Focus: Europe’s new stimulus package and US investment grade bonds

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Updated 29 May 2020
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Focus: Europe’s new stimulus package and US investment grade bonds

What happened:

Global stock markets were torn between two forces: Firstly, the reopening of the economies in Europe as well as more gradually in certain US states; and secondly the fear of a flaring up of US-China tensions over the National People’s Congress (NPC) waiving through a controversial new security law for Hong Kong against subversion, separatism and treason.

Markets were up through Thursday with reopening optimism prevailing. On Friday futures turned negative in Europe and the US as the anti-China sentiment in Washington turned up a notch.

US first-time jobless claims came in at 2.1 million for the week ending May 22, pushing the overall claims number for the last 10 weeks up to more than 40 million. Consensus estimates for May’s unemployment rate (to be published next week) are around 20 percent, which is the highest since the Great Depression when it was 25.6 percent.

Employment news was grim around the globe. On Thursday, US low-cost airline JetBlue announced it could let go of 30 percent of its workforce and the British budget carrier easyJet earlier made a similar announcement. French motor manufacturer Peugeot announced a cut 14,600 jobs.

In its Beige book, an assessment of economic conditions, the US Federal Reserve pointed out that economic activity continued to fall sharply into May in most of America. Declines were particularly steep in the leisure and hospitality industries amid the coronavirus disease (COVID-19) lockdown. Manufacturing activity was down too with auto, aerospace, and energy-related plants particularly hard hit.

On Thursday, credit rating agency Standard and Poor’s withdrew its investment grade rating from aero engine maker Rolls-Royce after 20 years. Last week the company had announced it would cut 9,000 jobs. Fitch and Moody’s still have Rolls-Royce at BBB+ (two notches above junk) and Baa3 (one notch above junk), respectively.

US President Donald Trump was irritated by Twitter attaching a fact-checking link to two of his tweets, one of them relating to the accuracy of mail-in ballots. He issued an executive order instructing federal regulators to remove the liability shield social media companies enjoy from users’ posts, if said companies engage in censoring or any political conduct. Twitter shares fell 4.4 percent during the regular session on Thursday but recovered some after.

The Lufthansa board has not accepted the 9 billion-euro rescue package it was offered by the German government. The sticking points were the 20 percent equity stake and board representation by the government and the EU directive that the airline give up slots in Frankfurt. The EU’s decision has to be seen in the context of ensuring competition in the sector in light of government intervention.

Focus

EU Package:

President of the European Commission Ursula von der Leyen announced a 750 billion euros package to be processed through the EU’s seven-year budget, the multiannual financial framework (MFF).

It envisages for the commission to issue bonds taking advantage of its AAA rating and all 27 member states to stand behind the bonds, as they do behind the budget. The bonds would have durations of up to 38 years.

The proposal is significant not only in size, but also in structure: Germany and northern states had so far also been opposed to the mutualization of debt while France and southern states had demanded it, especially since the pandemic spread through the continent. It was a controversy which threatened the cohesion of the union.

French President Emmanuel Macron and German Chancellor Angela Merkel had proposed a similar package worth 500 billion euros last week. The European Commission proposal will consist of 250 billion euros in loans and the rest in grants.

Discussions about the MFF (2021-2028) will be heated, with the “frugal four” (Netherlands, Austria, Demark and Sweden) opposing mutualization of debt and demanding that the funds be tied to COVID-19-related expenditure.

Meanwhile von der Leyen has asked for a carbon tax, digital tax, and a border adjustment mechanism for carbon.

US Investment Grade Bonds:

In the US, the investment grade bonds hit a significant milestone surpassing the $1 trillion mark much earlier than in previous years.

This showed two things: On the supply side, even well-capitalized companies wanted to shore up their cash reserves to weather the COVID-19 crisis. On the demand side, there were the Fed’s corona-related bond buying packages and investors who felt safe following the Fed’s policies.

The importance of maintaining liquidity and access to debt markets is important to avoid falling into the insolvency trap. There were more corporate bankruptcies in the US during May than in any other month since the Great Depression.

Where we go from here:

Merkel has proposed another 100 billion-euro package to support the economy coming out of lockdown. The package faces opposition by her own Christian Democratic Union party which does not want to incur more debt.

