Ukraine and Russia Exchange Hundreds More Prisoners of War

Ukraine and Russia struck a deal that will see 1,000 prisoners exchanged from each side following the first direct talks between Kyiv and Moscow in nearly three years. Photo: Valentyn Ogirenko/Reuters

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19 minutes ago

Armenian prime minister to meet Erdogan in rare visit to Turkey aimed at mending ties

ISTANBUL -- Armenian Prime Minister Nikol Pashinyan is scheduled to hold talks with Turkish President Recep Tayyip Erdogan on Friday as part of the two countries' efforts to normalize ties that were strained over historic disputes and Turkey's alliance with Azerbaijan. The talks between the two countries, which have no formal diplomatic ties, were expected to center on the possible reopening of their joint border as well as the war between Israel and Iran. Turkey, a close ally of Azerbaijan, shut down its border with Armenia in 1993 in a show of solidarity with Baku, which was locked in a conflict with Armenia over the Nagorno-Karabakh region. In 2020, Turkey strongly backed Azerbaijan in the six-week conflict with Armenia over Nagorno-Karabakh, which ended with a Russia-brokered peace deal that saw Azerbaijan gain control of a significant part of the region. Turkey and Armenia also have a more than century-old dispute over the deaths of an estimated 1.5 million Armenians in massacres, deportations and forced marches that began in 1915 in Ottoman Turkey. Historians widely view the event as genocide. Turkey vehemently rejects the label, conceding that many died in that era but insisting that the death toll is inflated and the deaths resulted from civil unrest. The rare visit by an Armenian leader comes after Ankara and Yerevan agreed in 2021 to launch efforts toward normalizing ties and appointed special representatives to lead talks. Pashinyan previously visited Turkey in 2023 when he attended a presidential inauguration ceremony following an election victory by Erdogan. The two have also held talks on the sideline of a meeting in Prague in 2022. It is Ankara and Yerevan's second attempt at reconciliation. Turkey and Armenia reached an agreement in 2009 to establish formal relations and to open their border, but the deal was never ratified because of strong opposition from Azerbaijan.

