more powerful long-range missiles designed to reach the U.S. mainland.
Experts say Kim’s nuclear push is aimed at forcing the United States to accept the idea of North Korea as a nuclear power and then negotiating badly needed economic concessions from a position of strength.
Nuclear negotiations between the U.S. and North Korea have been derailed since 2019 because of disagreements over a relaxation of U.S.-led economic sanctions against the North in exchange for steps by North Korea to wind down its nuclear weapons and missiles programs.
The North Korean spokesperson said Pyongyang isn’t interested in any contact or dialogue with the United States as long as it maintains its “hostile policy and confrontational line,” accusing Washington of maintaining sanctions and military pressure to force the North to “disarm itself unilaterally.”
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( With inputs from : www.politico.com )

February 2, 2023
‘Intellectually bankrupt’: Biden allies blast GOP debt-limit backup plan

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The White House and Treasury are already putting up resistance to the idea, which Treasury says would amount to a default. But disclosures over the past several years — driven in part by investigations by House Republicans — have revealed that officials believe the government has the technical capacity to implement payment prioritization, though it would be experimental and risky.
“Most investors who follow this closely are very aware the United States will not default on its bonds,” Ajay Rajadhyaksha, global chair of research at Barclays, said in an interview.
The debate around the potential backup plan underscores the economic uncertainty that’s already being triggered by the political stalemate around raising the debt limit, the total amount of money that Congress authorizes the government to borrow. Many on Wall Street doubt payment prioritization would work.
It’s also a window into the fraught choices awaiting the Biden administration if lawmakers are unable to resolve the impasse. Paying bondholders instead of everyone else — individuals and businesses depending on checks from the government — would likely trigger a political backlash and potentially slow the U.S. economy as a possible recession already looms, depending on how long it lasted.
“The notion is intellectually bankrupt,” former Treasury Secretary Jack Lew, who led the department under President Barack Obama, said in an interview.
But even some critics of payment prioritization concede it might be the least-bad of what are all bad alternatives, such as legally questionable proposals like minting a trillion-dollar coin to pay the government’s bills. Conservatives, including Sen. Rick Scott (R-Fla.), have suggested maintaining payments on Treasury debt, Social Security, Medicare, veterans and the military.
“Of all the unilateral options on the debt ceiling, prioritization is probably the healthiest horse in the glue factory,” Cowen policy analyst Chris Krueger said.
Washington and Wall Street are ramping up discussions around contingency plans after the U.S. hit its legal borrowing limit on Jan. 19. Treasury is now using accounting maneuvers known as extraordinary measures to keep paying the government’s obligations. In this case, Treasury is suspending investments in government retirement accounts.

The department hasn’t publicly outlined its ability to pick and choose whom to pay if it breached the “X-date” — the deadline when it wouldn’t have enough cash to cover all its bills. The idea came into focus when the U.S. nearly went over the cliff during the 2011 debt limit fight — an episode of brinksmanship that resulted in S&P downgrading the country’s credit rating for the first time in history.
House Republicans spent the ensuing years investigating what Treasury could and couldn’t do.
In a 2014 letter to the GOP chair of the House Financial Services Committee, a top Treasury official said systems at the Federal Reserve Bank of New York would be “technologically capable of continuing to make principal and interest payments while Treasury was not making other kinds of payments, although this approach would be entirely experimental and create unacceptable risk to both domestic and global financial markets.”
The official, then-assistant secretary for legislative affairs Alastair Fitzpayne, said “no decision regarding what to do in such a situation was made during the recent debt limit impasses, and potential responses have not been tested.”
J.W. Verret, who worked on the investigation as an aide to the Financial Services Committee, said Treasury and the Federal Reserve made available documents that showed in-depth tabletop exercises for how to prioritize payments. They indicated “there’s no inherently structural issue that stops them from doing it,” according to Verret, who reviewed the documents.
The committee’s Republican leaders — including current Chair Patrick McHenry (R-N.C.) — told Treasury in a 2014 letter that documents prepared by the New York Fed “exhaustively detail how the department and the bank would implement any plan to prioritize payments on Treasury bonds.”
Lew confirmed in the interview that officials ran an exercise to see whether the government could physically pay bond payments and nothing else. He still thinks it’s a bad idea.
“As a tabletop exercise, we reached the conclusion you might be able to,” he said. “It’s never been tested in the real world. We don’t know what the cash flows required are. We don’t know how that would interact with other systems being on or off.”
Lew, who argues that prioritization is “accepting default,” said the two presidents he worked for — Bill Clinton and Obama — never made the decision to pay bonds over other obligations.
“Only the president can make that decision,” he said. “It’s not a decision the Treasury secretary alone can make. No president should be forced to make that decision.”
Treasury Secretary Janet Yellen has also come out forcefully against the concept.
“A failure on the part of the United States to meet any obligation, whether it’s to debt holders, to members of our military, or to Social Security recipients, is effectively a default,” she told reporters earlier this month.
She added that Treasury’s systems were built to “pay all of our bills when they are due and on time, and not to prioritize one form of spending over another.”
PIMCO, a bond-trading behemoth, has added its voice to the naysayers.
PIMCO head of public policy Libby Cantrill said in a statement: “We take Secretary Yellen and previous Treasury secretaries – both Republican and Democratic – at their word that prioritizing payments under Treasury’s existing systems is simply not viable and should not be viewed as a feasible alternative to Congress raising the debt ceiling.”
But warnings aren’t enough to dissuade some financial industry analysts and executives that Treasury could pull it off.
“They have the tools available to be able to avoid a default or a disruption in the capital markets,” said Unlimited Funds CEO Bob Elliott, who previously led research at hedge fund giant Bridgewater Associates. “We would expect them to use those tools to ensure that the U.S. doesn’t experience a default.”
Bank of America rates strategist Ralph Axel said Treasury should be more forthcoming.
“They need to tell everybody what the real deal is with the Treasury market and whether or not this is a true massive threat or if it’s actually completely benign, which I think it is,” he said.
But payment prioritization believers on Wall Street still argue that it carries risks.
Even if the market for Treasury securities avoided disruption, the missed payments to other individuals and businesses could be a drag on the rest of the economy.
Elliott said the real risk is that it goes on for months, in which case people would start to cut spending.
“My fear is that X date is hit. The day after, not a whole lot happens and a bunch of people who are holding out say, ‘See, everything’s totally fine,’” Rajadhyaksha with Barclays said. “This is a slow burn. The longer it takes the worse it gets.”
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( With inputs from : www.politico.com )