Later Friday, Trump will announce how he wants to respond to the NPC’s Hong Kong security law.

The US has the legislative framework to do so: The Hong Kong Human Rights and Democracy Act allows it to put Hong Kong’s special trading status under tighter scrutiny over Hong Kong’s autonomy from Beijing. This potentially endangers billions of dollars-worth of trade.

Other sanctions could consist of visa restrictions for targeted individuals or freezing their US assets, and restrictions of visas for Chinese students.

Meanwhile, the UK is considering extending the visa rights of 300,000 British national (overseas) passport holders to fast-track them for UK citizenship.

 

— Cornelia Meyer is a Ph.D.-level economist with 30 years of experience in investment banking and industry. She is chairperson and CEO of business consultancy Meyer Resources.

Twitter: @MeyerResources


What does Biden’s decision to allow Ukraine to use longer-range US weapons mean?

Updated 6 min 49 sec ago
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What does Biden’s decision to allow Ukraine to use longer-range US weapons mean?

  • The ballistic missiles, developed by US aerospace and defense company Lockheed Martin, have nearly double the striking distance — up to 300 kilometers (190 miles) — of most of the weapons in Ukraine’s possession
  • Biden authorized Ukraine to use the ATACMS to strike deeper inside Russia, according to a US official and three other people familiar with the matter

