AFP

Western finance chiefs condemned Moscow’s invasion of Ukraine at G20 talks in Indonesia Friday, accusing Russia of sending a “shockwave” through the world economy and its technocrats of complicity in the war’s alleged atrocities.

The two-day meeting on the island of Bali began under the shadow of a Russian military assault that has roiled markets, spiked food prices and stoked breakneck inflation, a week after Moscow’s top diplomat walked out of talks with the forum’s foreign ministers.

“Russia is solely responsible for negative spillovers to the global economy,” US Treasury Secretary Janet Yellen told the Russian delegation in the opening session, according to a US official, who spoke on condition of anonymity.  

“Russia’s officials should recognise that they are adding to the horrific consequences of this war through their continued support of the Putin regime. You share responsibility for the innocent lives lost,” Yellen added, according to the official.

The official did not comment on whether the Russian delegation responded. Russian officials did not immediately respond to an AFP request for comment. 

Russia calls its invasion of Ukraine a “special military operation” and blames subsequent Western sanctions for blocked food shipments and rising energy prices.

“Russia tried to say that the world economic situation had nothing to do with the war,” a French delegation source told AFP.

Australian Treasurer Jim Chalmers condemned Russia’s “immoral transgression” against Ukraine, saying that Moscow must take the blame for the impacts on the global economy caused by the war.

“Russia’s unjust actions have had terrible human cost but they’ve also increased global uncertainty,” Chalmers said, according to a transcript. “Russia must take full responsibility.”

Canadian Finance Minister Chrystia Freeland told Russia’s delegation they were responsible for “war crimes” in Ukraine because of their support for the invasion, a Canadian official said. 

“It is not only generals who commit war crimes, it is the economic technocrats who allow the war to happen and to continue,” said Freeland, according to the official.

Both Russian Finance Minister Anton Siluanov and Ukrainian Finance Minister Serhiy Marchenko participated virtually in the meeting. 

Moscow sent Russian Deputy Finance Minister Timur Maksimov to attend the talks in person. He was in the room as Western officials expressed their condemnation, according to a source present at the talks.

Ukraine’s Marchenko said Russia’s invasion of Ukraine “clearly marks the end of the existing world order”, and blamed Moscow for the world facing hunger, inflation and energy insecurity.

“We need to stop the cause of these problems. The true practical solution… is imposing more severe targeted sanctions,” he told ministers, according to the Ukrainian finance ministry.

– ‘Weaponising’ food –

Indonesian Finance Minister Sri Mulyani Indrawati warned her counterparts that failure to tackle energy and food crises would be “catastrophic”.

The meeting has largely focused on those impacts of the war that are weighing on an already brittle global recovery from the Covid-19 pandemic.

“(Russian President Vladimir) Putin’s actions… amounts to using food as a weapon of war,” Yellen said in an afternoon seminar.

In another session, she said Russia’s “unjustified war” has sent a “shockwave” through the global economy. 

Indrawati said members had “identified the urgent need for the G20 to take concrete steps” to address food insecurity and to help countries in need.

Yellen has pressed G20 allies for a price cap on Russian oil to choke off Putin’s war chest and pressure Moscow to end its invasion while bringing down energy costs.

In April, the US treasury secretary led a multinational walkout of finance officials as Russian delegates spoke at a G20 meeting in Washington, but there was no such action on Friday.

There is unlikely to be a final communique issued when talks end on Saturday because of the disagreements with Russia.

– ‘Act together’ – 

G20 chair Indonesia -– which pursues a neutral foreign policy –- refrained from disinviting Russia despite Western pressure.

Chinese Finance Minister Liu Kun, Britain’s new Finance Minister Nadhim Zahawi and European Central Bank President Christine Lagarde attended the meeting virtually. 

World Bank chief executive David Malpass did not attend, while International Monetary Fund chief Kristalina Georgieva appeared in person after saying Wednesday that the global economic outlook had “darkened significantly” because of Moscow’s invasion.

The meeting is a prelude to the leaders’ summit on the Indonesian island in November that was meant to focus on the global recovery from the Covid-19 pandemic.

Other issues being tackled by the ministers included digital financial inclusion –- with more than a billion of the world’s population still without access to a bank account -– and the deadline for an international tax rules overhaul.

