Latest news with #Russian-run
Yahoo
27-04-2025
- Politics
- Yahoo
Ukraine ‘one step away from nuclear meltdown'
Ukraine has been left 'one step away' from catastrophic nuclear meltdowns because of Russian bombardments of its atomic power stations, the nation's energy minister has warned. Missile attacks on the three nuclear power stations left under Ukrainian control, as well as their associated substations, cables and cooling equipment, are putting Europe at risk of a cloud of nuclear radiation escaping into the atmosphere, according to German Galushchenko, who oversees Ukraine's energy systems. 'Russia has been attacking the substations supplying independent cooling power to the nuclear station. So when there is destruction of these power supplies, the nuclear units go into an emergency shutdown regime,' he said. 'The electricity for cooling then has to be supplied by a reserve diesel generator – but this is dangerous [because reserve generators can fail]. 'We have been one step short of a nuclear meltdown many times now.' Mr Galushchenko's warning came after attending a global energy summit in London last week, where he compared the potential impact of such a meltdown with Japan's nuclear catastrophe of 2011, when an earthquake severed the back-up power lines to the Fukushima nuclear power station. Fukushima's back-up diesel generators were then destroyed by a tsunami linked to the same earthquake, meaning there was no reserve cooling power. The result was an explosion and release of a giant radiation cloud. Mr Galushchenko warned that Russian bombardments of Ukraine's nuclear stations risked triggering exactly the same train of events – and has raised his concerns in confidential warnings to the International Atomic Energy Agency (IAEA). He and his staff have even begun holding training exercises to deal with such an event, using weather and wind forecasts to work out which parts of Europe could be affected. 'Each time it depends on, on the humidity and the winds as to how far this cloud of radiation could go, but they include central Europe, Turkey, Romania, Bulgaria, Russia and of course Ukraine. It's a horrible story,' he said. Europe has already experienced two such disasters. An explosion at the Russian-run Chernobyl nuclear power station in Ukraine in 1986 sent a plume of radioactivity across Western Europe including the UK. Rainfall then deposited radioactive dust across upland areas of Wales, Cumbria, Scotland and Northern Ireland, where grazing sheep became so radioactive they were deemed too dangerous to eat. A similar disaster occurred at the UK's own Windscale plant – now renamed Sellafield – in 1957 contaminating much of northern England, and forcing a ban on milk production because it had become radioactive. Ukraine has four nuclear power plants with a total of 15 operating reactors, plus adjacent stockpiles of used fuel rods and other radioactive waste. Two are in the west – Khmelnytskyi and Rivne – while the third is in the South, north of Odesa and nearer the front lines. Zaporizhzhia, the furthest east, has already been captured by the Russians, but is still close to the front lines with multiple reports of drone and artillery attacks around the reactors and waste stores. The IAEA has issued multiple warnings about the risk of a nuclear disaster caused by the Ukraine conflict, reporting drone attacks on the south Ukraine plant and another at Zaporizhzhia that punched a hole in a radioactive waste store. It has also been co-ordinating deliveries of safety equipment from across the EU and the UK in preparation for any disaster, warning two weeks ago: 'At Ukraine's nuclear sites, frequent air raid alarms and the sound of explosions in the distance continued to highlight persistent risks to nuclear safety.' On Thursday, Rafael Grossi, the IAEA director general, issued a further warning. 'What was once virtually unimaginable – evidence of military action in the vicinity of a major nuclear facility – has become a near daily occurrence and a regular part of life at Europe's largest nuclear power plant,' he said. 'From a nuclear safety perspective, this is clearly not a sustainable situation. We are doing everything we can to prevent a nuclear accident during this tragic war,' Mr Galushchenko has told the IAEA that Russia's attacks are setting the stage for a European-wide nuclear catastrophe – and that such an event would also risk killing off any hopes of a renaissance for nuclear energy in Europe. 'I have discussed this many times with the IAEA's board of governors where there is a Russian delegate also present, but the Russians always say that nuclear power stations are legitimate targets,' he said. 'We are here [in London] to discuss the global renaissance of the nuclear industry because it is low-carbon energy. But if an accident like this happens it could stop the renaissance. Totally stop. 'So this is an issue not just for Ukraine – it's a game of fire which the Russians are playing.' Mr Galushchenko, 51, trained as a lawyer and economist before becoming Ukraine's energy minister in 2021, prior to Russia's invasion. Unlike his boss, Volodymyr Zelensky, he makes a point of wearing immaculate suits to international meetings – but he also has come too close to the conflict for comfort. 'We were visiting a power site for one meeting and delayed the time by half an hour [for security reasons] and the venue was hit by a missile. We were so lucky,' he said. 'The Russians mostly use ballistic missiles, and there is very short time between launching and impact – they are very quick. So there is often no chance to run.' Others have not been so lucky. 