KYIV, Ukraine: The US will allow Ukraine to use American-supplied longer-range weapons to conduct strikes deeper inside Russian territory, a long-sought request by Kyiv.
It isn’t yet clear if there are limits on Ukraine’s use of the Army Tactical Missile System, or ATACMS, as there have been on other US missile systems. Their deployment could — at least initially — be limited to Russia’s Kursk region, where Ukrainian troops seized territory earlier this year.
Since the first year of the war, Ukrainian leaders have lobbied Western allies to allow them to use advanced weapons to strike key targets inside Russia — which they hope would erode Moscow’s capabilities before its troops reach the front line and could make it more difficult for the Russian forces to strike Ukrainian territory. It could also serve as a deterrent force in the event of future ceasefire negotiations.
The US has long opposed the move, with President Joe Biden determined to avoid any escalation that he felt could draw the US and other NATO members into direct conflict with nuclear-armed Russia. The Kremlin warned on Monday that the decision adds “fuel to the fire.”
The decision comes in the waning days of Biden’s presidency, before President-elect Donald Trump assumes office. Trump has said he would bring about a swift end to the war, which many fear could force unpalatable concessions from Kyiv.
What are ATACMS?
The ballistic missiles, developed by US aerospace and defense company Lockheed Martin, have nearly double the striking distance — up to 300 kilometers (190 miles) — of most of the weapons in Ukraine’s possession. They carry a larger payload and have more precise targeting for pinpoint attacks on air fields, ammunition stores and strategic infrastructure.
The United States has supplied Ukraine with dozens of ATACMS (pronounced attack-ems) and they have been used to destroy military targets in Russian-occupied parts of Ukraine such as Crimea — but not on Russian soil.
What is Biden allowing Ukraine to do?
Biden authorized Ukraine to use the ATACMS to strike deeper inside Russia, according to a US official and three other people familiar with the matter.
The longer-range missiles are likely to be used in response to North Korea’s decision to send troops to support Kremlin forces, according to one of the people familiar with the development. Pyongyang’s troops are apparently being deployed to help the Russian army drive Ukrainian forces out of Russia’s Kursk border region, where they launched an incursion in August.
The officials spoke on condition of anonymity because they were not authorized to discuss the US decision publicly.
It was the second time that Washington has expanded Ukraine’s authority to use its US-provided weapons systems inside Russian territory.
In May, after Russia’s offensive into the Kharkiv region threatened to stretch Ukrainian forces thin, Biden permitted the use of HIMARS systems — with a range of 80 kilometers (50 miles) — to quell that advance. That decision helped Ukrainian soldiers stabilize the fight for a time by forcing Russian forces to pull back military assets.
Why does Ukraine need longer-range weapons?
Ukraine has been asking its Western allies for longer-range weapons in order to alter the balance of power in a war where Russia is better resourced, and strike with precision air bases, supply depots and communication centers hundreds of kilometers (miles) over the border.
It hopes the weapons would help blunt Russia’s air power and weaken the supply lines it needs to launch daily strikes against Ukraine and to sustain its military ground offensive into Ukraine.
If used in Kursk, the weapons would likely require Russian forces preparing for counterattacks to push back valuable equipment and manpower and complicate battle plans.
In lieu of Western weapons, Ukraine has been regularly striking Russia with domestically produced weapons, with some capable of traveling up to 1,000 kilometers (620 miles), but still lacks sufficient quantities to do serious long-term harm.
Will the decision change the course of the war?
Ukrainian leaders are being cautious about the announcement — and senior US defense and military leaders have persistently argued that it won’t be a gamechanger. They also have noted that Russia has moved many key assets out of range.
“I don’t believe one capability is going to be decisive and I stand by that comment,” Defense Secretary Lloyd Austin has said, noting that the Ukrainians have other means to strike long-range targets.
Analysts have also suggested the effect could be limited.
“Today, many in the media are talking about the fact that we have received permission to take appropriate actions. But blows are not inflicted with words. Such things are not announced. The rockets will speak for themselves,” said Ukrainian President Volodymyr Zelensky of the announcement.
The effect of the decision depends on the rules set for the weapons’ use.
If strikes are allowed across all of Russia, they could significantly complicate Moscow’s ability to respond to battlefield demands.
If strikes are limited to the Kursk region, Russia could relocate its command centers and air units to nearby regions, blunting the effect of those logistical challenges. That would also mean many of the valuable targets Ukrainian officials have expressed desire to hit may still be beyond reach.
Either way, Pentagon spokesman Lt. Col. Charlie Dietz has noted the ATACMS wouldn’t be the answer to the main threat Ukraine faces from Russian-fired glide bombs, which are being fired from more than 300 kilometers (180 miles) away, beyond the ATACMS’ reach.
In addition, the overall supply of ATACMS is limited, so US officials in the past have questioned whether they could give Ukraine enough to make a difference — though some proponents say that even a few strikes deeper inside Russia would force its military to change deployments and expend more of its resources.
Jennifer Kavanagh, director of military analysis at Defense Priorities, said the US decision would not alter the course of the war.
“To really impose costs on Russia, Ukraine would need large stockpiles of ATACMS, which it doesn’t have and won’t receive because the United States’ own supplies are limited,” she said. “Moreover, the biggest obstacle Ukraine faces is a lack of trained and ready personnel, a challenge that neither the United States nor its European allies can solve and that all the weapons in the world won’t overcome.”
What are the key remaining questions?
In addition to it being unclear what, if any, restrictions the US will impose on the weapons’ use, it’s also not known how many the US will give to Ukraine.
While the US has provided ATACMS to Ukraine in various military aid packages, the Defense Department will not disclose how many have been sent or exactly how many of those missiles the Pentagon has. Estimates suggest the US has a number that is in the low thousands.
The recent American election raises questions over how long this policy will be in place. Trump has repeatedly criticized the Biden administration’s spending to support Ukraine — and could reverse moves like this one.
On the other hand, it’s also not clear whether other allies might step up: The decision may encourage Britain and France to allow Ukraine to use Storm Shadow missiles, also known as SCALP missiles, with a range of 250 kilometers (155 miles).
 

 


Trump appears to be planning to attend SpaceX ‘Starship’ launch scheduled for Tuesday in Texas

Updated 8 min 44 sec ago
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Trump appears to be planning to attend SpaceX ‘Starship’ launch scheduled for Tuesday in Texas

  • Trump frequently regaled audiences on the campaign trail with a dramatic account of the last Starship test

