U.S. Bid to Cap Russian Oil Prices Draws Skepticism Over Enforcement | Big Indy News
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U.S. Bid to Cap Russian Oil Prices Draws Skepticism Over Enforcement



WASHINGTON — The Biden administration’s push to form an international buyers’ cartel to cap the price of Russian oil is facing resistance amid private sector concerns that it cannot be reliably enforced, posing a challenge for the U.S.-led effort to drain President Vladimir V. Putin’s war chest and stabilize global energy prices.

The price cap has been a top priority of Treasury Secretary Janet L. Yellen, who has been trying to head off another spike in global oil costs at the end of the year. The Biden administration fears that the combination of a European Union embargo on Russian oil imports and a ban on the insurance and financing of Russian oil shipments will send prices soaring by taking millions of barrels of that oil off the market.

But the untested concept has drawn skepticism from energy experts and, in particular, the maritime insurance sector, which facilitates global oil shipments and is key to making the proposal work. Under the plan, it would be legal for them to grant insurance for oil cargo only if it was being sold at or below a certain price.

The insurers, which are primarily in the European Union and Britain, fear they would have to enforce the price cap by verifying whether Russia and oil buyers around the world were honoring the agreement.

“We can ask to see evidence of the price paid, but as an enforcement mechanism, it’s not very effective,” said Mike Salthouse, global claims director at The North of England P&I Association Limited, a leading global marine insurer. “If you have sophisticated state actors wanting to deceive people, it’s very easy to do.”

He added: “We’ve said it won’t work. We’ve explained to everybody why.”

That has not deterred Ms. Yellen and her top aides, who have been crisscrossing the globe to make their case with international counterparts, banks and insurers that an oil price cap can — and must — work at a moment of rapid inflation and the risk of recession.

“At a time of global anxiety over high prices, a price cap on Russian oil is one of the most powerful tools we have to address inflation by preventing future spikes in energy costs,” Ms. Yellen said in July.

The Biden administration is trying to mitigate fallout from sanctions adopted by the European Union in June, which would ban imports of Russian oil and the financing and insuring of Russian oil exports by year’s end. Britain was expected to enact a similar ban but has not yet done so.

Ms. Yellen and other Treasury officials want those sanctions to include a carve-out that allows for Russian oil to be sold, insured and shipped if it is purchased at a price that is well below market rates. They argue that this would diminish the revenue that Russia took in while keeping oil flowing.

The plan relies heavily on the maritime insurance industry, a web of insurers that provide coverage for ships and their cargo, liability for potential spills and reinsurance, a form of secondary insurance used to defray the risk of losses. Most of the major insurers are based within the Group of 7 nations, which have been coordinating sanctions against Russia for its war in Ukraine.

Lars Lange, secretary general of the International Union of Marine Insurance, a consortium based in Germany, said he believed that even with a price cap, insurers would still be reluctant to cover Russian oil exports for fear of violating sanctions.

“This insurance industry is more than prepared to comply, but please set up the sanctions in a way that we understand and that we can comply,” Mr. Lange said. “And with this oil cap, there are challenges, at least from our side.”

Mr. Lange said the cap would not work if only a few countries agreed to it, because insurers from other countries would pick up the slack and cover the cargo at market prices.

Treasury Department officials working on the plan have been meeting with the insurance and financial services sectors to try to allay some of their concerns. They have suggested that the industry would not bear responsibility if sanctions were flouted, and that Russia and its oil customers would have to “attest” to the purchase price. Enforcing the cap, they said, would be similar to dealing with sanctions that have targeted oil exports from countries such as Iran and Venezuela.

Officials have also played down the notion that global participation is needed, arguing that countries such as India and China, which have been purchasing Russian oil at deep discounts, could benefit from a price cap without signing on to the agreement.

Leaders of the G7 agreed in late June to explore the concept. The idea drew mixed reviews after finance ministers of the Group of 20 nations met in Indonesia in July. South Korea said it was willing to get behind it, while Indonesia’s finance minister, Sri Mulyani Indrawati, warned that a price cap would not solve the world’s oil supply problems. European officials, who have been skeptical, continue to say they are analyzing its viability.