'We have had more than 160 of our energy staff killed and more than 300 wounded, when they are doing their jobs,' Mr Galushchenko added. 'The latest tactic is they attack, wait for us to start repairs and then attack a second time in the same place, knowing that the [civilian] repair brigades are there.' The scale of attacks on Ukrainian energy infrastructure is huge. Since 2022 Russia has seized 18 gigawatts (GW) of Ukraine's original 58GW of power generation capacity. This includes six thermal power plants as well as Zaporizhzhia, which produced 6GW before the war forced it to shut down. Missile and drone attacks have also destroyed the Kakhovka hydroelectric power plant, near the southern city of Dnipro. Targeted shelling of critical energy infrastructure, which began in the autumn of 2022, means more than 63,000 pieces of energy equipment have been destroyed or damaged including all major high-voltage substations. During the winter of 2022 and early 2023, an average of 3.3m households were without electricity, prompting the UK and Nato allies to send the country thousands of power generators. Such responses have halted the widespread blackouts but the attacks on energy infrastructure are relentless. Compared to the crisis faced by Ukraine and Mr Galushchenko, the problems for the UK – and Ed Miliband, the Energy Secretary, in particular – may seem trivial. But he warns that this could change. Britain, he points out, is massively reliant on a complex network of subsea pipelines and cables. One pipeline alone, the Langeled, connecting Norway to the UK, brings up to a quarter of the UK's gas supplies. For electricity, a network of nine interconnectors bring up to 22pc of our power from European neighbours. Mr Galushchenko warned that an increase in tensions could prompt Russia to attack any of these covertly, leaving the UK instantly at risk of blackouts and gas shortages. 'Russia always uses energy as a weapon. That's obvious from history – it goes back to Soviet Union times,' he said. The energy minister was in the UK with two key messages. His first is a plea to keep the pressure on Russia by maintaining sanctions and not allowing Putin's regime back into the energy sector. His second request is for Britain to help rebuild Ukraine, saying it had already helped greatly by supplying 1,000 generators when war was declared, as well as uranium to keep its reactors fuelled. 'One day this war will be over and we will be thinking about the recovery,' he said. 'That would probably be the biggest rebuilding since the Second World War. And we want British companies to help us rebuild. 'The countries which stayed with Ukraine from the beginning should come first.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Telegraph
27-04-2025
- Politics
- Telegraph
Ukraine ‘one step away from nuclear meltdown', warns energy minister
Ukraine has been left 'one step away' from catastrophic nuclear meltdowns because of Russian bombardments of its atomic power stations, the nation's energy minister has warned. Missile attacks on the three nuclear power stations left under Ukrainian control, as well as their associated substations, cables and cooling equipment, are putting Europe at risk of a cloud of nuclear radiation escaping into the atmosphere, according to German Galushchenko, who oversees Ukraine's energy systems. 'Russia has been attacking the substations supplying independent cooling power to the nuclear station. So when there is destruction of these power supplies, the nuclear units go into an emergency shutdown regime,' he said. 'The electricity for cooling then has to be supplied by a reserve diesel generator – but this is dangerous [because reserve generators can fail]. 'We have been one step short of a nuclear meltdown many times now.' Mr Galushchenko's warning came after attending a global energy summit in London last week, where he compared the potential impact of such a meltdown with Japan's nuclear catastrophe of 2011, when an earthquake severed the back-up power lines to the Fukushima nuclear power station. Fukushima's back-up diesel generators were then destroyed by a tsunami linked to the same earthquake, meaning there was no reserve cooling power. The result was an explosion and release of a giant radiation cloud. Mr Galushchenko warned that Russian bombardments of Ukraine's nuclear stations risked triggering exactly the same train of events – and has raised his concerns in confidential warnings to the International Atomic Energy Agency (IAEA). He and his staff have even begun holding training exercises to deal with such an event, using weather and wind forecasts to work out which parts of Europe could be affected. 'Each time it depends on, on the humidity and the winds as to how far this cloud of radiation could go, but they include central Europe, Turkey, Romania, Bulgaria, Russia and of course Ukraine. It's a horrible story,' he said. Playing with fire Europe has already experienced two such disasters. An explosion at the Russian-run Chernobyl nuclear power station in Ukraine in 1986 sent a plume of radioactivity across Western Europe including the UK. Rainfall then deposited radioactive dust across upland areas of Wales, Cumbria, Scotland and Northern Ireland, where grazing sheep became so radioactive they were deemed too dangerous to eat. A similar disaster occurred at the UK's own Windscale plant – now renamed Sellafield – in 1957 contaminating much of northern England, and forcing a ban on milk production because it had become radioactive. Ukraine has four