WEST PALM BEACH, Florida: President-elect Donald Trump appears to be planning to attend a SpaceX “Starship” rocket launch on Tuesday, in the latest indication of founder Elon Musk ‘s influence in the Republican’s orbit.
The Federal Aviation Administration has issued temporary flight restrictions over Brownsville and Boca Chica, Texas area for a VIP visit that coincides with the SpaceX launch window for a test of its massive Starship rocket from its launch facility on the Gulf of Mexico. The flight restrictions put in place over Trump’s home in Palm Beach, Florida when he is there will be lifted briefly while the Texas security measures are in place.
Trump’s visit comes as billionaire Musk has been a near-constant presence at Trump’s side as he builds out his administration, attending meetings at Trump’s Mar-a-Lago club, accompanying him to meetings with Capitol Hill Republicans in Washington last week and to a UFC fight in New York on Saturday.
Trump frequently regaled audiences on the campaign trail with a dramatic account of the last Starship test, that included the capture of the booster at its launchpad by a pair of mechanical arms.
Tuesday’s 30-minute launch window opens at 4 p.m. central time, according to the company, with the company again looking to test the landing capture system of the booster in Texas, while the upper stage continues to a splashdown in the Indian Ocean.
Musk pumped an estimated $200 million through his political action committee to help elect Trump and has been named, along with former GOP presidential candidate Vivek Ramaswamy, to lead an advisory committee tasked by Trump to dramatically cut governmental costs and reshape how Washington operates, which has sparked ethics concerns over Musk’s many interests before the federal government.
The Trump transition team did not immediately respond to a request for comment on the president-elect’s plans.


Annual Dubai forum dedicated to futurism explores ways to ‘empower generations’

Updated 9 min 25 sec ago
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Annual Dubai forum dedicated to futurism explores ways to ‘empower generations’

  • Dubai Future Foundation CEO Khalfan Juma Belhoul unpacks the 2024 edition agenda in an exclusive interview with Arab News
  • “In order to have a view on the future, we need to convene and listen to everyone,” he says as Dubai Future Forum gets underway

DUBAI: As the third edition of the Dubai Future Forum kicks off, the UAE’s commercial capital is once again playing host to futurists, visionaries, and thought leaders from across the globe. This year’s event, being held at the city’s iconic Museum of the Future, is expected to draw over 2,500 experts, policymakers and innovators from around 100 countries.

Organized by the Dubai Future Foundation (DFF), the two-day event will feature 150 speakers across 70 sessions, making it the world’s largest gathering dedicated to futurism and foresight.

The agenda for the 2024 edition, entitled “Empowering Generations,” reflects Dubai’s vision to remain at the forefront of global futurism. The discussions will range from harnessing AI and technology for societal good to tackling the challenges of sustainability and human well-being.

The event is the world’s largest gathering dedicated to futurism and foresight. (AN Photo)

Speaking exclusively to Arab News, Khalfan Juma Belhoul, CEO of the DFF, emphasized the forum’s role in positioning Dubai as a leader in future foresight.

“Each year the event differs from the one before. The Dubai Future Forum is an anchor which positions us as leaders in foresight,” he said. “We like to promote the DFF as the headquarters of the future in the world; and in order for us to have a view on the future, we need to convene and listen to everyone.”

Held under the patronage of Sheikh Hamdan bin Mohammed bin Rashid Al-Maktoum, crown prince of Dubai and chairman of the DFF, the annual event aims to explore transformative shifts and identify practical solutions to ensure a better, sustainable future. Now in its third year, the forum continues to evolve.

Belhoul explained that the forum was born out of a vision of UAE Prime Minister and Ruler of Dubai Sheikh Mohammed bin Rashid Al-Maktoum to institutionalize foresight as a key strategy. According to him, when Sheikh Mohammed initially decided that the country needed to institutionalize foresight — something that had not been done before — it was obvious that the first thing that was needed was to find a way to convene a class of people that understood the vision.

FASTFACTS

  • Event Dates: Nov. 19-20, 2024.
  • Participants: 2,500 attendees, 150 speakers, 70 sessions.
  • Key Topics: AI, sustainability, health, longevity, digital economy.
  • Special Guests: Dr. Makoto Suzuki, Amy Webb, Sara Sabry, Paul Saffo, Jordan Nguyen.

“Fast forward to this year, we are talking about the gathering of roughly 2,500 people, 150 speakers, and 70 sessions. The numbers are steadily increasing every year,” Belhoul said. “It makes us proud to host and listen to futurist experts, especially when they speak so fondly about the DFF. We cannot claim to own a view on the future without being inclusive, collaborative, and hearing everyone.”

