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Russia’s ruble rebound raises questions of sanctions’ impact

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By Ken Sweet And Ellen Knickmeyer in Washington

WASHINGTON (AP) — The ruble is no longer rubble.

The Russian ruble by Wednesday had bounced back from the fall it took after the U.S. and European allies moved to bury the Russian economy under thousands of new sanctions over its invasion of Ukraine. Russian President Vladimir Putin has resorted to extreme financial measures to blunt the West’s penalties and inflate his currency.

While the West has imposed unprecedented levels of sanctions against the Russian economy, Russia’s Central Bank has jacked up interest rates to 20% and the Kremlin has imposed strict capital controls on those wishing to exchange their rubles for dollars or euros.

It’s a monetary defense Putin may not be able to sustain as long-term sanctions weigh down the Russian economy. But the ruble’s recovery could be a sign that the sanctions in their current form are not working as powerfully as Ukraine’s allies counted on when it comes to pressuring Putin to pull his troops from Ukraine. It also could be a sign that Russia’s efforts to artificially prop up its currency are working by leveraging its oil and gas sector.

The ruble was trading at roughly 85 to the U.S. dollar, roughly where it was before Russia started its invasion a month ago. The ruble had fallen as low as roughly 150 to the dollar on March 7, when news emerged that the Biden administration would ban U.S. imports of Russian oil and gas.

Speaking to Norway’s parliament on Wednesday, Ukraine’s president urged Western allies to inflict still greater financial pain on Russia.

“The only means of urging Russia to look for peace are sanctions,” Volodymyr Zelenskyy said in a video message from his besieged country. He added: “The stronger the sanctions packages are going to be, the faster we’ll bring back peace.”

Increasingly, European nations’ purchases of Russian oil and natural gas are coming under scrutiny as a loophole and lifeline for the Russian economy.

“For Russia, everything is about their energy revenues. It’s half their federal budget. It’s the thing that props up Putin’s regime and the war,” said Tania Babina, an economist at Columbia University who was born in Ukraine.

Babina is currently working with a group of 200 Ukrainian economists to more accurately document how effective the West’s sanctions are in stymying Putin’s war-making capabilities.

The ruble has also risen amid reports that the Kremlin has been more open to cease-fire talks with Ukraine. U.S. and Western officials have expressed skepticism about Russia’s announcement that it would dial back operations.

President Joe Biden promoted the success of the sanctions — some of the toughest ever imposed on a nation — while he was in Poland last week. “The ruble almost is immediately reduced to rubble,” Biden said.

Sanctions on Russian financial institutions and companies, on trade and on Putin’s power brokers were crushing the country’s economic growth and prompting hundreds of international companies to stop doing business there, Biden noted.

Russian efforts to counter those sanctions by propping up the ruble can only go so far.

Russia’s Central Bank cannot keep raising interest rates because doing so will eventually choke off credit to businesses and borrowers. At some point, individuals and businesses will develop ways to go around Russia’s capital controls by moving money in smaller amounts. As the penalties depress the Russian economy, economists say that will eventually weigh down the ruble. Without these efforts, Russia’s currency would almost certainly be weaker.

But Russia’s oil and gas exports have continued to Europe as well as to China and India. Those exports have acted as an economic floor for the Russian economy, which is dominated by the energy sector. In the European Union, a dependence on Russian gas for electricity and heating has made it significantly more difficult to turn off the spigot, which the Biden administration did when it banned the relatively small amount of petroleum that the U.S. imports from Russia.

“The U.S. has already banned imports of Russian oil and natural gas, and the United Kingdom will phase them out by the end of this year. However, these decisions will not have a meaningful impact unless and until the EU follows suit,” wrote Benjamin Hilgenstock and Elina Ribakova, economists with the Institute of International Finance, in a report released Wednesday.

Hilgenstock and Ribakova estimate that if the EU, Britain and the U.S. were to ban Russian oil and gas, the Russian economy could contract more than 20% this year. That’s compared with projections for up to a 15% contraction, as sanctions stand now.