nuclear power plants with a total of 15 operating reactors, plus adjacent stockpiles of used fuel rods and other radioactive waste. Two are in the west – Khmelnytskyi and Rivne – while the third is in the South, north of Odesa and nearer the front lines. Zaporizhzhia, the furthest east, has already been captured by the Russians, but is still close to the front lines with multiple reports of drone and artillery attacks around the reactors and waste stores. The IAEA has issued multiple warnings about the risk of a nuclear disaster caused by the Ukraine conflict, reporting drone attacks on the south Ukraine plant and another at Zaporizhzhia that punched a hole in a radioactive waste store. It has also been co-ordinating deliveries of safety equipment from across the EU and the UK in preparation for any disaster, warning two weeks ago: 'At Ukraine's nuclear sites, frequent air raid alarms and the sound of explosions in the distance continued to highlight persistent risks to nuclear safety.' On Thursday, Rafael Grossi, the IAEA director general, issued a further warning. 'What was once virtually unimaginable – evidence of military action in the vicinity of a major nuclear facility – has become a near daily occurrence and a regular part of life at Europe's largest nuclear power plant,' he said. 'From a nuclear safety perspective, this is clearly not a sustainable situation. We are doing everything we can to prevent a nuclear accident during this tragic war,' Mr Galushchenko has told the IAEA that Russia's attacks are setting the stage for a European-wide nuclear catastrophe – and that such an event would also risk killing off any hopes of a renaissance for nuclear energy in Europe. 'I have discussed this many times with the IAEA's board of governors where there is a Russian delegate also present, but the Russians always say that nuclear power stations are legitimate targets,' he said. 'We are here [in London] to discuss the global renaissance of the nuclear industry because it is low-carbon energy. But if an accident like this happens it could stop the renaissance. Totally stop. 'So this is an issue not just for Ukraine – it's a game of fire which the Russians are playing.' Relentless attacks Mr Galushchenko, 51, trained as a lawyer and economist before becoming Ukraine's energy minister in 2021, prior to Russia's invasion. Unlike his boss, Volodymyr Zelensky, he makes a point of wearing immaculate suits to international meetings – but he also has come too close to the conflict for comfort. 'We were visiting a power site for one meeting and delayed the time by half an hour [for security reasons] and the venue was hit by a missile. We were so lucky,' he said. 'The Russians mostly use ballistic missiles, and there is very short time between launching and impact – they are very quick. So there is often no chance to run.' Others have not been so lucky. 'We have had more than 160 of our energy staff killed and more than 300 wounded, when they are doing their jobs,' Mr Galushchenko added. 'The latest tactic is they attack, wait for us to start repairs and then attack a second time in the same place, knowing that the [civilian] repair brigades are there.' The scale of attacks on Ukrainian energy infrastructure is huge. Since 2022 Russia has seized 18 gigawatts (GW) of Ukraine's original 58GW of power generation capacity. This includes six thermal power plants as well as Zaporizhzhia, which produced 6GW before the war forced it to shut down. Missile and drone attacks have also destroyed the Kakhovka hydroelectric power plant, near the southern city of Dnipro. Targeted shelling of critical energy infrastructure, which began in the autumn of 2022, means more than 63,000 pieces of energy equipment have been destroyed or damaged including all major high-voltage substations. During the winter of 2022 and early 2023, an average of 3.3m households were without electricity, prompting the UK and Nato allies to send the country thousands of power generators. Such responses have halted the widespread blackouts but the attacks on energy infrastructure are relentless. UK vulnerabilities Compared to the crisis faced by Ukraine and Mr Galushchenko, the problems for the UK – and Ed Miliband, the Energy Secretary, in particular – may seem trivial. But he warns that this could change. Britain, he points out, is massively reliant on a complex network of subsea pipelines and cables. One pipeline alone, the Langeled, connecting Norway to the UK, brings up to a quarter of the UK's gas supplies. For electricity, a network of nine interconnectors bring up to 22pc of our power from European neighbours. Mr Galushchenko warned that an increase in tensions could prompt Russia to attack any of these covertly, leaving the UK instantly at risk of blackouts and gas shortages. 'Russia always uses energy as a weapon. That's obvious from history – it goes back to Soviet Union times,' he said. The energy minister was in the UK with two key messages. His first is a plea to keep the pressure on Russia by maintaining sanctions and not allowing Putin's regime back into the energy sector. His second request is for Britain to help rebuild Ukraine, saying it had already helped greatly by supplying 1,000 generators when war was declared, as well as uranium to keep its reactors fuelled. 'One day this war will be over and we will be thinking about the recovery,' he said. 'That would probably be the biggest rebuilding since the Second World War. And we want British companies to help us rebuild. 'The countries which stayed with Ukraine from the beginning should come first.'