The race to carry out such a complex plan in just a few months comes as the United States struggles to deliver on international agreements such as the a global tax pact, which Ms. Yellen brokered last year but is now stalled in Congress. In recent months, Ms. Yellen has dispatched her deputy, Wally Adeyemo, and Ben Harris, her assistant secretary for economic policy, to make the case for the cap on national security and economic grounds.

Mr. Adeyemo said in an interview that “a great deal of progress has been made amongst the G7 finance ministers and energy ministers, in terms of having conversations about how we actually design this at a technical level.”

He added that “we’ve also made progress in terms of talking to other countries about joining our coalition in pulling together a price cap.”

Mr. Adeyemo said officials were working to design the cap so insurers would not have to vet every transaction to ensure compliance.

“We’ve also had very constructive conversations with members of industry who are involved in the seaborne oil trade, both helping to understand how that oil is both sold and who has information about the price,” he said. “But also how we can design a method for attestation that will be as simple as possible in order to make sure that we’re able to enforce the price cap.”

Some former Treasury officials are skeptical that the plan could work.

“I think it is a clever analytical idea, but there’s a reason why the phrase ‘too clever by half’ was invented,” said Lawrence H. Summers, who was Treasury secretary during the Obama administration.

Noting that there are scant examples of successful buyers’ cartels, and that oil transactions can be often be hidden, Mr. Summers said, “It might not be workable.”

The United States hopes to have an agreement in place by Dec. 5, when the European Union ban takes effect, but many details remain unresolved, including the price at which Russian oil would be capped.

Treasury officials have said the price would be set high enough so Russia had an incentive to keep producing. Some commodities analysts have pointed to a range of $50 to $60 per barrel as a likely target, which is far lower than the current price of around $100 a barrel.

But a big wild card is how Russia might respond, including whether it retaliates in ways that drive up prices.

The Russian central bank governor, Elvira Nabiullina, said last month that she believed Russia would not supply oil to countries that imposed a cap, and predicted it would lead to higher oil prices worldwide. Other Russian officials have suggested that the nation would not sell oil at prices below its production costs.

In a report last month, J.P. Morgan analysts predicted that if Russia did not cooperate with a price cap, three million barrels of Russian oil per day could be removed from global markets, sending prices up to $190 per barrel. Curbing output indefinitely would damage its wells, they said, but Russia could handle a shutdown temporarily while sustaining its finances.

Paul Sheldon, chief geopolitical adviser for S&P Global Commodity Insights, said a successful cap could be the best hope for stabilizing oil prices once the European Union ban took effect. He said it was unlikely that Russia, which has restricted natural gas flows to parts of Europe in retaliation for sanctions, would curb oil exports because of their importance to its economy.

“Our assumption is that Russia will not curtail production,” Mr. Sheldon said.

Brian O’ Toole, a former adviser in Treasury’s office of foreign assets control, said that even a brief shutdown of Russian oil exports could destabilize markets. But he added that Russia’s invasion of Ukraine demonstrated that it was willing to take actions that were at odds with its economic fortunes.

“This assumes that Putin is a rational economic actor,” Mr. O’Toole, a nonresident senior fellow at the Atlantic Council who works in the financial services industry, said of Russia’s cooperation with a price cap. “If that were the case, he wouldn’t have invaded Ukraine in the first place.”

But proponents believe that if the European Union bans insurance transactions, an oil price cap may be the best chance to mitigate the economic fallout.

John E. Smith, former director of the foreign assets control unit, said the key was ensuring that financial services firms and maritime insurers were not responsible for vetting every oil transaction, as well as providing guidance on complying with the sanctions.

“The question is will enough jurisdictions agree on the details to move this forward,” said Mr. Smith, who is now co-head of Morrison & Foerster’s national security practice. “If they do, it could be a win for everyone but Russia.”

Matina Stevis-Gridneff contributed reporting from Brussels.