Citigroup reported better-than-expected results Friday following a strong performance in trading, as executives described US consumption as healthy despite rising inflation.

The big US bank, like its peers, also suffered a drop in second-quarter profits compared with the year-ago period, which was boosted by the return of funds set aside early in the pandemic in case of loan defaults.

But unlike JPMorgan Chase and others, Citigroup still topped analyst expectations, in part due to higher profits in lending after Federal Reserve interest rate hikes. 

Chief Financial Officer Mark Mason told reporters that Citi’s credit card business also had a “very, very strong performance,” indicating consumers remain on solid footing for now.

“There’s a lot of liquidity that still remains with consumers,” he said on a media conference call. “Obviously that is allowing for a bit more flexibility than they otherwise would have.”

But the continued spending is “hard to square” with data showing eroding consumer sentiment due to inflation, Mason acknowledged.

Citi reported profits of $4.5 billion, down 27 percent from the year-ago period on revenues of $19.6 billion, up 11 percent.

Citi had a net build of credit reserves of $375 million in case of bad loans.

Mason said the company “feels appropriately reserved” in case of a downturn, but saw no “signs of immediate credit loss concerns.”

Elevated volatility in financial markets lifted revenues tied to trading in equities, commodities and other financial markets, offsetting a drop in merger and acquisition activity.

As with JPMorgan, Citigroup is suspending its share buybacks in light of new US stress test requirements to hold more capital in case of a downturn.

Mason said the decision also reflected uncertainty about the macroeconomy.

“We’re worried about the prospect of a recession,” he said. “We’re worried about rate increases to kind of stabilize things as we manage through this environment and the uncertainty that comes with that.”

Wells Fargo also reported a drop in second-quarter profits.

Earnings at the California-based bank were $3.1 billion, down 48 percent from the year-ago level on a 16 percent drop in revenues to $17.0 billion.

But investors were cheered by Wells’ forecast of a 20 percent jump in 2022 net interest income from last year’s level in light of Fed interest rate hikes.

Citigroup shares soared 9.7 percent to $48.40 in morning trading, while Wells Fargo jumped 6.6 percent to $41.28.

The United States said Friday it would resume flights to the International Space Station with Russia, despite its attempts to isolate Moscow over the invasion of Ukraine.

“To ensure continued safe operations of the International Space Station, protect the lives of astronauts and ensure continuous US presence in space, NASA will resume integrated crews on US crew spacecraft and the Russian Soyuz,” US space agency NASA said in a statement.

NASA said that astronaut Frank Rubio would fly with two Russian cosmonauts on a Soyuz rocket scheduled to launch on September 21 from Kazakhstan, with another astronaut, Loral O’Hara, taking another mission in early 2023.

In a first, Russian cosmonauts will join NASA astronauts on SpaceX’s new Crew-5 which will launch in September from Florida with a Japanese astronaut also on the mission.

Another joint mission on the SpaceX Crew-6 will fly out in early 2023, NASA said.

The move comes despite the European Space Agency earlier this week terminating its relationship with Russia on a mission to put a rover on Mars, infuriating Russian space chief Dmitry Rogozin who banned cosmonauts on the ISS from using a European-made robotic arm.

But hours before NASA’s announcement, President Vladimir Putin dismissed Rogozin, a firebrand nationalist and ardent backer of the Ukraine invasion who once quipped that US astronauts should get to the space station on trampolines rather than Russian rockets.

NASA said that the International Space Station was always designed to be operated jointly with participation from the space agencies of the United States, Russia, Europe, Japan and Canada.

“The station was designed to be interdependent and relies on contributions from each space agency to function. No one agency has the capability to function independent of the others,” it said.

– New ways to blast off –

Soyuz rockets were the only way to reach the space station until SpaceX, run by the billionaire Elon Musk, debuted a capsule in 2020.

The last NASA astronaut to take a Soyuz to the station was NASA astronaut Mark Vande Hei in 2021. 

He returned to Earth in March this year alongside Russian cosmonauts, also on a Soyuz. 

Speaking to reporters afterward, Vande Hei said that the cosmonauts remained his “very dear friends” despite their nations’ tense relationship.