Yahoo
07-04-2025
- Business
- Yahoo
Morning Bid: Stocks crater again, no 'ifs' or 'puts'
By Mike Dolan LONDON (Reuters) - What matters in U.S. and global markets today By Mike Dolan, Editor-At-Large, Financial Industry and Financial Markets Forget about those puts. The White House does not seem concerned enough about crashing global stock prices to reverse its massive trade tariffs, and the Federal Reserve appears in no hurry to deliver rapid interest rate cuts. So the market sell off deepens and threatens to turn into a crash. I'll discuss all the market mayhem and then explore some competing history lessons on trade and explain why they may be bad news for U.S. Big Tech mega stocks. Today's Market Minute * On Sunday, Trump indicated he was not concerned about losses that have already wiped out trillions of dollars in value from share markets around the world. "I don't want anything to go down. But sometimes you have to take medicine to fix something," he said. * Taiwan stocks plummeted almost 10% on Monday, the biggest one-day percentage fall on record. Taiwan's president has taken to X to pledge a "golden age" of shared prosperity with the U.S. * Some hedge funds say they are offloading all or most of their holdings of stocks as U.S. President Donald Trump's trade war wipes out trillions of dollars of market value and forces them to curtail trading using borrowed cash. * EU countries will seek to present a united front in the coming days against U.S. tariffs, likely approving a first set of targeted countermeasures on up to $28 billion of U.S. imports from dental floss to diamonds. * Fake cosmetics, massage pillows and sex toys. These are some clues pointing to a suspected Russian-run sabotage plot behind parcel explosions in the UK, Germany and Poland last summer, a person with knowledge of the Polish investigation told Reuters. Stocks Crater Again, No 'ifs' or 'puts' Any investor hesitation in offloading expensive U.S. stocks earlier this year was partly due to suspicion that President Donald Trump would pull back or soften his tariff plan in the face of sharp equity market losses. But after the worst week on Wall Street since the pandemic hit in 2020, Trump effectively doubled down on Wednesday's tariff sideswipe against the rest of the world. "Sometimes you have to take medicine to fix something," he said as he returned from a weekend of golf in Florida. S&P 500 futures plunged another 4% at one point on Monday, putting the market on course to enter full-blown bear market territory as losses from recent peaks top 20%. With the VIX 'fear index' of volatility soaring as high as 60 for the first time since August, the whole financial complex is on edge. Global stocks in Asia and Europe tanked again today, with Hong Kong's Hang Seng clocking a 13% loss in its biggest one-day drop since the traumatic emerging markets crisis of 1997. It's now in the red for the year. Treasury yields, however, backed up, as did the dollar, especially against China's yuan. Oil prices fell to their lowest in four years, and both gold and Bitcoin fell too, the latter to its lowest since the election in November. If there is a 'Trump put' in the stock market, the strike price would appear to be much lower than Friday's close. And investors appear set to dump equities until they reach it. The current Washington tariff plan and the unfolding retaliation, such as China's 34% tariffs on all U.S. exports, look likely to sow recession at home and abroad, an outcome that was unthinkable to many people at the start of the year. Goldman Sachs now sees a 45% chance of a U.S. recession this year, effectively a coin toss. JPMorgan last week said there was a 60% chance of a wider global downturn. Time for a Fed rescue then? Much like the imagined Trump put, the 'Fed put' seems out of sight right now. On Friday, Fed Chair Jerome Powell outlined concerns about the trade uncertainty and business anxiety, but he put as much emphasis on the potential inflation spur from tariffs as the possible damage to growth. And he said he saw little in the labor market to warrant early rate cuts. Absent a shift of tone from Trump or Powell or some rowback on promises of trade retaliation, then the most important news for markets in the coming days will come with the corporate earnings season that kicks off in earnest this week. With such seismic uncertainty, investors are likely to see a sweep of downgraded outlooks and profit warnings, which will only add more fuel to the fire. And now I'll explain why U.S. tech firms and banks may find themselves squarely in the crosshairs of this escalating trade war. Tough Tariff History Lesson for US Tech The problem with U.S. President Donald Trump using historical grievances to justify a trade war is that others will do likewise, leaving richly-valued U.S. tech firms and banks in the crosshairs of retaliation. One of the big puzzles about last week's dramatic stock market plunge following the announcement of the sweeping U.S. tariff hikes was that so few investors seemed prepared for it when it was hiding in plain sight. Trump's tariff plans, while at the high end of expectations, were flagged endlessly for months before and after his November 5 election victory. Resulting retaliation from China, Europe, Canada and others was publicly and repeatedly promised too. That it took up to last Thursday for markets to begin to factor in a wider recession is bizarre at best, negligent at worst. Even stranger was that being long U.S. megacap tech stocks was still considered the most crowded trade on the planet as recently as March. And yet by Friday, the once "Magnificent Seven" leaders of the sector were nursing a bear market 25%-plus decline from their post-election peaks in December. It may simply be a case of the most crowded trades emptying out