Knowing this, Putin has greatly leveraged Europe’s dependence on its energy exports to its advantage. Putin has called for Russia’s Central Bank to force foreign gas importers to purchase rubles and use them to pay state-owned gas supplier Gazprom. It’s unclear whether Putin can make good on his threat.

The White House and economists have argued that the impact of sanctions takes time, weeks or months for full effect as industries shut down due to a lack of materials or capital or both. But the administration’s critics say the ruble’s recovery shows the White House needs to do more.

“The ruble’s rebound would seem to indicate that U.S. sanctions haven’t effectively crippled Russia’s economy, which is the price Putin should have to pay for his war,” said Sen. Pat Toomey, R-Pa.

“To give Ukraine a fighting chance, the U.S. must sever Putin’s revenue stream by cutting off Russian oil and gas sales globally,” Toomey said in an email to The Associated Press.

Sen. Sherrod Brown, chairman of the Senate Banking, Housing and Urban Affairs Committee, said Wednesday that lawmakers are considering ways to expand the sanctions Biden recently imposed on members of the Russian parliament “and probably widen that to other political players.” Brown, D-Ohio, said lawmakers also are weighing more penalties against banks.

Western leaders, under Biden’s encouragement, embraced sanctions as their toughest weapon to try to compel Russia to reverse its invasion of Ukraine, which is not a member of NATO and not protected under that bloc’s mutual defense policy.

Some of the allies now acknowledge their governments may need to redouble financial punishment against Russia.

British Prime Minister Boris Johnson said Wednesday that the Group of Seven major industrial nations should “intensify sanctions with a rolling program until every single one of (Putin’s) troops is out of Ukraine.”

But that’s a tougher ask for other European countries such as Germany, which depend on Russia for vital natural gas and oil. The EU overall gets 10% of its oil from Russia and more than one-third of its natural gas.

Many of those countries have pledged to wean themselves off that dependence — but not immediately.

If European nations did move more quickly off Russian petroleum, wrote analyst Charles Lichfield of the Atlantic Council, “a more comprehensive embargo from Europe would threaten Russia’s current account surplus — suddenly making it more difficult to pay public-sector salaries and wage war.”

He noted that “such an outcome may be beyond the reach of Western consensus.”

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Sweet reported from New York. AP Congressional Correspondent Lisa Mascaro contributed to this report.

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Peru’s protest ‘deactivators’ run toward tear gas to stop it

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By Daniel Politi in Lima

LIMA, Peru (AP) — When police fire tear gas at protesters demanding the resignation of Peruvian President Dina Boluarte, most run away.

A few, though, run toward the gas canisters as quickly as possible — to neutralize them.

These are the “deactivators.” Donning gas masks, safety goggles and thick gloves, these volunteers grab the hot canisters and toss them inside large plastic bottles filled with a mixture of water, baking soda and vinegar.

The deactivators made their debut in Peru street protests in 2020, inspired by protesters in Hong Kong who in 2019 unveiled new strategies to counteract the eye-stinging, breath-stealing effects of tear gas. With protesters in Lima facing a nearly daily fusillade of tear gas, more people have joined the ranks of deactivators trying to shield them and keep the demonstrations going.

Peruvians have been protesting since early December, when former President Pedro Castillo was impeached after a failed attempt to dissolve Congress. His vice president, Boluarte, immediately took over — and has faced strong opposition ever since.

Fifty-eight people have died in connection with the unrest, including one police officer. Forty-six of the deaths occurred during direct clashes between protesters and police.

The protests have exposed deep divisions in the country between the urban elites and the rural poor. Demonstrations were first largely concentrated in the south, a long-neglected region of Peru that felt a particular kinship to Castillo’s humble background as a rural teacher from the Andean highlands. But earlier this month, thousands descended on Peru’s capital, and police met them with tear gas. Lots and lots of tear gas.

On Thursday, as protesters gathered in downtown Lima, Alexander Gutiérrez Padilla, 45, was giving a brief course to anyone who would listen around Plaza San Martín about how to mix vinegar and baking soda into the water and how to grab the tear gas canisters most efficiently.

“If we don’t deactivate, people disperse and the protest breaks,” Gutiérrez said. “That’s why we’re pillars of this demonstration.”

