US Business

Russia’s invasion of Ukraine highlights the “acute threat” posed by Moscow, but China is the most consequential challenge for the United States, the Pentagon said Thursday.

The dangers are both conventional — Moscow’s aggression toward its neighbors and Beijing’s efforts to gain control of Taiwan — and nuclear, with Russia possessing an extensive arsenal and China’s stocks of atomic weapons growing fast.

US Defense Secretary Lloyd Austin highlighted the different challenges posed by China and Russia as he unveiled the unclassified versions of several military strategy documents.

China “is the only competitor out there with both the intent to reshape the international order, and increasingly the power to do so,” Austin said.

“Unlike China, Russia can’t systemically challenge the United States over the long term. But Russian aggression does pose an immediate and sharp threat.”

The National Defense Strategy, which was released Thursday, likewise places the primary emphasis on China.

Beijing is seeking to “refashion the Indo-Pacific region and the international system to suit its interests and authoritarian preferences,” it says, describing this dynamic as “the most comprehensive and serious challenge to US national security.”

The strategy says Chinese rhetoric about and “coercive activity” toward self-ruled Taiwan — which Beijing has vowed to take control of, by force if necessary — is a destabilizing factor that risks miscalculation and threatens peace in the area.

As for Russia, it says the “acute threat” posed by Moscow has been most recently demonstrated by Moscow’s February invasion of Ukraine.

– ‘Emerging threat’ of climate change –

“The Department (of Defense) will support robust deterrence of Russian aggression against vital US national interests, including our treaty Allies,” the strategy says.

In a departure from the previous National Defense Strategy, which was issued during Donald Trump’s presidency, the newly released document classifies climate change as an “emerging threat.”

The US “will integrate climate change into threat assessments,” as well as increasing the “resiliency of military installations” and taking “climate extremes” into account in decisions on training and equipping the armed forces, the strategy says.

In an updated report on US nuclear posture released in parallel with the National Defense Strategy, the Pentagon defines the role of its nuclear arsenal as deterring both nuclear and non-nuclear attacks that have strategic consequences.

“This includes nuclear employment of any scale, and it includes high-consequence attacks of a strategic nature that use non-nuclear means,” a senior defense official told journalists.

The Nuclear Posture Review emphasizes that China’s nuclear arsenal is growing, but says Russia’s is currently more extensive.

– Warning to North Korea –

“By the 2030s the United States will, for the first time in its history, face two major nuclear powers as strategic competitors and potential adversaries,” the document says.

It emphasizes the importance of modernizing US strategic assets, while scrapping a submarine-launched nuclear cruise missile program and saying a type of obsolete nuclear bomb will be retired.

The document also contains a stark warning for Kim Jong Un against employing North Korea’s growing nuclear arsenal.

“Any nuclear attack by North Korea against the United States or its allies and partners is unacceptable and will result in the end of that regime. There is no scenario in which the Kim regime could employ nuclear weapons and survive,” it says.

The Missile Defense Review — also released Thursday — likewise points to growing threats from China and Russia.

Beijing is closing the gap with Washington when it comes to ballistic and hypersonic missile technology, while Moscow is modernizing its intercontinental-range missile systems and developing advanced precision-strike missiles.

The document says drones — which Russia has used to strike against Ukrainian cities and energy infrastructure — are also a threat that is likely to grow.

Russian President Vladimir Putin meanwhile offered a distinctly different take on the international strategic environment Thursday, saying Moscow is trying to “defend its right to exist” in the face of Western efforts to “destroy” his country.

“Ahead is probably the most dangerous, unpredictable and at the same time important decade since the end of the Second World War,” he said.

The world is probably entering the “most dangerous” decade since the end of World War II, Russian President Vladimir Putin warned Thursday, presenting the Ukraine conflict as part of a wider struggle against western domination.

Arguing that Western dominance in global affairs was coming to an end, Putin insisted Russia was not just challenging the West but fighting for its own right to exist.

Putin was speaking as Ukrainian troops reclaim more territory that Moscow has annexed as its own, and has mobilised more troops to defend.

“Ahead is probably the most dangerous, unpredictable and at the same time important decade since the end of the Second World War,” Putin told members of the annual Valdai Discussion Club, in a lengthy question-and-answer session.

The situation was “to a certain extent revolutionary”, he said, describing the Ukraine offensive as simply part of the “tectonic shifts of the entire world order”.