the quickest. But there are other reasons for Big Tech to turn tail. The Rest is History Trump is justifying his decision to impose the highest average U.S. import tariffs in more than a century with a history lesson on how overseas trading partners have "looted, pillaged and raped" America and how often "the friend is worse than the foe." Others have similarly dusted off the spreadsheets and history books, but they find a different narrative. Trump's widely-criticized tariff formula focused solely on trade in goods, not services. But experts point out that this quid pro quo was precisely how the U.S. chose to design the globalized trading system that it's now choosing to unravel. The global dominance of U.S. Big Tech companies, whose stock valuations have skyrocketed for more than a decade, was one of the big prizes Washington secured. Under Pressure In a recent article, trade economist Ricardo Hausmann questioned the administration's sole focus on goods trade, adding that tariff retaliation may be beside the point. "America's economic ties to the rest of the world go far beyond goods. Services and investments are equally – if not more – important. And if that's where its advantages and potential vulnerabilities lie, there is little reason for other countries to retaliate with tariffs." Counter-tariffs certainly might come - China already announced measures on Friday - but this is not where the pain would be felt most. The outsized slide in U.S. tech and bank stocks, as a result, reflects more than just recession fears. Hausmann details how last year's $1.2 trillion U.S. goods trade deficit is only half the story, as there was nearly a $1 trillion U.S. surplus in services like digital, telecommunications and finance, if the repatriated profits of overseas subsidiaries are added back. In effect, America's overall trade is nearly in balance. But given that the value of U.S. investments abroad is estimated to be $16.4 trillion compared to the $374 billion that foreign companies earned in America last year, the former is a much more valuable target for any tit-for-tat reactions than U.S. goods, he said. What's more, U.S. dominance in tech and intellectual property was not an accident. Indeed, it is rooted in the Uruguay Round of trade talks in 1994, when developing countries agreed to enforce rich countries' IP protections in exchange for goods market access. If the U.S. is reneging on the latter, the former may be considered fair game. "While the debate in the U.S. and abroad is focused on tariffs and their impact on prices and exports, other countries will soon begin to wonder whether protecting America's most valuable economic assets - its IP and the global mechanisms that allow it to be monetized - still serves their interests," Hausmann wrote. Emerging economies aside, European leaders - with their multiple grievances against U.S. Big Tech and demands for fairer digital taxation - see this vulnerability too. France, for one, said its companies should pause investments in the U.S. while the situation is clarified. French Finance Minister Eric Lombard also said Paris was working on "a package of responses that can go well beyond tariffs". The European Union's recently adopted "Anti-Coercion Instrument" allows it to limit offending countries' access to public procurement tenders, restrict protection of IP rights or limit financial service firms' access to EU markets. Too hefty to invoke? "Donald Trump buckles under pressure, corrects his announcements under pressure, but the logical consequence is that he must also feel the pressure - and this pressure must now be exerted from Germany, from Europe," German Economy Minister Robert Habeck said on Thursday. The gloves are off. Chart of the day Hong Kong's benchmark Hang Seng stock index was one of the star performers of the year prior to Trump's trade sideswipe last week. But it plunged 13% on Monday, falling into the red for the year to date and recording it biggest one-day drop since the traumatic emerging markets crisis of 1997. Back then, the regional crisis became so severe that the Hong Kong Monetary Authority was eventually forced to intervene to buy equities as part of its defence of the HK dollar peg. Monday's drop unfolded despite the fact that a unit of China's sovereign fund, Central Huijin Investment, bought China-listed stocks to defend market stability. Meanwhile, the Hang Seng Tech Index plummeted 17%, marking its worst single-day performance since records began, bringing the index close to where it began the year before the DeepSeek-inspired rally. Today's events to watch * U.S. February consumer credit * Federal Reserve Board Governor Adriana Kugler speaks Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. (By Mike Dolan; Editing by Anna Szymanski and Bernadette Baum)
Reuters
07-04-2025
- Business
- Reuters
Morning Bid: Stocks crater again, no 'ifs' or 'puts'
LONDON, April 7 (Reuters) - Forget about those puts. The White House does not seem concerned enough about crashing global stock prices to reverse its massive trade tariffs, and the Federal Reserve appears in no hurry to deliver rapid interest rate cuts. So the market sell off deepens and threatens to turn into a crash. I'll discuss all the market mayhem and then explore some competing history lessons on trade and explain why they may be bad news for U.S. Big Tech mega stocks. Today's Market Minute * On Sunday, Trump indicated he was not concerned about losses that have already wiped out trillions of dollars in value from share markets around the world."I don't want anything to go down. But sometimes you have to take medicine to fix something," he said. * Taiwan stocks plummeted almost 10% on Monday, the biggest one-day percentage fall on record. Taiwan's president has taken to X to pledge a "golden age" of