Next to him was Wilfredo Huertas Vidal, 25, who has taken it upon himself to collect donations to buy gloves and other protective equipment and hand them out to those who want to help.

“Who wants gloves? Who wants gloves?” he yelled as he stood next to several large bottles of water, gas masks and eye goggles.

When protesters descended on Lima earlier this month, old networks were reactivated. A tactic first seen in Peru in late 2020 during protests against then-President Manuel Merino resurfaced.

Vladimir Molina, 34, who participated in the 2020 protests, now runs what he calls a “brigade.” It consists of around 60 people, including paramedics, deactivators and “front-line” activists who stand in the middle of protesters and police with shields, in an effort to block any pellets or tear gas police may fire into the crowd.

“Every day more and more people are joining,” Molina said. Interest in his group is so great that he’s made it a requirement for anyone who wants to join to have their own equipment.

By tossing the hot tear gas cartridges into the water solution, “what they do is extinguish the pyrotechnical charge so the tear gas cannot come out anymore,” said Sven Eric Jordt, a professor of anesthesiology at Duke University.

Water alone should achieve what the protesters want, although the carbon dioxide created by mixing vinegar and baking soda could “form a foam bath that suffocates the charge” further, Jordt speculated.

It may be only a matter of time before authorities deploy methods to blunt the deactivators’ effectiveness. Manufacturers are now developing tear gas with plastic cartridges that stick to the road so it “can’t be lifted up anymore,” Jordt said.

Fearful of being targeted by police and prosecutors, many of the deactivators prefer to remain anonymous, keeping their faces covered even when there’s no tear gas around.

Boluarte has given strong backing to law enforcement, and the government recently announced a bonus for police officers. Boluarte has characterized the work of police controlling the Lima protests as “immaculate,” despite their often indiscriminate firing of tear gas and pellets. In contrast, she says the demonstrations are violent and financed by drug-trafficking rings and illegal miners.

Andrea Fernández, 22, is new to deactivating tear gas.

“The truth is I love the adrenaline,” Fernández said shortly after grabbing a pair of gloves from Huertas and listening to the instructions closely.

She said she hadn’t been really interested in the country’s political crisis at first. Then the deaths started piling up.

“There are a lot of farmers who’ve come from lots of parts of Peru and they come here to march, face-to-face, but don’t have the necessary protection,” Fernández said.

Felix Davillo, 37, also says the casualties pushed him to become a deactivator.

“I made this decision for all the death that is going on in Puno right now,” Davillo said, referring to a region in Peru that has experienced some of the deadliest protests.

A general lack of protective equipment has also meant protesters have been injured by the widespread use of less lethal weapons.

From January 19 to 24, Doctors Without Borders treated 73 patients at the Lima protests suffering from exposure to tear gas, pellet wounds, contusions or psychological distress, the non-profit organization said.

The deactivators’ increased chance of injury doesn’t scare Julio Incarocas Beliz, who grabbed one of the big water bottles in the plaza for his first day trying to diffuse tear gas.

“I served in the military and I’ve never been afraid,“ Incarocas, 28, said. “I’m fighting for my homeland.”

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78 years on, Jewish Holocaust rescuers want their story told

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By Alon Bernstein in Kibbutz Hazorea

KIBBUTZ HAZOREA, Israel (AP) — Just before Nazi Germany invaded Hungary in March 1944, Jewish youth leaders in the eastern European country jumped into action: They formed an underground network that in the coming months would save tens of thousands of fellow Jews from the gas chambers.

This chapter of the Holocaust heroism is scarcely remembered in Israel. Nor is it part of the official curriculum in schools. But the few remaining members of Hungary’s Jewish underground want their story told. Dismayed at the prospect of being forgotten, they are determined to keep memories of their mission alive.

“The story of the struggle to save tens of thousands needs to be a part of the chronicles of the people of Israel,” said David Gur, 97, one of a handful of members still alive. “It is a lighthouse during the period of the Holocaust, a lesson and exemplar for the generations.”

As the world marks International Holocaust Remembrance Day on Friday, historians, activists, survivors and their families are all preparing for the time when there will no longer be living witnesses to share first-person accounts of the horrors of the Nazi genocide during World War II. In the Holocaust, 6 million Jews were wiped out by the Nazis and their allies.

