Increasing debt default risk won't Make America Great Again
Donal Trump's spending plan and rising deficits are set to push the US closer to fiscal crisis. Photo / Getty Images
THREE KEY FACTS
On May 12, US President Donald Trump's government spending and revenue bill was published. With characteristic panache, the President calls it his 'Big Beautiful Bill'.
On May 16, Moody's, a US credit rating agency, did something it had not done for over 100 years. It dropped its
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RNZ News
5 hours ago
- RNZ News
Russia sets out punitive terms at peace talks with Ukraine
By Vladimir Soldatkin , Tom Balmforth and Huseyin Hayatsever, Reuters Head of the Russian delegation and Kremlin aide Vladimir Medinsky, left, sits with delegation members as they attend a second meeting of Ukrainian and Russian delegation direct talks, at the Ciragan Palace, in Istanbul, on 2 June 2025. Photo: AFP / Adem Altan Russia has told Ukraine at peace talks that it would only agree to end the war if Kyiv gives up big new chunks of territory and accepts limits on the size of its army, according to a memorandum reported by Russian media. The terms, formally presented at negotiations in Istanbul on Tuesday (NZT), highlighted Moscow's refusal to compromise on its longstanding war goals despite calls by US President Donald Trump to end the "bloodbath" in Ukraine. Ukraine has repeatedly rejected the Russian conditions as tantamount to surrender. Delegations from the warring sides met for barely an hour, for only the second such round of negotiations since March 2022. They agreed to exchange more prisoners of war - focusing on the youngest and most severely wounded - and return the bodies of 12,000 dead soldiers. Turkish President Tayyip Erdogan described it as a great meeting and said he hoped to bring together Russia's Vladimir Putin and Ukraine's Volodymyr Zelenskiy for a meeting in Turkey with Trump. But there was no breakthrough on a proposed ceasefire that Ukraine, its European allies and Washington have all urged Russia to accept. Moscow says it seeks a long-term settlement, not a pause in the war; Kyiv says Putin is not interested in peace. Trump has said the United States is ready to walk away from its mediation efforts unless the two sides demonstrate progress towards a deal. Ukrainian Defence Minister Rustem Umerov, who headed Kyiv's delegation, said Kyiv - which has drawn up its own peace roadmap - would review the Russian document, on which he offered no immediate comment. Ukraine has proposed holding more talks before the end of June, but believes only a meeting between Zelenskiy and Putin can resolve the many issues of contention, Umerov said. Zelenskiy said Ukraine presented a list of 400 children it says have been abducted to Russia, but that the Russian delegation agreed to work on returning only 10 of them. Russia says the children were moved from war zones to protect them. The Russian memorandum, which was published by the Interfax news agency, said a settlement of the war would require international recognition of Crimea - a peninsula annexed by Russia in 2014 - and four other regions of Ukraine that Moscow has claimed as its own territory. Ukraine would have to withdraw its forces from all of them. It restated Moscow's demands that Ukraine become a neutral country - ruling out membership of NATO - and that it protect the rights of Russian speakers, make Russian an official language and enact a legal ban on glorification of Nazism. Ukraine rejects the Nazi charge as absurd and denies discriminating against Russian speakers. Russia also formalised its terms for any ceasefire en route to a peace settlement, presenting two options that both appeared to be non-starters for Ukraine. Option one, according to the text, was for Ukraine to start a full military withdrawal from the Luhansk, Donetsk, Zaporizhzhia and Kherson regions. Of those, Russia fully controls the first but holds only about 70 percent of the rest. Option two was a package that would require Ukraine to cease military redeployments and accept a halt to foreign provision of military aid, satellite communications and intelligence. Kyiv would also have to lift martial law and hold presidential and parliamentary elections within 100 days. Russian delegation head Vladimir Medinsky said Moscow had also suggested a "specific ceasefire of two to three days in certain sections of the front" so that the bodies of dead soldiers could be collected. According to a proposed roadmap drawn up by Ukraine, a copy of which was seen by Reuters, Kyiv wants no restrictions on its military strength after any peace deal, no international recognition of Russian sovereignty over parts of Ukraine taken by Moscow's forces, and reparations. The conflict has been heating up, with Russia launching its biggest drone attacks of the war and advancing on the battlefield in May at its fastest rate in six months. On Sunday, Ukraine said it launched 117 drones in an operation codenamed "Spider's Web" to attack Russian nuclear-capable long-range bomber planes at airfields in Siberia and the far north of the country. Satellite imagery suggested the attacks had caused substantial damage, although the two sides gave conflicting accounts of the extent of it. Western military analysts described the strikes, thousands of miles from the front lines, as one of the most audacious Ukrainian operations of