“We supported each other throughout everything,” he said. “And I never had any concerns about my ability to continue working with them.”

The United States has imposed sweeping sanctions on Russia after Putin on February 24 invaded Ukraine, defying Western warnings.

The sanctions, which include tough restrictions on financial interactions, have led to an exodus of leading US brands from Russia including Starbucks and McDonald’s.

But the International Space Station is unique. It was launched in 1998 at a time of hope for US-Russia cooperation following their Space Race competition during the Cold War.

The ISS is expected to wind down in the next decade.

Rogozin, the outgoing head of Russian space agency Roscosmos, had warned that Western sanctions could affect cooperation.

“If you block cooperation with us, who will save the ISS from uncontrolled deorbiting and falling on US or European territory?” Rogozin wrote in a tweet earlier this year — noting that the station does not fly over much of Russia.

Kremlin spokesman Dmitry Peskov did not indicate that his removal meant Putin was unhappy with Rogozin.

One independent media outlet said he would be promoted and could be put in charge of occupied territories in Ukraine.

The world’s authoritarian regimes are persecuting their opponents living abroad more vigorously than ever before and some get away with murder, literally.

A blatant example of the impunity some governments enjoy is Saudi Arabia’s de-facto ruler, Crown Prince Mohammed bin Salman, whose country US President Joe Biden labelled a “pariah” over the 2018 murder and dismemberment of Saudi journalist Jamal Khashoggi.  

Yet in June, Saudi made up with Turkey — where the murder happened — and Biden decided to include the kingdom on a tour of the Middle East.

Experts say transnational repression of opposition figures is nothing new, but since digital technologies have allowed dissidents to needle authoritarian regimes from across borders more easily, they have stoked the wrath of strongmen like rarely before.

“The threat perception of dictators or these repressive regimes has increased,” said Marcus Michaelson, a researcher on authoritarianism at the Vrije Universiteit in Brussels.

According to US watchdog Freedom House, there were at least 735 direct, physical incidents of transnational repression between 2014 and 2021, carried out by 36 governments, notably those of China, Turkey, Russia, Saudi Arabia, Iran and Rwanda. 

Four regimes joined the list in 2021, including Belarus, which diverted an aircraft to arrest an opposition figure.

– ‘Harassment to murder’ –

Spectacular acts like the poisoning of former Russian intelligence agent Sergei Skripal in Britain in 2018, or the killing in 2019 in Berlin of Georgian Chechen Zelimkhan Khangoshvili — attributed to Russia — get the world’s attention, but much of the repression happens under the radar.

“The range of tactics goes from harassment to murder,” said Katia Roux at Amnesty International France.

Turkish journalist Can Dundar, who runs a website and a radio station aimed at Turkey and the Turkish diaspora from exile in Germany, has become a target for the secret apparatus of President Recep Tayyip Erdogan. 

“In the first year we found a Turkish camera crew (…) recording our office and giving all the details of our office, including our address and our daily work schedule, at what time we are there, at what time we are getting out etc, and showing it as the ‘headquarters of the traitors’ making plans against Turkey,” he told AFP.

Turkish intelligence “is very active, especially in Germany and France,” he said, recalling the attack by three men on a Turkish journalist in Berlin in July 2021 who warned him to stop writing about certain topics.

Pakistani journalist Taha Siddiqui, who fled to France after a kidnapping attempt he blamed on his home country’s security services, said he still didn’t actually feel safe in exile, only “safer”.

In 2020 a Pakistani intelligence officer told Siddiqui’s parents that “if Taha thinks he’s safe in Paris, he is mistaken. We can reach anyone anywhere”.

The threat came the same year as the suspicious deaths of a Pakistani journalist in Sweden, and of a Pakistani human rights activist in Canada, and a year before a British court convicted a man for conspiring to murder a Pakistani blogger in Dutch exile.

“They have made me paranoid, suspicious, scared, even in exile,” said Siddiqui, who has opened “The Dissident Club” in Paris, a bar dedicated to discussion, exhibitions and screenings.

Digital technologies give repressive regimes a whole new toolkit to sidestep the political cost or diplomatic risk that can come with physical action against dissidents, with “almost no consequences”, said Michaelson.

