MOSCOW/KYIV/WASHINGTON — The United States hit Russia’s major oil companies with sanctions on Wednesday and accused the Russians of a lack of commitment toward ending the war in Ukraine, as Moscow conducted a major training exercise involving nuclear arms.

The new sanctions were unveiled one day after plans for a summit between US President Donald J. Trump and Russian President Vladimir Putin fell apart. Mr. Trump told reporters he cancelled the meeting because “it didn’t feel right to me.”

The US Treasury Department said Russia’s two largest oil companies, Rosneft and Lukoil, were targeted in a bid to damage Moscow’s ability to fund its war machine.

The move marked a sharp turnaround for the White House, which has veered between pressuring Moscow and taking a more conciliatory approach aimed at securing peace in Ukraine. Only last week Mr. Trump appeared ready to hold off on new actions targeting Moscow.

“Now is the time to stop the killing and for an immediate ceasefire,” US Treasury Secretary Scott Bessent said. Oil prices extended gains after Mr. Bessent’s comments, rising by more than $2 a barrel.

For months, Mr. Trump has resisted pressure from US lawmakers to impose energy sanctions, hoping that Mr. Putin would agree to end the fighting. But with no end in sight, he said he felt it was time.

Mr. Trump said he was still not ready to provide Ukraine with long-range Tomahawk missiles, which Kyiv has requested. Talking to reporters as he met North Atlantic Treaty Organization (NATO) Secretary General Mark Rutte, Mr. Trump said it would take the Ukrainians at least six months to learn how to use them.

Ahead of a meeting next week with Chinese President Xi Jinping in South Korea, Mr. Trump said he would like to see Mr. Xi use his influence on Mr. Putin to halt the fighting. Mr. Xi and Mr. Putin have formed a strategic alliance between their countries.

In a fresh show of force, the Kremlin released a video showing General Valery Gerasimov, head of the General Staff, reporting to Mr. Putin on the drills. Russia said it fired missiles from ground launchers, submarines and aircraft, including intercontinental ballistic weapons capable of striking the United States.

Russia’s Defense Ministry said its long-range Tu-22M3 strategic bombers flew over the Baltic Sea, escorted at various points by fighter jets from foreign — presumably NATO — states.

At key moments in the war in Ukraine, Mr. Putin has issued reminders of Russia’s nuclear might as a warning to Kyiv and its Western allies. NATO has also been conducting nuclear deterrence exercises this month.

European Union (EU) countries also approved a 19^th package of sanctions against Russia for its war against Ukraine, which includes a ban on Russian liquefied natural gas imports, the Danish rotating presidency of the EU said on Wednesday.

The Wall Street Journal said the United States lifted a restriction on Ukraine’s use of some long-range missiles provided by Western allies, which would allow Ukraine to increase attacks on targets inside Russia. In a social media post, Mr. Trump denied the report.

On Wednesday, Sweden said it had signed a letter of intent to export Gripen fighter jets to Ukraine, as European governments act to boost Kyiv’s defenses in a war that has ground on for three years and eight months since Russia’s full-scale invasion, and shows no sign of ending soon.

Ukrainian pilots have been in Sweden to test the Gripen, a rugged and relatively low-cost option compared to aircraft such as the US F-35.

Kyiv aimed to receive and start using Gripens next year and expected to acquire at least 100, President Volodymyr Zelensky said during a visit to Swedish defense manufacturer Saab.

TRUMP DOESN’T WANT WASTED MEETING
Russia and Ukraine pounded each other with heavy overnight missile attacks as renewed uncertainty enveloped the US-led peace effort.

After months of stalled diplomacy, Mr. Putin and Mr. Trump spoke last week and unexpectedly announced they would hold a summit in Hungary soon.

But following a phone call on Monday between the two countries’ top diplomats, the White House said the next day that Mr. Trump had no plans to meet Mr. Putin “in the immediate future.” Mr. Trump said he did not want to have a wasted meeting — something the Kremlin said Mr. Putin also wanted to avoid.

US Secretary of State Marco Rubio, departing Washington for the Middle East on Wednesday, told reporters the United States would still like to meet with Russia.

Russian officials said that preparations continued for a summit. “The dates haven’t been set yet, but thorough preparation is needed before then, and that takes time,” Kremlin spokesperson Dmitry Peskov told reporters.

The summit delay came after Russia reiterated to the US its previous terms for reaching a peace deal, including that Ukraine cede control of the whole of the southeastern Donbas region, three sources told Reuters.

That amounted to a rejection of Mr. Trump’s statement last week that both sides should stop at the current front lines.