Politico

26 minutes ago

• Politico

How the Israel-Iran conflict could hit the economy

Presented by As the U.S. weighs intervention in Israel's conflict with Iran, Wall Street has been skittish, eyeing the potential fallout for oil prices and inflation. To get a better sense of what's driving the oil market and what economic risks might lie ahead, MM caught up with Rory Johnston, an oil market analyst at research service Commodity Context who's been following all of this closely. A takeaway from that conversation: The price jump has been notably large for a market that has become desensitized to political risks after safely weathering multiple shocks over the last few years, including Covid and the Russia-Ukraine war. Now, 'even a numb cynical oil market sees Israel bombing Tehran and says, 'OK, maybe worry a bit here,'' he said. Conflict with Iran is the 'No. 1 risk scenario that people talk about, and now we're living in it,' he added. A worst-case scenario would be if Tehran is driven to close off the Strait of Hormuz, a channel through which about a fifth of the world's oil passes. Experts including Johnston say it's unlikely Iran would do that unless pushed to the brink — such a move would run the risk of hurting its own economic lifeline, as well as antagonizing its neighbors in the region — but the shockwaves would be significant. For now, what struck your host is that this conflict is helping prop up prices at a time when they'd really started to drop, and that could help boost U.S. oil production, which had previously been forecast to contract in 2026. But the exact trajectory of all this is highly unclear. 'This is usually the lead-up to summer driving season, so gasoline prices were set to rise anyway,' POLITICO's resident oil market expert Ben Lefebvre told MM. 'Because of the current Middle East situation, they'll rise further than they might have when oil was still around $60 a barrel. But when compared to what U.S. drivers experienced even last year, it won't be too far off recent norms … if there is such a thing as 'recent norms.'' 'The interesting thing is whether this spurs U.S. oil companies to drill more,' he added. 'They might just see this as a temporary boost and not something they want to get too far ahead of.' Rewind to before the current Israel-Iran conflict escalated. OPEC, the cartel of major oil-exporting countries, had been holding back production but then ramped up output earlier this year. That move was taken, in part, to get ahead of the effects of President Donald Trump's tariffs, which had raised fears that demand for oil would crater amid a global slowdown. That was leading to forecasts of oversupply later this year, Johnston said, reducing incentives for oil companies to produce. Now, Israel's attacks on Iran have likely led to fear-buying, as well as speculative trading, that has pushed up prices as much as 15 percent. Fighting so far has spared infrastructure that would significantly crimp the outflow of crude. 'While theoretically on its face, nothing that's happened so far has changed anything physical about supply and demand, part of the way … price formation has occurred is you have physical participants — a refinery, whatever — that's all of a sudden worried they're not going to be able to get cargos next month or the month after,' Johnston said. For prices to stay high or go higher, there likely would have to be some actual damage to key oil infrastructure, he said. But in the meantime, the scope for economic disruption is still significant. The largest price increases have been for diesel, a key input for shipping and therefore a potential risk to inflation in many sectors. 'It might not seem as harsh at the pump, but your shipping and your route delivery is going to feel the pinch of diesel far more,' Johnston said. More broadly, John Fagan, co-founder of Markets Policy Partners and the former markets head at the Treasury Department, said this oil price shock feeds the narrative that the U.S. is going to have slower growth and higher prices: stagflation. 'Demand is not collapsing, and oil prices are not unbelievably high, so you don't have that pop and drop kind of dynamic' when prices rise above where the market can support, he said. 'And if the dollar can't rally, that's supportive of [higher] oil prices.' HAPPY FRIDAY — Hope many of you got to have a restful day off yesterday. Send thoughts about the economic outlook to vguida@ and as always, send MM tips and pitches to Sam Sutton, who is back next week: ssutton@ Driving the day Deputy Treasury Secretary Michael Faulkender speaks at the Council on Foreign Relations at 12:30 p.m. Debt warnings fall on deaf ears — Republicans are largely ignoring a host of reports warning that their bill would worsen the nation's fiscal trajectory in a serious way, our Ben Guggenheim reports. The Congressional Budget Office estimates Tuesday led to an unusual finding. Usually tax cuts tend to cost less under so-called dynamic scores that include economic effects. Not so here: The $2.8 trillion figure released Tuesday outstripped the CBO's prior $2.4 trillion estimate that did not include economic analysis — mostly because the bill would increase interest rates. But the GOP is relying instead on estimates from the White House that Kyle Pomerleau of the American Enterprise Institute called 'outrageous' and 'way higher than everyone else's.' Your MM host chatted last week with Joe Lavorgna, who joined the Treasury Department this month as a counselor to Secretary Scott Bessent, and he had thoughts on CBO's projection that the economy would grow at an average rate of 1.8 percent over the next 10 years. 'Once the One Big Beautiful Bill passes, it's going to lock in the gains that we saw in the first Trump administration, when we were growing at nearly 3 percent,' he told your MM host. 'Then, you could make a case because of AI,' productivity growth will be much higher. 'The trailing 10-year growth rate of GDP is 2.5 percent. Why aren't we using that? .. 1.8 is unbelievably pathetically slow.' On the pods: Hear from CBO Director Phillip Swagel himself on Bloomberg's Big Take podcast. Sober news on entitlements — The longterm financial health of Social Security and Medicare worsened last year, our Michael Stratford reports. 'Annual reports released by the Treasury Department on Monday show that Social Security's reserve funds, if combined, would run out of money to fully pay beneficiaries in 2034 — a year sooner than projected last year,' Stratford writes. 'And the trust fund that pays Medicare's hospital bills would be depleted in 2033 — three years earlier than expected.' Trump calls for 'clean' Senate crypto bill to pass — Late Wednesday, Trump called on House Republicans to move 'LIGHTNING FAST' to send Senate-passed stablecoin legislation to his desk, dialing up pressure on GOP lawmakers in the lower chamber to adopt the measure without any changes, our Jasper Goodman reports. The Economy ICYMI: Fed holds rates steady — Federal Reserve officials announced Wednesday that they will hold interest rates steady, ignoring repeated calls from President Donald Trump to dramatically lower borrowing costs. In fact, projections from the central bank's policymakers suggest they're less confident they will be able to significantly decrease rates than they were in March. Vibe check: Here was Trump's response on Truth Social Thursday morning: ''Too Late' Jerome Powell is costing our Country Hundreds of Billions of Dollars. He is truly one of the dumbest, and most destructive, people in Government, and the Fed Board is complicit. Europe has had 10 cuts, we have had none. We should be 2.5 Points lower, and save $BILLIONS on all of Biden's Short Term Debt. We have LOW inflation! TOO LATE's an American Disgrace!' Jobs report Carolyn Davis is now director of comms at Better Markets. She previously was director of external comms at Leadership for Educational Equity. Mike Spratt has joined the ICI as an associate general counsel. He previously was assistant director in the Division of Investment Management Disclosure Review office at the SEC. He also served as counsel to former SEC Commissioners Kara Stein and Elisse Walter.