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The F.D.A. Now Says It Plainly: Morning-After Pills Are Not Abortion Pills



The F.D.A. said it made the change now because it had completed a review of a 2018 application to alter the label that was submitted by Foundation Consumer Healthcare, a company that in 2017 bought the Plan B brand from Teva Pharmaceutical Industries. Agency officials said the pandemic delayed the review process and that the timing was not motivated by political considerations.

A spokeswoman for the company, Dani Hirsch, said in an interview that for its 2018 application, the company had not conducted any new studies but had submitted “what was already out there.”

In a statement, the company’s marketing director, Tara Evans, said “the misconception that Plan B works by interfering with implantation can present barriers to broader emergency contraception access. The Plan B labeling correction will help protect continued over-the-counter emergency contraception access and reduce confusion about how Plan B works and further clarify that Plan B does not affect implantation.”

Plan B One-Step and its generic versions — including brands like Take Action, My Way and Option 2 — contain levonorgestrel, one of a class of hormones called progestins that are also found at lower doses in birth control pills and intrauterine devices. The pills are most effective in preventing pregnancy if taken within 72 hours of sexual intercourse, although they can sometimes work if taken within five days.

Another type of morning-after pill, marketed as Ella and containing a compound called ulipristal acetate, is only available by prescription and is not affected by the F.D.A.’s label change. There has been less research on this type of pill, but studies suggest that it is highly unlikely to prevent implantation of a fertilized egg. In 2009, after months of scrutiny, Ella was approved for sale in overwhelmingly Catholic Italy, where laws would have barred it if it had been considered to induce abortions.

According to data published in 2021 by the Centers for Disease Control and Prevention, nearly one-quarter of women of reproductive age who have sex with men answered yes to the question: “Have you ever used emergency contraception, also known as ‘Plan B,’ ‘Preven,’ ‘Ella,’ ‘Next Choice,’ or ‘Morning after’ pills?” The agency did not break down the data by the type of pills taken.

As far back as the 1999 approval process, the maker of Plan B — Barr Pharmaceuticals, later acquired by Teva — asked the F.D.A. not to list an implantation effect on the label, The Times reported in 2012.

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Who are Caroline Ellison’s parents? Fraudster’s mom and dad are MIT economists



This apple fell far from the tree.

Caroline Ellison — who pleaded guilty to fraud charges related to her role in the FTX cryptocurrency scandal, which led to the extradition of Sam Bankman-Fried this week — is the daughter of high-profile economists at the Massachusetts Institute of Technology.

According to his curriculum vitae, Ellison’s father, Glenn Ellison, was educated at Harvard, Cambridge and MIT before becoming the Gregory K. Palm (1970) Professor of Economics at the latter. 

In addition to coaching youth softball and his daughters’ middle school math teams, he writes “Hard Math,” a series of textbooks and workbooks about teaching arithmetic to younger students.

Glenn Ellison is also an Elected Fellow of the Society for the Advancement of Economic Theory and American Academy of Arts & Sciences.

Caroline Ellison’s parents, Glenn and Sara Ellison, outside their Newton, Mass., home in early December.
Robert Miller

Ellison’s mother, Sara Ellison, is also an accomplished academic. Armed with an undergraduate degree from Purdue University and a mathematical statistics diploma from Cambridge University, her profile shows she completed a doctorate at MIT in 1993. 

Sara Ellison is currently a senior lecturer in the department alongside her husband.

“We were definitely exposed to a lot of economics [growing up],” Ellison, 28, once told Forbes.

Ellison, 28, plead guilty to fraud this week.
Ellison, 28, pleaded guilty to fraud this week.
Twitter / @AlamedaResearch
Caroline Ellison's sister, Anna, now lives in the West Village.
Caroline Ellison’s sister, Anna, now lives in the West Village.

Glenn and Sara Ellison were photographed by The Post outside their home in Newton, an affluent Boston suburb, earlier this month. Armed with several bags, they told reporters they were too “busy” to comment on the FTX scandal.

The eldest of three sisters — including Anna, 25, who now lives in Manhattan’s West Village — Ellison distinguished herself as a precocious math whiz at a young age. 