Israel, which was established as a refuge for Jews in the wake of the Holocaust, has gone to great lengths over the years to recognize thousands of “Righteous Among the Nations” — non-Jews who risked their lives to save Jews during the Holocaust.

Accounts of Jewish resistance to the Nazis, such as the Warsaw Ghetto uprising, are mainstays in the national narrative but rescue missions by fellow Jews — such as the Hungarian resistance — are less known.

Hungary was home to around 900,000 Jews before the Nazi invasion. Its government was allied with Nazi Germany, but as the Soviet Red Army advanced toward Hungary, the Nazis invaded in March 1944, to prevent its Axis ally from making a separate peace deal with the Allies.

Over the 10 months that followed, as many as 568,000 Jews were killed by the Nazis and their allies in Hungary, according to figures from Yad Vashem, Israel’s official Holocaust memorial.

Gur said he and his colleagues knew that disaster was looming when three Jewish women arrived at Budapest’s main synagogue in the fall of 1943. They had fled Nazi-occupied Poland and bore disturbing news about people being shipped off to concentration camps.

“They had fairly clear information about what was happening, and saw the many trains, and it was obvious to them what was happening,” said Gur.

Gur oversaw a massive forgery operation that provided false documents for Jews and non-Jewish members of the Hungarian resistance. “I was an 18-year-old adolescent when the heavy responsibility fell upon me,” he said.

There was great personal risk. In December 1944, he was arrested at the forgery workshop and brutally interrogated and imprisoned, according to his memoir, “Brothers for Resistance and Rescue.” The Jewish underground broke him out of the central military prison in a rescue operation later that month.

The forged papers were used by Jewish youth movements to operate a smuggling network and run Red Cross houses that saved thousands from the Nazis and their allies.

According to Gur’s book, at least 7,000 Jews were smuggled out of Hungary, through Romania to ships on the Black Sea that would bring them to British-controlled Palestine. At least 10,000 forged passes offering protection, known as Shutzpasses, were distributed to Budapest’s Jews, and around 6,000 Jewish children and accompanying adults were saved in houses ostensibly under the protection of the International Red Cross.

Robert Rozett, a senior historian at Yad Vashem, said that although it was “the largest rescue operation” of European Jews during the Holocaust, this episode remains off “the main route of the narrative.”

“It’s very significant because these activities helped tens of thousands of Jews stay alive in Budapest,” he said.

In 1984, Gur founded “The Society for Research of the History of the Zionist Youth Movements in Hungary,” a group that has promoted awareness about this effort.

Last month at a kibbutz in northern Israel, Sara Epstein, 97, Dezi Heffner-Reiner, 95, and Betzalel Grosz, 98, three of the remaining survivors who helped save Jews in Nazi-occupied Hungary, received the Jewish Rescuers Citation for their role in the Holocaust. The award is given by two Jewish groups — B’nai B’rith World Center-Jerusalem and the Committee to Recognize the Heroism of Jewish Rescuers During the Holocaust.

“There aren’t many of us left, but this is important,” said Heffner-Reiner.

More than 200 other members of the underground were given the award posthumously. Gur received the award in 2011, the year it was created.

Yuval Alpan, a son of one of the rescuers and an activist with the society, said the citations were meant to recognize those who saved lives during the Holocaust.

“This resistance underground youth movement saved tens of thousands of Jews during 1944, and their story is not known,” he said. “It’s the biggest rescue operation in the Holocaust and nobody knows about it.”

International Holocaust day falls on the anniversary of the Red Army’s liberation of the Auschwitz death camp 78 years ago. Israel is home to some 150,600 Holocaust survivors, almost all of them over the age of 80, according to government figures. That is 15,193 less than a year ago.

The United Nations will be holding a memorial ceremony at the General Assembly on Friday, and other memorial events are scheduled around the globe.

Israel marks its own Holocaust Remembrance Day in the spring.

___

Associated Press writers Eleanor Reich and Ilan Ben Zion in Jerusalem contributed to this report.

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