the war. Russia's strategic bomber fleet forms part of the "triad" of forces - along with missiles launched from the ground or from submarines - that make up the country's nuclear arsenal, the biggest in the world. Faced with repeated warnings from Putin of Russia's nuclear might, the US and its allies have been wary throughout the Ukraine conflict of the risk that it could spiral into World War Three. A current US administration official said Trump and the White House were not notified before the attack. A former administration official said Ukraine, for operational security reasons, regularly does not disclose to Washington its plans for such actions. A UK government official said the British government also was not told ahead of time. Zelenskiy said the operation, which involved drones concealed inside wooden sheds, had helped to restore partners' confidence that Ukraine is able to continue waging the war. "Ukraine says that we are not going to surrender and are not going to give in to any ultimatums," he told an online news briefing. "But we do not want to fight, we do not want to demonstrate our strength - we demonstrate it because the enemy does not want to stop." - Reuters
RNZ News
7 hours ago
- RNZ News
Russia and Ukraine reach deal on new POW swap and handover of bodies
By Vladimir Soldatkin , Tom Balmforth and Huseyin Hayatsever, Reuters Head of the Russian delegation and Kremlin aide Vladimir Medinsky, left, sits with delegation members as they attend a second meeting of Ukrainian and Russian delegation direct talks, at the Ciragan Palace, in Istanbul, on 2 June 2025. Photo: AFP / Adem Altan Russia and Ukraine said they had agreed at peace talks to exchange more prisoners of war and return the bodies of 12,000 dead soldiers. The warring sides met on Monday (local time) for barely an hour in the Turkish city of Istanbul, for only the second such round of negotiations since March 2022. Turkish President Tayyip Erdogan described it as a great meeting and said he hoped to bring together Russia's Vladimir Putin and Ukraine's Volodymyr Zelensky for a meeting in Turkey with US President Donald Trump. But there was no breakthrough on a proposed ceasefire that Ukraine, its European allies and Washington have all urged Russia to accept. Moscow says it seeks a long-term settlement, not a pause in the war; Kyiv says Putin is not interested in peace. Kremlin aide Vladimir Medinsky said Russian negotiators had handed their Ukrainian counterparts a detailed memorandum outlining Moscow's terms for a full ceasefire. Medinsky, who heads the Russian team, said Moscow had also suggested a "specific ceasefire of two to three days in certain sections of the front" so that the bodies of dead soldiers could be collected. Each side said it would hand over the bodies of 6000 dead soldiers to the other. In addition, they said they would conduct a further big swap of prisoners of war, after 1000 captives on each side were traded following a first round of talks in Istanbul on 15 May. Members of Ukrainian (R), Russian (L) and Turkish (C) delegations attend the second peace talks at the Ciragan Palace, in Istanbul, on 2 June, 2025. Photo: ADEM ALTAN / AFP Ukrainian Defence Minister Rustem Umerov, who headed Kyiv's delegation, said the new exchange would focus on those severely injured in the war and on young people. Umerov also said that Moscow had handed a draft peace accord to Ukraine and that Kyiv - which has drawn up its own version - would review the Russian document. Ukraine has proposed holding more talks before the end of June, but believes that only a meeting between Zelensky and Putin can resolve the many issues of contention, Umerov said. Zelensky's chief of staff, Andriy Yermak, said Kyiv's delegation had requested the return of a list of children who it said had been deported to Russia. Moscow says such children were moved in order to protect them from fighting. Medinsky said there were 339 names on Ukraine's list but that the children had been "saved", not stolen. Ukraine had a day earlier launched one of its most ambitious attacks of the war, using drones to target Russian nuclear-capable long-range bomber planes in Siberia and elsewhere. Angry war bloggers urged Moscow to retaliate strongly. While both countries, for different reasons, are keen to keep Trump engaged in the peace process, expectations of a breakthrough on Monday had been low. Ukraine regards Russia's approach to date as an attempt to force it to capitulate - something Kyiv says it will never do - while Moscow, which advanced on the battlefield in May at its fastest rate in six months, says Kyiv should submit to peace on Russian terms or face losing more territory. Putin set out his opening terms for an immediate end to the war last June: Ukraine must drop its ambitions to join the Western NATO alliance and withdraw its troops from the entirety of the four Ukrainian regions claimed and largely controlled by Russia. According to a proposed roadmap drawn up by Ukraine, a copy of which was seen by Reuters, Kyiv wants no restrictions on its military strength after any peace deal, no international recognition of Russian sovereignty over parts of Ukraine taken by Moscow's forces, and reparations. Russia currently controls just under one fifth of Ukraine, or about 113,100 sq km, about the area of the US state of Ohio. Putin sent his army into Ukraine on 24 February, 2022, after eight years of fighting in eastern Ukraine between Russian-backed separatists and Ukrainian forces. The United States, which under Trump's predecessor Joe Biden was Ukraine's main source of advanced weaponry in the war, says over 1.2 million people have been killed and injured in the conflict since 2022. Trump has called Putin "crazy" and berated Zelensky in public in the Oval Office, but the US president has also said he thinks peace is achievable and that if Putin delays, the US could impose tough sanctions on Russia. - Reuters