When she was just 8 years old, she reportedly presented her father with a paper analyzing stuffed animal prices at Toys ‘R’ Us.

Sam Bankman-Fried leaving Manhattan Federal Court on Thursday.
Sam Bankman-Fried leaving Manhattan federal court on Thursday.
Matthew McDermott
Both Glenn and Sara Ellison are economists at MIT.
Both Glenn and Sara Ellison are economists at MIT.
Robert Miller

She went on to compete in the Math Prize for Girls while at Newton North High School before studying mathematics at Stanford University, where former professor Ruth Stackman described her to Forbes as “bright, focused, [and] very mathy.”

Ellison and Bankman-Fried, 30, crossed paths at the Wall Street trading firm Jane Street. Bankman-Fried’s parents are also both university lecturers, at Stanford in California. They became good friends and she joined Alameda Research, the hedge fund arm of the FTX crypto exchange, in 2018. She then became CEO in 2021. However, the company remained owned 90% by Bankman-Fried and 10% by another member of his circle.

In addition to documenting her supposed foray into polyamory on Tumblr, Ellison once boasted about drug use on social media.

Sara Ellison completed a doctorate at MIT in 1993.
Sara Ellison completed a doctorate at MIT in 1993.
Robert Miller

“Nothing like regular amphetamine use to make you appreciate how dumb a lot of normal, non-medicated human experience is,” she tweeted in 2021.

Ellison reportedly admitted to Alameda employees that FTX had used client funds to bail out the fledgeling hedge fund during a video call in November. She was eventually terminated as CEO by insolvency professional and current FTX CEO John J. Ray III after FTX and Alameda filed for Chapter 11 bankruptcy.

She pleaded guilty to federal fraud charges on Monday, and has subsequently been released on $250,000 bail.

Ellison was spotted getting coffee in New York City on Dec. 4.
Ellison was spotted getting coffee in New York City on Dec. 4.
Twitter / @AutismCapital

Although she could be sent to jail for up to 110 years for her part in the FTX-Alameda scandal — which has been said by federal prosecutors to have lost between $1 billion and $2 billion of customers’ cash — she is thought to have struck a deal with the feds for a much lighter sentence in return for her cooperation.

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Iran condemns Zelensky’s remarks to Congress as ‘baseless.’



Iran has condemned President Volodymyr Zelensky’s remarks to the U.S. Congress, warning the Ukrainian leader against further accusing Tehran of supplying weapons to Russia for use in the war.

Mr. Zelensky told Congress on Wednesday that Iranian-made drones “sent to Russia in hundreds” had been threatening Ukraine’s critical infrastructure, a view shared by American and European officials. In Iran, he said, Russia had found an “ally in its genocidal policy.”

A spokesman for Iran’s foreign ministry, Nasser Kanaani, called Mr. Zelensky’s comments “rude” and “baseless.”

“Mr. Zelensky had better know that Iran’s strategic patience over such unfounded accusations is not endless,” Mr. Kanaani said in a statement on Thursday.

Although Iran has officially denied supplying Russia with the weapons since Moscow’s invasion of Ukraine, U.S. officials have said that the first shipment was delivered in August.

Mr. Zelensky has said that drones used in Monday’s wave of predawn attacks on Kyiv and other Ukrainian cities were from a batch recently delivered to Russia by Iran. The strikes came after Biden administration officials said that Russia and Iran were strengthening their military ties into a “full-fledged defense partnership.”

The European Union last week condemned Iran’s military partnership with Russia as a gross violation of international law and announced new sanctions against Iranian individuals and entities over their roles in supplying the drones that Moscow has used to attack Ukrainian civilians and infrastructure. That followed a round of sanctions on Iranians over the drone deliveries in October.

Mr. Kanaani “once again emphasizes” that Iran has not supplied military equipment for use in Ukraine, the statement issued on Thursday added, and urged Mr. Zelensky to learn “the fate of some other political leaders” who were happy with U.S. support. It was not clear which other leaders the statement was referring to.

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