“The historical period of undivided dominance of the West in world affairs is coming to an end,” said Putin. “The unipolar world is becoming a thing of the past. 

While the West was still “desperately” trying to govern humanity, it was not able to. “Most peoples of the world no longer want to put up with it,” he said.

And the Russian president characterised the current crisis as a battle for survival for Russia.

“Russia is not challenging the elites of the West, Russia is just trying to defend its right to exist,” he said.

– ‘Dirty bomb’ row –

Putin also returned to the row over Russian allegations that Ukraine was preparing to use a “dirty bomb” against its soldiers.

Kyiv was “doing everything to cover up traces of this preparation” for such a bomb, he said.

On Monday, the International Atomic Energy Agency (IAEA), responding to the  allegations, said it regularly visited two sites that Moscow had raised questions over.

The UN agency’s inspectors had found nothing untoward and were preparing to visit again in the coming days, the statement added.

“We are in favour,” said Putin. “And it should be done as fast as possible.” 

A dirty bomb is a conventional bomb laced with radioactive, biological or chemical materials which are disseminated in an explosion.

Over the past week, Russian Defence Minister Sergei Shoigu has repeated the claims regarding a Ukrainian dirty bomb in conversations with his counterparts in France, the US, the UK, China and India.

France, the US and the UK have all rejected the claim, and NATO chief Jens Stoltenberg has warned that Russia might be trying to use the claim as a “pretext” for escalation.

Kyiv meanwhile, has said it suspects Russia might itself use a dirty bomb in a “false flag” attack.

But Putin said Thursday using nuclear weapons in Ukraine would “make no sense at all to us — either in political or military terms”.

– Stalled talks –

Earlier Thursday, the Kremlin said Ukraine had pulled out of peace talks with Moscow back in March on orders from Washington.

“The text was ready… And then suddenly the Ukrainian side went off the radar, the Ukrainian side declared its unwillingness to continue negotiations,” Kremlin spokesman Dmitry Peskov told reporters.

Talks between Kyiv and Moscow have stalled since March, each side blaming the other for the stalemate.

Zelensky on Wednesday dismissed any possibility of talks with Moscow, denouncing Putin’s “planned rhetoric”. In late September, he said he would not negotiate with Russia as long as Putin was president.

Russia’s “special operation” in Ukraine has met with repeated setbacks.

Putin has in recent weeks changed his military commander there after Kyiv’s forces launched a  counter-offensive, recapturing territory in the east.

Last week, Putin introduced martial law in four Ukrainian regions that he has declared annexed: Kherson, Zaporizhzhia, Donetsk and Lugansk. 

The annexation announcement came in late September, despite Moscow’s forces not controlling some of the regions fully. Most recently, for example, there has been fierce fighting in the eastern region of Donetsk.

Russian-installed authorities in Ukraine’s occupied region of Zaporizhzhia on Thursday ordered phone checks on local residents.

Anyone subscribed to “propaganda resources of the terrorist Kyiv regime” would receive a warning, before being fined.

The US economy rebounded in the third quarter, government data showed Thursday, in welcome news for President Joe Biden days before midterm elections, though analysts warn of a gloomier path ahead.

Economic issues have become a flashpoint in the United States, with decades-high inflation weighing on growth and squeezing households.

Fears of a downturn have intensified in the world’s biggest economy after two quarters of negative growth, commonly viewed as a strong signal that a recession is underway — a trend that would have global consequences and domestic political costs.

But gross domestic product rose for the first time this year, at an annual rate of 2.6 percent in the July to September period, according to the latest Commerce Department data.

“Our economic recovery is continuing to power forward,” said Biden in a statement, later telling reporters that “things are looking good”.

But he also said that officials need to “make more progress” on bringing down high costs for American households.

On Thursday, mortgage rates surged past seven percent for the first time in two decades according to the Freddie Mac survey, piling further pressure on potential homebuyers.

The better-than-expected GDP performance was helped by strong trade, but housing investment plunged and weaker consumer spending on goods casts a pall on growth as higher prices bite.

Industrial supplies and materials, notably petroleum and products, kept exports robust.

In consumer spending, an increase in services was “partly offset” by a drop in products like motor vehicles and parts, along with food and beverages, data showed.

– ‘Unsustainable’ –

The leap in exports is “unsustainable,” as a strong dollar and weak global growth will pose constraints moving forward, cautioned Ian Shepherdson of Pantheon Macroeconomics.