January 30, 2023
European allies will send about 80 Leopard 2 tanks to Ukraine, Germany says

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BERLIN — Germany and its European partners plan to “quickly” send two Leopard 2 tank battalions to Ukraine — suggesting about 80 vehicles — the government in Berlin announced Wednesday, adding that Germany would provide one company of 14 Leopard 2 A6 tanks “as a first step.”
Other countries likely to send Leopards to the war against Russia include Poland, Spain, Norway and Finland.
The decision by Chancellor Olaf Scholz — which emerged on Tuesday evening — marks a decisive moment in Western support for Ukraine in its fight against Russian aggression, which entered its 12th month this week and could soon heat up further as Moscow is expected to launch a new offensive.

Following Berlin’s move, other European countries like Spain and Norway reportedly agreed to join the Leopard tank alliance.
Andriy Yermak, the head of Ukrainian President Volodymyr Zelenskyy’s office, welcomed the German announcement as a “first step.”
“Leopards are very much needed,” he said on Telegram.
Zelenskyy himself also welcomed the move on Twitter. “Sincerely grateful to the Chancellor and all our friends in” Germany, he said.
Russia’s Ambassador to Germany Sergei Nechaev said in a statement the decision was “extremely dangerous,” and took the conflict “to a new level of confrontation.”
Kyiv had long urged Germany and other partners to supply its army with the powerful German-built Leopard 2 tank, but Scholz hesitated to take the decision, partly out of concern that it could drag Germany or NATO into the conflict. He remained adamant that such a move had to be closely coordinated and replicated by Western allies, most notably the United States.
The news of an imminent announcement by U.S. President Joe Biden to send “a significant number” of American M1 Abrams tanks to Ukraine facilitated the chancellor’s decision. Scholz had come under huge pressure from European partners like Poland, as well as his own coalition partners in government, to no longer block the delivery of the German tank. Since they are German-made, their re-export needed the approval of the German government.
“This decision follows our well-known line of supporting Ukraine to the best of our ability. We act internationally in a closely coordinated manner,” Scholz said in a written statement. He is also due to address the German parliament at 1 p.m. on Wednesday to further explain his decision.
“The goal is to quickly form two tank battalions with Leopard 2 tanks for Ukraine,” a German government spokesperson said.
“As a first step, Germany will provide a company of 14 Leopard-2 A6 tanks from Bundeswehr stocks. Other European partners will also hand over Leopard-2 tanks,” the spokesperson added.
The spokesperson also said the training of Ukrainian crews on the tanks “is to begin rapidly in Germany.” Berlin would also provide “logistics, ammunition and maintenance of the systems.”
Moreover, Germany will provide partner countries like Spain, Poland, Finland or Norway, which “want to quickly deliver Leopard-2 tanks from their stocks,” the necessary re-export permission, the spokesperson said.
NATO Secretary-General Jens Stoltenberg tweeted that he “strongly welcomes” Berlin’s decision. “At a critical moment in Russia’s war, these can help Ukraine to defend itself, win & prevail as an independent nation.”
Spain, which owns one of the largest fleets of Leopards in the EU, with 347 tanks, has previously said it would send tanks to Kyiv as part of a European coalition, according to El País.
The Norwegian government is considering sending eight of its 36 Leopard tanks to Ukraine, but no decision has been made yet, Norwegian daily DN reported late Tuesday after a meeting of the parliamentary committee on foreign affairs and defense, quoting sources close to the deliberation.
Portugal, which has 37 Leopards, could provide four tanks to the assembling European coalition, a source close to the government told Correio da Manhã late on Tuesday.
The Netherlands, which is leasing 18 Leopards from Germany, is also weighing supplying some of their armored vehicles, Dutch newswire ANP reported, quoting a government spokesperson. On Tuesday, Dutch Prime Minister Mark Rutte said he was “willing to consider” buying the tanks from Germany and shipping them to Ukraine, but that no decision had been made.
On Wednesday, the Swedish defense minister said that Sweden did not exclude sending some of its own tanks at a later stage, according to Swedish daily Svenska Dagbladet.
Wilhelmine Preussen and Zoya Sheftalovich contributed reporting.
This article was updated.

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( With inputs from : www.politico.eu )

January 24, 2023