They have a “commercial market for surveillance technologies” at their disposal, such as the Israeli-made spy software Pegasus, which are cost-effective, he said.

“So they don’t need to invest a lot of manpower or send agents to spy on dissidents abroad,” he said.

A telling example is Egyptian opposition figure Ayman Nour, a friend of Khashoggi, and exiled in Turkey.

Citizen Lab, a body for research into technology, human rights and security, said it found two sets of spyware on Nour’s mobile phone — Pegasus and Predator — operated by two different governments. 

– ‘You have to stop’ –

Calling spying “a form or organised crime”, Nour said he always thought of his phone as “a radio that anybody can listen to”.

Amnesty International has identified 11 government clients for Pegasus which allows “the surveillance of anybody in a completely invisible and untraceable way”, said Roux.

Activists in China defending the rights of the Uyghur minority, against which western countries say China is committing “genocide”, often find that digital threats precede physical violence, said Michaelson.

Meiirbek Sailanbek, a member of China’s Kazakh community, said he uninstalled all Chinese apps from his phone when he moved to neighbouring Kazakhstan, and deleted the numbers of his brother and sister who still live in Xinjiang, the Uyghur autonomous region in northwest China.

When the Kazakhstan authorities arrested the head of the Atajurt NGO — which Sailanbek had joined writing social posts under a pseudonym — he fled the country, settling in Paris.

But Kazakhstan’s authorities identified him, and since then the Chinese government is threatening his brother and sister with prison if he continues his activism.

“Meiirbek, your sister and brother are in danger, you have to stop,” said a message forwarded to him by his mother.

Sailanbek faces arrest if he returns to China or Kazakhstan, but he considers Turkey, Pakistan, Arab nations and Russia to be off-limits too because he believes they would give in to Chinese pressure to hand him over.

US retail sales shot up one percent in June amid the ongoing surge in prices, according to new data Friday that spelled more bad news for the Federal Reserve as it struggles to rein in rampant inflation.

The data showed that after pausing in May, American consumers last month were still eating out and buying furniture and cars, even amid the fastest inflation in more than four decades. 

That poses a challenge for the US central bank, which has been hoping to see more decisive signs that its aggressive interest rate hikes were starting to take the economy off the boil and tamp down high prices.

After total sales dipped 0.1 percent in May, they recovered with a vengeance last month and climbed to $680.6 billion, the Commerce Department said.

Record gas prices at the pump in June were a major factor, boosting sales at gasoline stations 3.6 percent in the month, and posting an eye-watering 49.1 percent surge over the past year, the report said.

But the data showed increases were widespread, and sales were still up 0.7 percent even when gasoline is removed from the calculation.

The Fed started raising the benchmark borrowing rate in March, and last month increased it by 0.75 percentage point, the biggest hike in nearly 30 years. But talk has now shifted to the possibility of a massive, full-point increase later this month.

Fed Governor Christopher Waller on Thursday said he could favor the mega step — which would be the biggest such move in four decades — if there were no signs of cooling in the retail sales data and the new home sales report due out in two weeks.

– Mega rate hike in play –

The Fed’s policy-setting Federal Open Market Committee is due to meet July 26-27 to debate the next move in its war on inflation.

Kathy Bostjancic of Oxford Economics said “Today’s strong report keeps the Fed in an aggressive policy tightening mode — the debate at the July FOMC meeting will be between a 75bps or 100bps rate hike.”

But she noted that, when adjusted for inflation — the report does not take into account rising prices — spending on goods appears to be slowing in the second quarter “but not contracting.”

“While consumer sentiment is very downbeat, it doesn’t mean they will stop spending,” she said, although they will shift spending more to necessities.

The report showed auto sales rose 0.9 percent in June, after a 3.4 percent drop in May, while furniture stores and restaurants saw sales rise one percent or more, and online sales gained 2.2 percent.

Grocery stores saw a 0.6 percent rise, slower than in the prior month.

Clothing and building and gardening stores were among the few categories posting declines, the data showed.

Neil Saunders, Managing Director of GlobalData, called it “quite remarkable that the consumer has not retrenched more” amid surging prices.

But he noted that “consumers did not buy more stuff in June – they bought less product but paid more for it. This is not a comfortable position.”