Conversations at the 2024 edition of the Dubai Future Forum will center on five key themes: Foresight Insights, Transforming Humanity, Optimizing Health, Empowering Generations, and Futuring Nature. The topics align with global priorities, echoing the recent UN Summit of the Future, which focused on forging an international consensus for a better present and future.

Belhoul highlighted the significance of exploring critical topics such as artificial intelligence, sustainability and societal well-being. While themes like AI and Gen AI will be on the agenda, participants will also be actively discussing how they affect communities, nature and job sectors. “If you really focus on what matters to humans, then you realize all of the above are integral components of our conversations,” he said.

Key topics to be discussed at the event include AI, sustainability, health, longevity, and digital economy. (Supplied)

“Of course, we will also be diving deeply into foresight conversations which you can consider as main pillar alongside the other themes.

“They are integral parts of our conversations and they are integral parts of what matters to humans.  We are trying to create a network of like-minded people who can talk about how foresight can be done.”

The event’s focus extends to health and longevity, exploring how technological advancements can improve human well-being. As Belhoul put it, “We have to strike the balance between leveraging technology — which we haven’t yet scratched the surface of, in terms of AI and computing — and ensuring the health and well-being of our people.”

On attendance will be star-studded lineup of global experts and futurists, including the technology forecaster Paul Saffo; Jordan Nguyen, an advocate for technology-driven human enhancement; Amy Webb, CEO of the Future Today Institute; and Sara Sabry, the first female Arab and African astronaut.

One of the most eagerly anticipated speakers is Dr. Makoto Suzuki, who will share his pioneering research on the secrets of longevity.

Conversations at the 2024 edition of the Dubai Future Forum will center on five key themes: Foresight Insights, Transforming Humanity, Optimizing Health, Empowering Generations, and Futuring Nature. (Supplied)

“There is a massive line up that I am looking forward to. Anad while I will not be able to attend all the sessions, I will be listening to them as I am running on my treadmill in the morning,” Belhoul said.

He also expressed excitement about the diversity of speakers, noting how their insights will contribute to the forum’s goal of fostering global collaboration. “While some topics are AI focused, we have people like Nguyen and Webb, who are amazing story tellers. And when you have that kind of style, you attract the audience to listen to you and engage more.”

Belhoul added: “We are trying to create a network of like-minded people who can discuss how foresight can be done. It’s amazing how like-minded we are in the foresight perspective. This validates the importance of working with different networks to create a better future.”

“And how we, as humanity, can overcome the biggest challenges we might face by collectively finding ways to solve big those issues — whether its regulations for AI, solutions for climate crises, or the economic conflicts around the world.”

Khalfan Belhoul, CEO of Dubai Future Foundation. (Supplied)

The first day of the forum will include a series of keynote addresses and thematic panels, with sessions like “From Deep Space to Deep Ocean: A Future of Exploration and Discovery” and “Concepts of Time: How Do They Shape Our Future?” Innovative exchanges in intimate settings will cover everything from deep-sea robotics to the impact of science fiction on future imaginings.

Central to the event will be exploring how foresight can lead to practical solutions for pressing global challenges. Mohammad Abdullah Al-Gergawi, UAE minister of cabinet affairs and managing director of DFF, described the Dubai Future Forum as a crucial platform for fostering international cooperation.

“Rapid transformations in technology, society, and the environment make it essential to continuously revisit our government’s priorities for future readiness,” he said.

The annual event aims to explore transformative shifts and identify practical solutions to ensure a better, sustainable future. (Supplied)

One of the new initiatives at this year’s forum is the “Dubai Future Solutions — Prototypes for Humanity” exhibition, showcasing 100 cutting-edge prototypes designed to address global challenges.

Belhoul underscored the importance of listening to diverse voices and collaborating to shape the future. “We need to find a way to work in harmony when it comes to the digital economy,” he said. “By listening to opinions from all over the world, you get a boost of knowledge as to where the future is headed.”

Reflecting on the forum’s impact, he said: “The DFF is a tool for us to come up with an action plan for the future. By being inclusive and collaborative, we aim to build a world that’s ready for whatever comes next.”

 


Where’s Joe? G20 leaders have group photo without Biden

Updated 18 min 46 sec ago
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Where’s Joe? G20 leaders have group photo without Biden

  • Biden had earlier urged the G20 leaders to support Ukraine’s “sovereignty” in the face of Russia’s 2022 invasion.