A fall in imports that helped net trade also marks a reversal of earlier inventory rebuilding, but that is now over, he said.

“We’re relying on better consumption, rising government spending, and… investment to keep GDP in the black,” he added.

Overall, personal consumption expenditures — a key segment of the economy — grew 1.4 percent, slower than before.

The US economy shrank 0.6 percent in the second quarter, according to revised numbers, after a larger decline in the first three months this year.

Biden has insisted that the economy is on the right path, but analysts warn of risks ahead, as households grapple with soaring prices and draw down on their savings.

– Risks ahead –

Republicans have blamed Democrats for worsening price spikes through runaway spending, though inflation is a global issue that presidents have limited power over.

Analysts see a slowdown in growth in the coming quarters, with the possibility of a recession in 2023.

“This will likely be the only positive quarter for the entire year,” said economist Diane Swonk of KPMG in a tweet.

While there is still some momentum in household spending and a rebound in business investment, there is also “ongoing weakness in residential investment,” added Rubeela Farooqi of High Frequency Economics.

There are particular risks to consumption “as households continue to face challenges from high prices and likely slower job growth going forward,” she said in an analysis.

Households have been reeling from decades-high inflation, with prices soaring on supply chain snarls due to Covid-19 lockdowns and fallout from Russia’s invasion of Ukraine, which sent food and energy costs rocketing.

To lower price pressures, the US central bank has embarked on aggressive rate hikes, walking a tightrope as it tries to avoid tipping the economy into a recession.

Already, there are signs of stress, such as a hit to the more interest-sensitive housing sector.

Rates on popular 30-year fixed-rate mortgages have also rocketed to 7.08 percent according to Freddie Mac, as the Federal Reserve’s moves ripple through the economy.

Policymakers are expected to press on with rate increases at a meeting next week, in the face of persistently high prices.

Closing in on his Twitter megadeal, Elon Musk said Thursday his goal is to enable “healthy” debate of ideas and counter the tendency of social media to splinter into partisan “echo chambers.”

In a message meant to reassure jittery Twitter advertisers on the eve of a court-imposed deadline to finalize the deal, Musk said he would work with marketers to “build something extraordinary together.”

The billionaire entrepreneur pursued the $44 billion deal “because it is important to the future of civilization to have a common digital town square, where a wide range of beliefs can be debated in a healthy manner,” Musk tweeted.

The planned takeover has dismayed activists who fear a surge in harassment and misinformation under the unpredictable Musk, who himself is known for trolling other Twitter users.

But Musk said he realizes Twitter “cannot become a free-for-all hellscape where anything can be said with no consequences.”

The Tesla boss’s on-again, off-again acquisition of the platform appeared to be entering its final phase after a Delaware judge paused litigation on October 6 on Twitter’s suit against Musk after he previously walked away from the deal.

Musk has reportedly been lining up financing and, while there is always the chance of a last-minute curveball, more signs point to the deal’s likely closure.

The New York Stock Exchange posted a pending order to suspend trading in Twitter before Friday’s session.

Shares of Twitter climbed 1.1 percent to $53.96 near 1615 GMT Thursday, not far below the $54.20 purchase price in Musk’s deal.

“We expect Musk and Twitter to officially close the deal by Friday morning with Cinderella finally getting the glass slipper that fits,” said Wedbush analyst Dan Ives.

– ‘Chief Twit’ –

Musk originally agreed to the Twitter acquisition in April, but soon pulled back, saying in July he was canceling the contract because he was misled by Twitter over the number of fake “bot” accounts — allegations rejected by the company.

Twitter in turn sought to prove Musk, who also heads aerospace firm SpaceX, was contriving excuses to walk away simply because he changed his mind.

A trial on Twitter’s suit was scheduled for mid-October, but the Delaware court gave the parties until 5:00 pm on October 28, 2022 to close the transaction.

Fresh questions about the deal and Twitter’s future surfaced last week following reports Musk planned deep staff cuts.

But on Wednesday, Musk changed his Twitter profile to “Chief Twit” and posted a video of himself walking into the company’s California headquarters carrying a sink.

The South African-born entrepreneur cuts a polarizing figure in American business.

Supporters cheer his disruptive spirit and achievements at Tesla, while detractors criticize him as a megalomaniac with a dangerous tendency to wade into geopolitical topics in which he lacks expertise, such as the Russia-Ukraine conflict. 