Washington Post

27 minutes ago

• Washington Post

NATO's call to arms: Time to muscle up ‘at the speed of fear'

LONDON — NATO chief Mark Rutte visited Britain this month and had a bracing message for his hosts, along with other nations in the alliance: Start bulking up militarily, he said, or 'you had better learn to speak Russian.' Vladimir Putin isn't about to invade England. But don't forget that, shortly before invading Ukraine in 2022, he did casually threaten then-British Prime Minister Boris Johnson with a missile strike that 'would only take a minute.' Europe, a top British defense strategist told me, needs to re-arm 'at the speed of fear.' With a handful of exceptions, most of NATO's European leaders have gotten the memo that Russia, far from being depleted by the bloodbath in Ukraine, is now a country remade, reoriented and revved up for a state of permanent warfare. A much greater share of overall Russian economic activity, more than 7 percent of gross domestic product, is now earmarked for defense than in any of the alliance's 32 member states. That is likely to continue even if the guns fall silent in Ukraine, which they probably won't any time soon. 'As the army eats through Soviet legacy equipment, Putin is determined to replenish stockpiles — and equip his military with the most modern [equipment] informed by wartime innovation,' Alexandra Prokopenko of Carnegie Russia Eurasia Center in Berlin wrote recently in the Financial Times. 'This will take several years, keeping the performance-enhancing drug of high military expenditure in the Russian economic system.' The growing dread in Europe arising from Moscow's threat has been compounded by the parallel fear inspired by President Donald Trump's contempt for Washington's NATO allies, and his apparent indifference to their security. That is the backdrop as NATO prepares for its annual summit next week at The Hague, where it is expected to adopt an annual spending goal of 5 percent of GDP on defense and related infrastructure — a target most of member states will struggle over years to meet. About one-third of the alliance's members don't even hit the current minimum of 2 percent; some that do, including France and Britain, are grappling with severely squeezed public finances. Rutte's prescription is that the alliance should be prepared to defend its own territory from Russian aggression within five years, including by boosting its air and missile defense by 400 percent. Others across the continent think the timeline is even shorter. Don't imagine that Putin would launch a massive invasion of a European NATO state like the unsuccessful one of Ukraine three years ago. To achieve his aim — unmasking the alliance as a paper tiger — he wouldn't need to. It would be enough to take a bite out of one of the three tiny Balts — Lithuania, Latvia or Estonia — and bet that Washington wouldn't respond with boots on the ground or a sustained missile air assault. With Trump in the White House, that's a bet Putin might be willing to make. For the Russian leader, the West is an implacable forever-foe obstructing his neoimperial dream. He's not giving up or backing down; to the contrary, he sees opportunity in Trump's disregard for Europe. The intensifying peril for Europe is not only to fortify its own defenses but simultaneously to bear the burden of keeping Ukraine in the fight for its sovereignty and survival as Washington disengages. In Ukraine, my British strategist source told me, Europe must seek 'escalation dominance,' meaning arming Kyiv at a pace that might double Russian casualties, forcing Putin to reassess the war's cost-benefit calculus. That's an ambitious goal given Russia's resilience. One measure of Putin's callousness is that he is untroubled by his forces' average daily toll of at least 1,200 deaths and injuries in Ukraine over the past year, for territorial gains the size of Rhode Island. The question is whether the continent's major powers — their economies anemic, their leaders facing ascendant right-wing parties, their aging populations frustrated by ineffectual governments — can rise to the occasion. Amid that haze of challenges, will Europe's main leaders leverage the crisis they face in Russia's threat, and fundamentally reorder their nations' priorities? Doing so would require asking voters to sacrifice some of their comforts — and real political courage. 'That this threat is now clear gives Europeans the chance to go beyond meetings in gilded palaces, and to convince people they face an existential choice,' Gerald Knaus, founding chairman of the European Stability Initiative, a think tank, told me. 'We need a clear narrative to make the case for a modern arsenal of democracy.' That is the concern that prompted Rutte's call to arms. Britons, like other Europeans, can maintain their generous public health care and other social services, he said, and ignore his recommendation that alliance members devote 5 percent of their economies to defense. But in that case, start studying the Cyrillic alphabet.