Russian Deputy Foreign Minister Sergei Ryabkov was quoted by state news agency RIA as saying he could not confirm that Moscow had conveyed its position as reported by Reuters.

SHARES IN EUROPEAN DEFENSE COMPANIES RISE
Through the first nine months of his second term, Mr. Trump has pressed for an end to the conflict, the deadliest in Europe since World War II.

Sharply critical at times of Mr. Zelensky, he has also expressed frustration with Mr. Putin.

European defense shares rose on the delay to the Putin-Trump summit. Most European governments strongly back Kyiv and have pledged to raise military spending to help Ukraine meet its defense needs.

European Union leaders are due on Thursday to discuss a proposal to use frozen Russian assets to extend a $163-billion loan to Ukraine. Moscow says the scheme amounts to theft and has vowed to retaliate. — Reuters

STOCKHOLM — When Sweden’s then-Finance Minister Goran Persson dashed to New York during the country’s early 1990s financial crisis to plead with Wall Street investors to keep buying its debt, he stayed in a budget hotel infested with cockroaches.

That reflected the Finance Ministry’s strict “absolutely no extravagance” policy, Mr. Persson, who later became prime minister, wrote in his 1997 book Those Who Are in Debt Are Not Free.

Penny-pinching on ministerial travel was one small part of a decades-long austerity drive, which has created fiscal leeway much of the belt-tightening Europe is lacking, allowing Sweden this year to pledge billions for defense, energy and tax cuts in its largest public spending package in decades.

The lessons for other countries, especially France, deep in its own budget crisis, are simple, if not easy:

First, things may need to get really bad before politicians are ready to act.

Secondly, buy-in from voters, unions and opposition parties is crucial for long-term success.

Finally, a strong global economy and a slice of luck on timing really help.

LIVING BEYOND THEIR MEANS
After decades of living beyond its means, Sweden’s debt had by 1994 roughly doubled to around 80% of gross domestic product (GDP) from 44% in 1990. At worst, the budget deficit hit 12%, and investor confidence collapsed, and the Riksbank briefly hiked interest rates to 500%.

The government responded with cuts in spending on welfare, defense and education worth 8% of GDP. The economy shrank more than 1% three years in a row, unemployment soared and bank credit losses piled up in Sweden’s worst downturn since the 1930s Great Depression.

“We had a banking crisis, a foreign exchange crisis and a debt crisis,” said Stefan Ingves, a former central bank governor who oversaw the cleanup of Sweden’s “bad banks” after the crash.

“In some sense, we were at the end of the road,” he told Reuters.

The government set a spending ceiling and budgeted for surpluses over the economic cycle. Pensions were reformed to encourage private savings and deepen capital markets, while labor unions and employers agreed to limit wage growth.

Gradually those reforms, helped by the fact that a weakened currency was boosting exports, started to work: the economy grew 4.1% in 1994, and debt fell below 50% of GDP within a decade.

“In an open economy, structural change pays,” Mr. Ingves said.

Among the most critical changes was a shift to a pension system where payments are adjusted for market returns and life expectancy, easing the pressure on the budget from the aging population and passing the shortfall risk onto individuals.

France, where the retirement age remains a hot-button issue, spends just over 13% of its GDP on pensions compared with 10.7% in Sweden, according to Eurostat data, and the gap gets bigger when healthcare and other social benefits are included.

NO FREE LUNCH
To be sure, it came at a price: thousands of public employees lost their jobs, and Sweden was left with a legacy of underinvestment in infrastructure, from energy and transport networks to hospital beds.

But painful memories of the crisis have ensured there has been no backsliding.

“Government after government has held the line,” Finance Minister Elisabeth Svantesson told Reuters. “There is a consensus, which is a strength for Sweden.”

Decades of frugality are now paying dividends.

With public debt now at just over a third of GDP, Sweden was able to hike defense spending to 3.5% of GDP, pump up to 440 billion crowns ($46.73 billion) into nuclear power expansion and provide 105 billion crowns to support Ukraine.

At the same time, the government cut income taxes and VAT on food and raised spending on job measures and yet its borrowing costs remain lower than Germany’s SE10YT=RR.

Unlike many other developed nations, Sweden also managed to ride out the financial crisis of 2008-2009 and the COVID pandemic without piling on much new debt.

Replicating Sweden’s path, however, will be hard for France and other euro zone countries faced with rising debt. ($1 = 9.4155 Swedish crowns).

Sweden’s exporters operated in a buoyant 1990s world economy fueled by an IT boom and rapid globalization — a far cry from the protectionist tilt seen from Washington to Beijing now.

“Sweden was not okay, but the rest of the world was reasonably okay,” noted Mr. Ingves.

