Banking and Financial Institutions

Subterms

    More stories

    • 138 Shares129 Views

      in Elections

      Ahead of Nigeria’s Election, a Cash Shortage Causes Chaos and Suffering

      by

      Nigeria’s government changed the currency design before the presidential election, causing shortages and wreaking social havoc.Fights are breaking out in bank A.T.M. lines where people queue for days, just to withdraw a maximum of around $40. Cash shortages are so severe that many cannot buy food or medicine, despite having money in the bank. Protesters are venting their anger by burning down banks.A decision by Nigeria’s government to replace its currency with newly designed bills within just four months — with a deadline of Feb. 10 — has thrown Africa’s largest democracy into chaos as it heads toward a presidential election scheduled for this Saturday, Feb. 25.Most Nigerians turned in their old currency, called the naira, as they were told to do in October by the Central Bank of Nigeria. But when they tried to withdraw the new notes, from banks or even informal money brokers, they were stunned to find that few were available.The cash crisis is now an enormous and unpredictable factor in an election that was already Nigeria’s most wide-open race in years. The presidential candidates for the two major parties, which have alternated power for over two decades and failed to address widespread poverty and insecurity, are now facing a surprise, third-party challenger.The government has not made clear what it is trying to accomplish with the currency makeover, offering a gamut of explanations including that it is trying to rein in counterfeiting and cash hoarding. But the effort has been a disaster, and some suspect there may be a political motive behind the mess because of the timing.Voters are now furious at the governing party over the shortage of bank notes, which could undermine support for the party’s candidate. Protests, if they continue, could disrupt elections in parts of the country. Turnout could be affected as some voters struggle to afford to travel to faraway polling stations.Blessing Akor, 22, was on the verge of tears as she was jostled and elbowed by dozens of people waiting in line for an A.T.M. in central Abuja. That morning at 4 a.m., she had left her baby daughter with a neighbor she didn’t really trust, and went in search of cash.The heat was intense, but Ms. Akor had little choice; despite having money in her account, she had no cash for food, water or even the bus fare home. She was incandescent with rage at the government, and said she would not vote for any Nigerian politician.“We’ve been in hell, serious hell,” she said, watching as a man in military uniform cut to the front of the line. “It’s choking — as if they are pressing my throat.”So-called point-of-service operators stand on street corners with card machines, offering withdrawals, essentially functioning as human A.T.M.s. Taiwo Aina for The New York TimesNormally, cash is Ms. Akor’s livelihood. Since Nigeria has few commercial bank branches and A.T.M.s, many people get their cash from professional agents who act as human A.T.M.s., known as P.O.S., or point of service, operators. Ms. Akor is among legions of such operators, who stand on street corners throughout the country with small stocks of cash and mobile card machines, offering cash to cardholders in return for a small fee.Right now, though, cash is in such short supply that those fees are astronomical.Prince Chibeze, 37, ducked under a P.O.S. operator’s umbrella in Lagos last week and asked the price for withdrawing 5,000 naira. A construction worker who earns around 9,000 naira daily, he had spent hours searching for cash to send home to his parents, who were running out of food. But every P.O.S. operator was demanding 30 percent — 1,500 naira — a huge jump from the usual fee of 100 naira.Initially, Godwin Emefiele, the Central Bank governor, said the currency had to be redesigned because Nigerians were hoarding notes in their houses. He then said it would help prevent counterfeiting and kidnappers’ ransom payments, and that it was a step toward achieving a cashless society. Later, he also claimed it would reduce inflation — which has risen to a crippling 21 percent.But some analysts, politicians and dozens of Nigerian voters said that the real reason was to stem vote buying by foiling politicians who had stockpiled naira ahead of election day.Last week, President Muhammadu Buhari said that it had reduced the influence of money on politics, and many Nigerians spoke approvingly of the policy in interviews. But some warned that voters might be so desperate for cash that they would more readily sell their votes.President Buhari has served two terms, and could not run again. The governing