RIO DE JANEIRO: Joe Biden headed for a photo with fellow G20 leaders in Rio de Janeiro at his final summit as US president on Monday, only to find they had already taken the picture without him.
Frustrated US officials blamed “logistical issues” for the blunder which meant that Biden missed out on the shot, along with the Canadian and Italian prime ministers.
It came during a South American tour during which Biden’s counterparts have been looking past the outgoing US president in political terms and toward his successor Donald Trump.
Biden’s swan song on the world stage has seen the 81-year-old try to shore up his legacy before Trump potentially takes a wrecking ball to it with his isolationist “America First” foreign policy.
World leaders including Chinese President Xi Jinping, Indian Prime Minister Narendra Modi and French President Emmanuel Macron walked down a red carpeted ramp at Rio’s stunning bayside museum of modern art to the group photo set-up.
They took to a stage, chatted and joked as they gathered to pose against the backdrop of the Brazilian city’s iconic Sugarloaf Mountain. The snap was over in a second.
Biden and Canadian Prime Minister Justin Trudeau then came in from another direction, after a bilateral meeting on the sidelines of the summit, but it was too late and the other leaders had already dispersed.
Italian Prime Minister Giorgia Meloni also missed the picture. She, Biden and Trudeau formed a separate huddle.
“Due to logistical issues, they took the photo early before all the leaders had arrived. So a number of the leaders weren’t actually there,” a US official said on condition of anonymity.
US officials denied that Biden missed the photo — officially for Brazilian President Luiz Inacio Lula da Silva’s launch of an alliance to curb world hunger — to avoid appearing alongside Russia’s Foreign Minister Sergei Lavrov.
Biden had earlier urged the G20 leaders to support Ukraine’s “sovereignty” in the face of Russia’s 2022 invasion.
Russian President Vladimir Putin was conspicuously absent from the Rio summit. His arrest is sought by the International Criminal Court over the Ukraine war.


Moscow warns the US over allowing Ukraine to hit Russian soil with longer-range weapons

Updated 18 November 2024
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Moscow warns the US over allowing Ukraine to hit Russian soil with longer-range weapons