shared prosperity with the U.S. * Some hedge funds say they are offloading all or most of their holdings of stocks as U.S. President Donald Trump's trade war wipes out trillions of dollars of market value and forces them to curtail trading using borrowed cash. * EU countries will seek to present a united front in the coming days against U.S. tariffs, likely approving a first set of targeted countermeasures on up to $28 billion of U.S. imports from dental floss to diamonds. * Fake cosmetics, massage pillows and sex toys. These are some clues pointing to a suspected Russian-run sabotage plot behind parcel explosions in the UK, Germany and Poland last summer, a person with knowledge of the Polish investigation told Reuters. Stocks Crater Again, No 'ifs' or 'puts' Any investor hesitation in offloading expensive U.S. stocks earlier this year was partly due to suspicion that President Donald Trump would pull back or soften his tariff plan in the face of sharp equity market losses. But after the worst week on Wall Street since the pandemic hit in 2020, Trump effectively doubled down on Wednesday's tariff sideswipe against the rest of the world. "Sometimes you have to take medicine to fix something," he said as he returned from a weekend of golf in Florida. S&P 500 futures plunged another 4% at one point on Monday, putting the market on course to enter full-blown bear market territory as losses from recent peaks top 20%. With the VIX (.VIX), opens new tab 'fear index' of volatility soaring as high as 60 for the first time since August, the whole financial complex is on edge. Global stocks in Asia and Europe tanked again today, with Hong Kong's Hang Seng (.HSI), opens new tab clocking a 13% loss in its biggest one-day drop since the traumatic emerging markets crisis of 1997. It's now in the red for the year. Treasury yields , however, backed up, as did the dollar (.DXY), opens new tab, especially against China's yuan . Oil prices fell to their lowest in four years, and both gold and Bitcoin fell too, the latter to its lowest since the election in November. If there is a 'Trump put' in the stock market, the strike price would appear to be much lower than Friday's close. And investors appear set to dump equities until they reach it. The current Washington tariff plan and the unfolding retaliation, such as China's 34% tariffs on all U.S. exports, look likely to sow recession at home and abroad, an outcome that was unthinkable to many people at the start of the year. Goldman Sachs now sees a 45% chance of a U.S. recession this year, effectively a coin toss. JPMorgan last week said there was a 60% chance of a wider global downturn. Time for a Fed rescue then? Much like the imagined Trump put, the 'Fed put' seems out of sight right now. On Friday, Fed Chair Jerome Powell outlined concerns about the trade uncertainty and business anxiety, but he put as much emphasis on the potential inflation spur from tariffs as the possible damage to growth. And he said he saw little in the labor market to warrant early rate cuts. Absent a shift of tone from Trump or Powell or some rowback on promises of trade retaliation, then the most important news for markets in the coming days will come with the corporate earnings season that kicks off in earnest this week. With such seismic uncertainty, investors are likely to see a sweep of downgraded outlooks and profit warnings, which will only add more fuel to the fire. And now I'll explain why U.S. tech firms and banks may find themselves squarely in the crosshairs of this escalating trade war. Tough Tariff History Lesson for US Tech The problem with U.S. President Donald Trump using historical grievances to justify a trade war is that others will do likewise, leaving richly-valued U.S. tech firms and banks in the crosshairs of retaliation. One of the big puzzles about last week's dramatic stock market plunge following the announcement of the sweeping U.S. tariff hikes was that so few investors seemed prepared for it when it was hiding in plain sight. Trump's tariff plans, while at the high end of expectations, were flagged endlessly for months before and after his November 5 election victory. Resulting retaliation from China, Europe, Canada and others was publicly and repeatedly promised too. That it took up to last Thursday for markets to begin to factor in a wider recession is bizarre at best, negligent at worst. Even stranger was that being long U.S. megacap tech stocks was still considered the most crowded trade on the planet as recently as March. And yet by Friday, the once "Magnificent Seven" leaders of the sector were nursing a bear market 25%-plus decline from their post-election peaks in December. It may simply be a case of the most crowded trades emptying out the quickest. But there are other reasons for Big Tech to turn tail. The Rest is History Trump is justifying his decision to impose the highest average U.S. import tariffs in more than a century with a history lesson on how overseas trading partners have "looted, pillaged and raped" America and how often "the friend is worse than the foe." Others have similarly dusted off the spreadsheets and history books, but they find a different narrative. Trump's widely-criticized tariff formula focused solely on trade in goods, not services. But experts point out that this quid pro quo was precisely how the U.S. chose to design the globalized trading system that it's now choosing to unravel. The global dominance of U.S. Big Tech companies, whose stock valuations have skyrocketed for more than a decade, was one of the big prizes Washington secured. Under Pressure In a recent article, trade economist Ricardo Hausmann, opens new tab questioned the administration's sole focus on goods trade, adding that tariff retaliation may be beside the point. "America's economic