All Progressives Congress (A.P.C.) party selected Bola Tinubu, a former governor of Lagos, as its candidate for president.But one of Mr. Tinubu’s rivals in the presidential primary was the head of the Central Bank, Mr. Emefiele. Mr. Tinubu’s allies assert that the Central Bank and a group of people around the president are trying to exact revenge, plotting to ensure Mr. Tinubu suffers massive losses by inciting Nigerians’ anger at the government.One A.P.C. state governor even claimed that they were trying to “provide a fertile foundation for a military takeover.”A campaign poster for Bola Tinubu, the ruling party candidate, at a market in Lagos this month.Taiwo Aina for The New York TimesSome critics even accuse President Buhari of trying to make Mr. Tinubu lose the election — allegations that Mr. Buhari, who has campaigned with Mr. Tinubu, has denied.This is the second time Mr. Buhari has rushed a currency redesign; the first was almost four decades ago, after he took power in a coup d’état. That time, he gave Nigerians less than two weeks to exchange their naira.How severe the shortage of new naira is this time is unclear. Mr. Emefiele has only vaguely referred to “challenges in the distribution” of notes, blaming commercial banks for not loading them into A.T.M.s. Neither he nor the president’s spokesmen could be reached for comment.While political infighting intensifies, the disruption to ordinary life is extraordinary.Angel Christopher pulled her children out of school, unable to pay the fees, because she is selling so few vegetables to cash-strapped customers at the Garki Model Market in Abuja. Hungry diners at a lunch spot ate reduced portions of banga soup — stew made with palm fruit — because the chef, Theresa Tota, can’t afford to buy as many ingredients.A livestock owner desperate for cash in northeast Borno sold his sheep for a fraction of the usual price. At Ocean Blue strip club in Lagos, lap dancers have started accepting bank transfers. Uber drivers now routinely phone passengers before pickups to ask if they’re paying cash — and if not, they cancel.Lines at a gas station in Lagos.Taiwo Aina for The New York TimesNigerians with bank accounts try to pay with cards and bank transfers — but are frequently stymied by what they’re told are “network issues,” perhaps because the system is suddenly overloaded.The crisis has been compounded by the scarcity of fuel. Lines at gas stations rival those at A.T.M.s. Some customers sleep overnight in their vehicles to get gas, and some pay double the official price. Industry officials blame the high cost of transporting fuel to and around the country. But Nigeria is one of Africa’s biggest oil producers, and many citizens blame government mismanagement.The long-term effects of the cash crunch on Nigeria’s already-struggling economy are not clear, but when India banned the largest rupee notes in 2016, causing similar chaotic scenes, its economy slowed markedly.The rituals that many Nigerians savor are also affected.At a glamorous Lagos wedding, no wads of cash were available for showering the bride and groom with money — a Nigerian tradition.A few notes of Nigeria’s currency, the naira, are “sprayed” to celebrate a recent wedding in Lagos. Normally, there would be far more.Taiwo Aina for The New York TimesNext morning at the Citadel Church, a large Pentecostal church in Lagos, when the blue plastic offering buckets went round, congregants mimed putting cash in them. Few had notes to give. Church leaders had anticipated that: outside the auditorium were rows of card machines, and inside, bank numbers flashed on a giant screen so worshipers could transfer their tithes instead.In his sermon, the church’s celebrity pastor, Tunde Bakare — who was a 2023 ruling party presidential aspirant himself, but received no delegates’ votes in the primaries — railed against Nigerian politicians, including some in his own party.“Today our nation is in dire straits; our frontline political parties and the politicians within their enclaves are at war with themselves,” he told his flock.After the service, he said in an interview that he would usually be out in the field campaigning for his party, the A.P.C., but that he refused to be “part of Ali Baba and the 40 thieves.”And though he was Mr. Buhari’s running mate in 2011, and remains close to the president, the pastor had no kind words for the chaotic currency redesign.“The policy may be good, but the implementation is terrible,” Mr. Bakare said.A screen at the Citadel Church in Lagos shows bank numbers so that churchgoers can give donations digitally because of the shortage of bank notes in Nigeria.Taiwo Aina for The New York TimesOladeinde Olawoyin contributed reporting from Lagos, Nigeria, and Rahila Lassa from Abuja, Nigeria. More