KYIV, Ukraine: The Kremlin warned Monday that President Joe Biden’s decision to let Ukraine strike targets inside Russia with US-supplied longer-range missiles adds “fuel to the fire” of the war and would escalate international tensions even higher.
Biden’s shift in policy added an uncertain, new factor to the conflict on the eve of the 1,000-day milestone since Russia began its full-scale invasion in 2022.
It also came as a Russian ballistic missile with cluster munitions struck a residential area of Sumy in northern Ukraine, killing 11 people and injuring 84 others. Another missile barrage sparked apartment fires in the southern port of Odesa, killing at least 10 people and injuring 43, Ukraine’s Interior Ministry said.
Washington is easing limits on what Ukraine can strike with its American-made Army Tactical Missile System, or ATACMs, US officials told The Associated Press on Sunday, after months of ruling out such a move over fears of escalating the conflict and bringing about a direct confrontation between Russia and NATO.
The Kremlin was swift in its condemnation.
“It is obvious that the outgoing administration in Washington intends to take steps and they have been talking about this, to continue adding fuel to the fire and provoking further escalation of tensions around this conflict,” said spokesman Dmitry Peskov.
The scope of the new firing guidelines isn’t clear. But the change came after the US, South Korea and NATO said North Korean troops are in Russia and apparently are being deployed to help Moscow drive Ukrainian troops from Russia’s Kursk border region.
Biden’s decision almost entirely was triggered by North Korea’s entry into the fight, according to a US official who spoke on condition of anonymity to discuss internal deliberations, and was made just before he left for the annual Asia-Pacific Economic Cooperation summit in Peru.
Russia also is slowly pushing Ukraine’s outnumbered army backward in the eastern Donetsk region. It has also conducted a devastating aerial campaign against civilian areas in Ukraine.
Peskov referred journalists to a statement from President Vladimir Putin in September in which he said allowing Ukraine to target Russia would significantly raise the stakes.
It would change “the very nature of the conflict dramatically,” Putin said at the time. “This will mean that NATO countries — the United States and European countries — are at war with Russia.”
Peskov claimed that Western countries supplying longer-range weapons also provide targeting services to Kyiv. “This fundamentally changes the modality of their involvement in the conflict,” he said.
Putin warned in June that Moscow could provide longer-range weapons to others to strike Western targets if NATO allowed Ukraine to use its allies’ arms to attack Russian territory. After signing a treaty with North Korea, Putin issued an explicit threat to provide weapons to Pyongyang, noting Moscow could mirror Western arguments that it’s up to Ukraine to decide how to use them.
“The Westerners supply weapons to Ukraine and say: ‘We do not control anything here anymore and it does not matter how they are used.’” Putin had said. “Well, we can also say: ‘We supplied something to someone — and then we do not control anything.’ And let them think about it.”
Putin had also reaffirmed Moscow’s readiness to use nuclear weapons if it sees a threat to its sovereignty.
Biden’s move will “mean the direct involvement of the United States and its satellites in military action against Russia, as well as a radical change in the essence and nature of the conflict,” Russia’s Foreign Ministry said.
President-elect Donald Trump, who takes office Jan. 20, has raised uncertainty about whether his administration would continue military support to Ukraine. He has also vowed to end the war quickly.
Ukrainian President Volodymyr Zelensky gave a muted response Sunday to the approval that he and his government have been requesting for over a year, adding, “The missiles will speak for themselves.”
Consequences of the new policy are uncertain. ATACMS, which have a range of about 300 kilometers (190 miles), can reach far behind the about 1,000-kilometer (600-mile) front line in Ukraine, but they have relatively short range compared with other types of ballistic and cruise missiles.
The policy change came “too late to have a major strategic effect,” said Patrick Bury, a senior associate professor in security at the University of Bath in the United Kingdom.
“The ultimate kind of impact it will have is to probably slow down the tempo of the Russian offensives which are now happening,” he said, adding that Ukraine could strike targets in Kursk or logistics hubs or command headquarters.
Jennifer Kavanagh, director of military analysis at Defense Priorities, agreed the US move would not alter the war’s course, noting Ukraine “would need large stockpiles of ATACMS, which it doesn’t have and won’t receive because the United States’ own supplies are limited.”
On a political level, the move “is a boost to the Ukrainians and it gives them a window of opportunity to try and show that they are still viable and worth supporting” as Trump prepares to take office, said Matthew Savill, director of Military Sciences at the Royal United Services Institute in London.
The cue for the policy change was the arrival in Russia of North Korean troops, according to Glib Voloskyi, an analyst at the CBA Initiatives Center, a Kyiv-based think tank.
“This is a signal the Biden administration is sending to North Korea and Russia, indicating that the decision to involve North Korean units has crossed a red line,” he said.
Russian lawmakers and state media bashed the West for what they called an escalatory step, threatening a harsh response.
“Biden, apparently, decided to end his presidential term and go down in history as ‘Bloody Joe,’” lawmaker Leonid Slutsky told Russian news agency RIA Novosti.
Vladimir Dzhabarov, deputy head of the foreign affairs committee in the upper house of parliament, called it “a very big step toward the start of World War III” and an attempt to “reduce the degree of freedom for Trump.”
Russian newspapers offered similar predictions of doom. “The madmen who are drawing NATO into a direct conflict with our country may soon be in great pain,” Rossiyskaya Gazeta said.
Some NATO allies welcomed the move.
President Andrzej Duda of Poland, which borders Ukraine, praised the decision as a “very important, maybe even a breakthrough moment” in the war.
“In the recent days, we have seen the decisive intensification of Russian attacks on Ukraine, above all, those missile attacks where civilian objects are attacked, where people are killed, ordinary Ukrainians,” Duda said.
Easing restrictions on Ukraine was “a good thing,” said Foreign Minister Margus Tsahkna of Russian neighbor Estonia.
“We have been saying that from the beginning — that no restrictions must be put on the military support,” he told senior European Union diplomats in Brussels. “And we need to understand that situation is more serious (than) it was even maybe like a couple of months ago.”
But Slovakian Prime Minister Robert Fico, known for his pro-Russian views, described Biden’s decision as “an unprecedented escalation” that would prolong the war.