ties to the rest of the world go far beyond goods. Services and investments are equally – if not more – important. And if that's where its advantages and potential vulnerabilities lie, there is little reason for other countries to retaliate with tariffs." Counter-tariffs certainly might come - China already announced measures on Friday - but this is not where the pain would be felt most. The outsized slide in U.S. tech and bank stocks, as a result, reflects more than just recession fears. Hausmann details how last year's $1.2 trillion U.S. goods trade deficit is only half the story, as there was nearly a $1 trillion U.S. surplus in services like digital, telecommunications and finance, if the repatriated profits of overseas subsidiaries are added back. In effect, America's overall trade is nearly in balance. But given that the value of U.S. investments abroad is estimated to be $16.4 trillion compared to the $374 billion that foreign companies earned in America last year, the former is a much more valuable target for any tit-for-tat reactions than U.S. goods, he said. What's more, U.S. dominance in tech and intellectual property was not an accident. Indeed, it is rooted in the Uruguay Round of trade talks in 1994, when developing countries agreed to enforce rich countries' IP protections in exchange for goods market access. If the U.S. is reneging on the latter, the former may be considered fair game. "While the debate in the U.S. and abroad is focused on tariffs and their impact on prices and exports, other countries will soon begin to wonder whether protecting America's most valuable economic assets - its IP and the global mechanisms that allow it to be monetized - still serves their interests," Hausmann wrote. Emerging economies aside, European leaders - with their multiple grievances against U.S. Big Tech and demands for fairer digital taxation - see this vulnerability too. France, for one, said its companies should pause investments in the U.S. while the situation is clarified. French Finance Minister Eric Lombard also said Paris was working on "a package of responses that can go well beyond tariffs". The European Union's recently adopted"Anti-Coercion Instrument" allows it to limit offending countries' access to public procurement tenders, restrict protection of IP rights or limit financial service firms' access to EU markets. Too hefty to invoke? "Donald Trump buckles under pressure, corrects his announcements under pressure, but the logical consequence is that he must also feel the pressure - and this pressure must now be exerted from Germany, from Europe," German Economy Minister Robert Habeck said on Thursday. The gloves are off. Chart of the day Hong Kong's benchmark Hang Seng stock index (.HSI), opens new tab was one of the star performers of the year prior to Trump's trade sideswipe last week. But it plunged 13% on Monday, falling into the red for the year to date and recording it biggest one-day drop since the traumatic emerging markets crisis of 1997. Back then, the regional crisis became so severe that the Hong Kong Monetary Authority was eventually forced to intervene to buy equities as part of its defence of the HK dollar peg. Monday's drop unfolded despite the fact that a unit of China's sovereign fund, Central Huijin Investment, bought China-listed stocks to defend market stability. Meanwhile, the Hang Seng Tech Index (.HSTECH), opens new tab plummeted 17%, marking its worst single-day performance since records began, bringing the index close to where it began the year before the DeepSeek-inspired rally. Today's events to watch * U.S. February consumer credit * Federal Reserve Board Governor Adriana Kugler speaks Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias. By Mike Dolan; Editing by Anna Szymanski and Bernadette Baum Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
Japan Times
07-04-2025
- Politics
- Japan Times
Sex toys and exploding cosmetics: anatomy of a 'hybrid war' on the West
Fake cosmetics, massage pillows and sex toys. Crude homemade explosives. A Russian known as Warrior. A code word: Mary. These are among the key elements of a suspected Russian-run sabotage plot that led to three parcels being detonated at courier depots in Britain, Germany and Poland last summer, said a person with knowledge of the Polish investigation. The pillows, packed into the parcels with the cosmetics and sex toys, contained hidden homemade incendiary devices made of a cocktail of chemicals including highly reactive magnesium, according to the person familiar with the case, who provided the most granular account yet of the alleged plot. The chemicals were ignited by pre-timed detonators adapted from cheap Chinese electronic gadgets used to track items like lost keys, with the effect enhanced by the tubes of what looked like cosmetics but in fact contained a gel made of flammable compounds including nitromethane, according to the source. "The proceedings in this case concern criminal activities inspired by Russia's GRU," this person said, referring to Moscow's foreign military intelligence agency. The details of the investigation are being reported for the first time, drawing on the account provided by the source close to the Polish case as well as interviews with more than a dozen European security officials. The findings provide a rare insight into how sabotage campaigns play out on the ground. European security chiefs made the parcel fires public in October, describing them as part of a "hybrid war" being waged by Russia to destabilize the functioning of countries that support Ukraine, involving tactics like arson and cyberattacks. They said the parcels — which caught alight in warehouses, causing fires but not hurting anyone — were a dry run for a future Russian plot to detonate similar packages in midair