Moreover, since the 1990s the political landscape has become more fragmented with the rise of far-right parties across Europe — including in Sweden — making it much harder to build consensus on unpopular measures, such as tax hikes or welfare cuts.

Ultimately, some argue, France has not yet reached a tipping point like Sweden did in the 1990s and Ireland, Portugal, Italy and Greece two decades later during the euro zone sovereign debt crisis, which forced them to repair their public finances.

Despite all its woes, France still has access to borrowing at a reasonably affordable 3.35% FR10YT=RR, allowing it to muddle through.

“Things will need to get a lot worse before France is forced to confront its fiscal problems in the same way other European countries have,” said Adrian Prettejohn, European economist at Capital Economics. ($1 = 9.4155 Swedish crowns). — Reuters

TAIPEI — Taiwan is warily watching whether China could seek to try and exert economic control over sensitive frontline Taiwanese islands in a key development plan being discussed in Beijing this week, officials familiar with the matter said.

China’s ruling Communist Party, at its closed-door meeting ending on Thursday known as a plenum, is going to discuss, among other things, the country’s 15^th five-year development plan, which will formally begin next year and be unveiled in detail at March’s annual meeting of parliament.

Two officials briefed on the matter told Reuters that Taiwan is paying particular attention to whether the new five-year plan makes any mention of deepening economic integration with the Taiwan-controlled Kinmen islands that sit just off China’s coast.

China has long taken a carrot and stick approach to Kinmen, threatening it with frequent coast guard incursions into its waters while dangling perks from gas and electricity supply to bring the islands of 140,000 closer to China.

For policy makers in Taipei, Kinmen’s proximity to China makes it extra vulnerable to Beijing’s economic and political clout, especially when many residents there have close family and business ties with China, whose Xiamen city is a short boat ride away for work or shopping.

Kinmen also gets regular water supply from China, a deal secured under the previous government led by the Kuomintang party which favors close relations with Beijing.

China, which has not ruled out using force to seize democratically governed Taiwan, could seek to gain de facto jurisdiction over Kinmen if it includes it in its economic development plan, a move that would further escalate Taipei-Beijing tensions, the officials told Reuters.

“Cross-strait relations could shift from past sovereignty disputes to a contest over jurisdiction,” said one of the sources, a senior Taiwan official briefed on the matter, speaking on condition of anonymity given the sensitivity of discussing security assessments.

A second source, an official in the region looking into the issue, said with a new economic blueprint China could try to exert “de facto administrative power” over Kinmen and push for its unification agenda.

Taiwan’s Mainland Affairs Council said it would not comment on the story before any Chinese policy details from the plenum are released later this week. China’s Taiwan Affairs Office did not respond to a request for comment.

Jessica Chen, Kinmen’s Kuomintang member of parliament, told Reuters that China indeed wanted closer economic integration for Kinmen, but that sovereignty could not be compromised.

“Kinmen is the territory of the Republic of China. Its jurisdiction belongs to the Republic of China — this is beyond doubt,” she added, referring to Taiwan’s formal name.

Five-year plans have previously mentioned Taiwan in a vague way, though in 2016 the 13^th five-year plan proposed a tunnel to the island and opening of a high-speed rail line. Taiwan rejected that idea.

‘NEXT CRIMEA’
China’s still-in-construction bridge to Kinmen is a major concern for Taiwan, a project Taipei has not approved, as is the new Xiamen airport slated to open next year and which is only around 3 km (1.9 miles) at its closest point from Kinmen, the officials said.

Taiwan officials worry greater integration could chip away at Taiwanese sovereignty. China says Taiwan is not a country, only a Chinese province, and that it has no sovereignty.

“What if they try to press ahead with the bridge, which carries national security concerns for us?” The Taiwan official said, adding such a proposal could also sow division between local residents and central government as well as the military.

“If they dare to invade (Kinmen), we will become the next Crimea,” the official said, referring to Russia’s annexation of Crimea in 2014 after people there voted in a disputed referendum to become part of Russia.

To be sure, there are differences with Crimea, where many people identify as Russian, not Ukrainian, whereas in Kinmen most people identify as being Chinese, albeit from the Republic of China.

Xiamen’s new airport is so close to Kinmen it could pose an aviation safety risk, and China has not reached out to discuss the issue, the official said.

China last year opened a new air route from Xiamen which Taiwan said was done without consultation and brought aircraft too close to Kinmen airspace, posing aviation and security concerns.

The new airport could offer another way for China to further jurisdiction claims over Kinmen, the official added.

“Mutual development is not a bad thing,” the Taiwan official said. “But if this is for the purpose of annexation, that’s a problem.” — Reuters