RNZ News
16 hours ago
- RNZ News
Global markets: Shares and dollar tumble as tariff tensions flare
Stocks and the dollar slipped on Monday as US-China trade tensions bubbled. Photo: Wang Zhao / AFP By Wayne Cole and Amanda Cooper , Reuters Stocks and the dollar slipped on Monday as US-China trade tensions bubbled and investors turned defensive ahead of US jobs data and a widely expected cut in European interest rates. Shares in Asian and European steelmakers, which export metal to the United States, dropped in reaction to US President Donald Trump's threat late on Friday to double tariffs on imported steel and aluminium to 50 percent, starting June 4. The move drew criticism from European Union negotiators. Speaking on Sunday, Treasury Secretary Scott Bessent said Trump would soon speak with Chinese President Xi Jinping to iron out a dispute over critical minerals. Beijing then forcefully rejected Trump's trade criticism, suggesting a call might be some time coming. With tensions rising again over tariffs and trade, sentiment looked fragile in Europe, where the STOXX 600 fell 0.5 percent on the day and euro zone government bonds sold off, while the euro benefited from an investor push out of dollar holdings. "The flip-flopping on trade policy looks set to continue and it appears the uncertainty this creates does not bother President Trump at all. That is likely to give investors the reason to renew selling of the US dollar," MUFG strategist Derek Halpenny said. The dollar has lost 9 percent in value against a basket of six major currencies so far this year. The index was last down 0.6 percent on the day at 98.77. White House officials also continued to play down a court ruling that Trump had overstepped his authority by imposing across-the-board duties on imports from US trading partners. Investors will be watching for signs to indicate whether Trump will go ahead with the 50 percent tariff on Wednesday or back off as he has often done before. Safe-haven assets found plenty of demand on Monday, with the likes of the Japanese yen and Swiss franc staging a robust rally, as did gold. There was some speculation about what Ukraine's astonishing attack on Russian air bases might mean for peace talks resuming on Monday. In Poland, nationalist opposition candidate Karol Nawrocki narrowly won a presidential election, delivering a major blow to the centrist government's efforts to cement Warsaw's pro-European orientation. In US markets, S&P 500 futures fell 0.5 percent, while Nasdaq futures lost 0.7 percent, suggesting a retreat at the opening bell later. The S&P had climbed 6.2 percent in May, while the Nasdaq rallied 9.6 percent on hopes that final import levies will be far lower than the sky-high levels initially touted by Trump. Front-running the tariffs has already caused wild swings in the US economy, with a contraction in the first quarter likely turning into a jump this quarter as imports fall back. The Atlanta Fed GDPNow estimate is running at an annualised 3.8 percent for April-June, though analysts assume this will slow sharply in the second half of the year. Data this week on US manufacturing and jobs will offer a timely reading on the pulse of activity, with payrolls seen rising 130,000 in May while unemployment stays at 4.2 percent. A rise in unemployment is one of the few developments that could get the Federal Reserve to start thinking of easing again, with investors having largely given up on a cut this month or next. A move in September is seen at around a 75 percent chance, though Fed officials have stopped well short of endorsing such pricing. Fed Governor Christopher Waller said on Monday that cuts remain possible later this year as he saw downside risks to economic activity and employment and upside risks to inflation from the tariffs. The Senate will this week start considering a tax-and-spending bill that will add an estimated US$3.8 trillion to the federal government's US$36.2 trillion in debt. Across the Atlantic, the European Central Bank is considered almost certain to cut its rates by a quarter point to 2.0 percent on Thursday, while markets will be sensitive to guidance on the chance of another move as early as July. The Bank of Canada meets Wednesday and markets imply a 76 percent chance it will hold rates at 2.75 percent, while sounding dovish on the future given the tariff-fuelled risk of recession there. On Monday, the dollar fell 0.8 percent on the yen to below 143 , and fell 0.6 percent to 0.8179 Swiss francs. The euro was up 0.6 percent to US$1.1423, the most since late April. In commodity markets, gold rallied nearly 2 percent to US$3,353 an ounce, having lost 1.9 percent last week. Brent crude oil rose 2.4 percent to US$64.25 a barrel after OPEC+ decided to increase output in July by the same amount as in each of the prior two months, a relief to some who had feared an even bigger increase. - Reuters