In his latest statement Thursday, Musk said much of the public speculation about his intentions in the deal had been “wrong” as he insisted his goals were noble.

In pursuing Twitter, “I didn’t do it because it would be easy. I didn’t do it to make more money,” Musk said. 

“I did so with humility, recognizing that failure in pursuing this goal, despite our best efforts, is a very real possibility.”

Musk urged marketers to devise ads that are “as relevant as possible” to consumers, appealing to the industry at a time when tech giants Google and Facebook have reported big declines in advertising revenue.

“Low relevancy ads are spam, but highly relevant ads are actually content!” he said.

Insider Intelligence analyst Jasmine Enberg said Twitter’s ad business has suffered due to uncertainty surrounding the Musk deal, as well as the macroeconomic concerns that have buffeted the broader online ad industry.

“Even slightly loosening content moderation on the platform is sure to spook advertisers, many of whom already find Twitter’s brand safety tools to be lacking compared with other social platforms,” Enberg said.

Having more relevant ads is “a noble goal, but one that is difficult to accomplish,” Enberg said.

“Musk is set to acquire Twitter at a time when data is already scarce and users are highly skeptical of forking over more personal information to social platforms.”

Canada said Thursday it was conducting an assessment mission in Haiti, as US Secretary of State Antony Blinken arrived in Ottawa for talks on setting up an intervention force to address the Caribbean nation’s spiralling crises.

The Canadian delegation is due to assess options “to support Haitian people in resolving the humanitarian and security crises” facing the impoverished country and “restore access to essential goods and services,” in consultation with regional partners the United Nations, the CARICOM Caribbean grouping and others, a statement said.

The mission comes in the wake of appeals by Haiti’s government and UN Secretary-General Antonio Guterres for international intervention as armed gangs take over vast stretches of the country and a cholera outbreak worsens.

The UN Security Council last week unanimously approved a resolution that targeted gang leaders but it did not address a multinational force. 

Ahead of Blinken’s arrival in Ottawa, however, a top US official voiced hope for progress on an international intervention.

“I am very optimistic that the international community and the Security Council will come together around another resolution that would create a multinational force for Haiti,” said Assistant Secretary of State for Western Hemisphere Affairs Brian Nichols.

While President Joe Biden’s administration has made clear it has no desire to put US troops in harm’s way, Nichols rejected pessimism that no country would step forward.

He said a “number of countries” have the capacity to lead a mission, including Canada, but that there had been no decision.

“I’ve talked to dozens of partner nations around the world about the situation in Haiti and there is strong support for a multinational force,” he added.

– US prioritizes police –

Blinken said ahead of his trip that solving Haiti’s problems would be “difficult, if not impossible” without restoring security.

He reiterated the US focus on building the Haitian National Police, pointing to the October 15 delivery by the US and Canadian militaries of equipment, including armored vehicles.

“We need to break the nexus — a very noxious nexus — between the gangs and certain political elites who are funding them, directing them and using them to advance their own interests instead of the interests of the country,” Blinken told an event at Bloomberg News.

“If we are able to help break that up as well as reinforce the Haitian National Police, then I think the government can get a grip on security,” he said.

Canadian Foreign Minister Melanie Joly said she would discuss Haiti with Blinken and that any actions need to “take into consideration what Haitians themselves think.”

“The goal is, at the end of the day, to find ways to help Haiti in the most effective way,” she told reporters in Ottawa.

Joly said Canada would work to impose sanctions on gang leaders in line with last week’s Security Council resolution that notably froze for one year all economic resources linked to Jimmy Cherizier, nicknamed “Barbecue,” whose armed groups have blockaded Haiti’s main oil terminal.

In a statement, she vowed Canada would “not remain idle while gangs and those who support them terrorize Haiti’s citizens.”

Joly said she would also coordinate with Blinken on the Ukraine war, Iran and China, ahead of a series of major Asian summits.

Blinken has spoken frequently to Joly but his two-day trip is his first to Canada since becoming the top US diplomat in January 2021 with the start of Biden’s presidency.

In Ottawa, Blinken will meet with Prime Minister Justin Trudeau and tour a community center for Ukrainian refugees.

He will spend Friday in Montreal, Joly’s hometown, where he will visit a lithium recycling factory in a bid to highlight cooperation on supply chains.