on cargo flights to the United States and Canada. "With the war in Ukraine, these attacks have intensified, they became more frequent, more assertive," said Nicu Popescu, Moldova's deputy prime minister and foreign secretary until early last year and now distinguished policy fellow at the European Council on Foreign Relations think tank. "Of course, this poses a risk to people, to citizens across the European Union." Poland's National Prosecutor's Office headquarters in Warsaw | REUTERS The Kremlin rejected the accusation of Russia having a hand in the fires. "We know nothing about it," said spokesman Dmitry Peskov. "We do not rule out that this is just more fake news or a manifestation of blind Russophobia." The Kremlin said European allegations of a Russian sabotage or hybrid campaign were wholly unsubstantiated. The GRU didn't respond to a request for comment. The package detonations took place on July 19, 20 and 21 in the British city of Birmingham, Leipzig in Germany and near the Polish capital Warsaw. Two EU security officials with knowledge of alleged attacks, who requested anonymity to discuss sensitive information, said the Polish cell was typical of Russian intelligence's methods. Russian handlers often recruit local criminals to carry out their plans, the officials added, giving them basic instructions via Telegram and paying each operative up to a few thousand euros per job. The ingredients and igniters detailed in the case are widely available in stores selling products like fertilizer inputs and pyrotechnics, said Jaroslaw Stelmach, a former bomb-disposal specialist who runs the Safety Project, a consultancy that advises on the security of public buildings among other things. While the small, crude devices might only be able to cause a small fire, they could be difficult to detect, he said. "This is an extremely cheap, very effective, highly anonymous method of producing explosive devices," he added. The Polish prosecution case is based on testimony from at least five suspected members of the alleged sabotage cell as well as the classified findings of security services, according to the person with knowledge of the investigation. The national prosecutor's office said that investigators had also seized a fourth parcel that failed to explode at a Warsaw depot, allowing them to examine the contents intact. Polish investigators allege a Ukrainian named Vladyslav D who lived in southern Poland played a key role in the European dry run, acting on instructions he received on Telegram from a GRU handler whom he knew only as "Warrior", the source said. Polish law doesn't allow the public disclosure of the surnames of people facing criminal charges. However, the suspect's full name — Vladyslav Derkavets — was publicly disclosed in a related court case in Bosnia, where there are no identification restrictions, in which another suspected member of the alleged parcels plot faced extradition to Poland. On July 18, Vladyslav drove an Opel Astra from his home in Katowice across the border to the Lithuanian city of Kaunas where he collected more than a dozen items from the trunk of a parked car, according to the person close to the Polish prosecution case. The 27-year-old drove on to Lithuania's capital Vilnius where he boxed up four packages, each with a pillow plus a few of the cosmetics tubes and sex toys. Before sealing them, he pressed two buttons to activate pre-timed detonation mechanisms, according to the source who said the gadgets were of a type that allowed users to set trigger times from a few seconds to months ahead. On July 19, he handed the parcels over to a man in a park in Vilnius who used the code word "Mary", the person said. The packages were posted on the same day from the city, they added. A sign of the National Prosecutor's Office is seen on its headquarters in Warsaw on March 27. | REUTERS Vladyslav was arrested in Poland in early August and charged with performing terrorist acts on behalf of Russian intelligence. In January, a Warsaw court extended his detention near the capital until May while the investigation continues. Vladyslav was unable to be reached in detention and his court-appointed lawyer said he couldn't comment given his lack of knowledge of the details of the investigation, which is at a pre-trial stage. The national prosecutor's office said that the suspect denied both the charges levelled at him including working for a foreign intelligence agency, and provided "extensive explanations" for his actions which the office said it was unable to disclose because of investigation confidentiality. When questioned after his arrest, Vladyslav told investigators he had been introduced to Warrior by a friend and that they only communicated over Telegram, the source familiar with the investigation said. Polish prosecutors accuse another man, 44-year-old Alexander B, of being part of the same Polish cell as Vladyslav. His task, they say, involved preparing the way for targeting the North American-bound cargo planes by organising for packages of sneakers and clothes to be sent from Warsaw to Washington and Ottawa to gather information about parcel-processing methods and timing. Alexander was the suspect Polish authorities sought to extradite from Bosnia, where he was publicly named in full as Alexander Bezrukavyi, a Russian national from Rostov-on-Don. He told a hearing in Bosnian capital Sarajevo in January that he had no part or knowledge of any plot to target depots or cargo planes. Bezrukavyi lost his extradition battle and was extradited to Poland in February. Reporters were unable to contact him in detention or reach a lawyer acting for him. He has denied the charges levelled against him including working for a foreign intelligence agency, according to the person familiar with the Polish investigation.