    • 88 Shares169 Views

      in Elections

      Brazil’s President Lula Has No Easy Choices

      by

      Brazil’s new president is hemmed in by protesters on one side and financial markets on the other. He needs to spend money to please the public, but he needs to demonstrate fiscal responsibility to keep investors from abandoning Brazilian assets, which could cause interest rates to soar and cripple the economy. Unfortunately, it will be extremely difficult to do both at once.It’s a tough spot for President Luiz Inácio Lula da Silva, the leftist who served two terms from 2003 to 2010 and narrowly won election to a third term in October over the far-right incumbent, Jair Bolsonaro. On Sunday, thousands of Bolsonaro supporters broke into government buildings in the capital, Brasília, to protest what they falsely believe was a stolen election.Lula, as he is known, was able to spend generously on social programs during his first period in office in part because of high prices for many of the commodities that Brazil exports. Brazil is a major producer of steel as well as agricultural products such as citrus and soybeans. Now commodity prices are faltering because of expectations of a global economic downturn. On top of that, Brazil’s central bank has raised its key lending rate to nearly 14 percent in an effort to extinguish inflation, which is running around 6 percent.Bolsonaro, although far right in his politics, governed as a free-spending populist. His government bolstered fuel subsidies last year, which won him votes but worsened the government’s financial situation.Lula, who was inaugurated on Jan. 1 in the company of his adopted pet dog, Resistência, has handed the vital job of finance minister to Fernando Haddad, a fellow leftist who hasn’t (at least yet) won the confidence of investors.With Bolsonaro’s supporters roiling Brasília and other cities, “The capital flow of foreign buyers that entered the Brazilian market recently is likely to be undone,” Matthew Ryan, the head of market strategy at Ebury, a financial services firm, wrote in a note on Monday.In a warning to investors, Filippos Papasavvas, a markets economist at Capital Economics, wrote in a client note on Monday that “any worries about widespread protests could see Lula double down on the more popularist (and less market-friendly) parts of his agenda, such as significant increases to social spending.”For a closer look at Lula’s dilemma, I interviewed Monica de Bolle, a senior fellow at the Peterson Institute for International Economics. A native of Brazil, she was named an honored economist by the Order of Brazilian Economists in 2014 for her contributions to the Brazilian policy debate.“He has no room to do the kinds of things that people expected him to do,” de Bolle told me. On the spending side, investors who worry about deficts spending will rebel if the government increases social spending or puts through a big increase in the minimum wage. Conversely, the public will rebel if he attempts to roll back subsidies on fuel that Bolsonaro put in place.De Bolle said that Brazil’s Wall Street is thick with Bolsonaro supporters. She argued that they gave Bolsonaro the benefit of the doubt but aren’t cutting Lula any slack. I told her that sounded like a great opportunity for investors from outside Brazil: If indeed domestic investors are overly pessimistic about Lula’s ability to rein in spending, then prices of Brazilian debt must be too low, presenting a good deal for buyers. She agreed. “Brazil will certainly present that opportunity,” she said.Then again, if Ebury’s Ryan is correct, foreign investors will be reluctant to scoop up Brazilian assets as long as the political situation remains uncertain. There’s no second honeymoon for Lula.Outlook: Georges Ugeux“Why is nobody talking about the debt?” Georges Ugeux, the chairman and chief executive of Galileo Global Advisors, a New York-based company that advises on mergers, acquisitions and management, asked in an article posted on Medium on Thursday. Rising interest rates have increased the burden of debt. It isn’t just a problem for emerging markets, he wrote. “The over-indebtedness of the United States, Europe, Japan and China could create a much more severe debt crisis, both at sovereign and at corporate levels.” He predicted that 2023 will be “the year where we will start paying the cost of our inconsiderate addiction to debt.”Quote of the Day“Japan’s experience of prolonged deflation suggests that it takes a great deal of effort to dispel anxiety over deflation. Nevertheless, there was no need to give up the challenge of overcoming deflation simply because the economy fell into deflation; against the background of the Bank’s monetary policy measures adopted since 2013, the economy has improved and is currently no longer in deflation.”— Masazumi Wakatabe, deputy governor of the Bank of Japan, in his keynote speech at the annual meeting of the Japan Association of Business Cycle Studies, Dec. 3, 2022Have feedback? Send a note to coy-newsletter@nytimes.com. More

    • 25 Shares99 Views

      in Elections

      Balancing Extremes

      by

      The Federal Reserve is trying to tame inflation without wrecking the economy.America’s central bank, the Federal Reserve, is trying to strike a delicate balance: It has to take steps to slow down the economy to bring inflation under control — but it wants to do so without causing a severe recession.The predicament is unusual for a government agency. Typically, public officials talk about stimulating the economy and creating more jobs.The Fed is trying to do the opposite. Under its dual mandate from Congress, the Fed tries to keep unemployment low and prices relatively stable. Yet those two goals are sometimes in conflict: A strong economy can lead to more jobs but quickly rising prices, while a sluggish economy can lead to fewer jobs but slower price increases. The Fed aims to balance those extremes.But as the Fed has moved to slow down the economy, some experts have worried that it’s going too far, risking unnecessary economic pain. The Fed’s defenders, meanwhile, say the central bank is acting wisely — and may even need to go further than it has to tame rising prices.Today’s newsletter will explain both sides of the debate and the potential dangers to the economy if the Fed does too much or too little to bring down inflation.The case for cautionExperts arguing for caution worry that the Fed has already done enough to ease inflation, even if the effects are not clear yet, and that any more action could backfire.The Fed’s attempts to cool the labor market illustrate the potential risk.The jobs market is one of the major drivers of inflation today, said Jason Furman, an economist at Harvard University. Many employers have raised wages to compete for hires; there are more job vacancies than there are available workers. But someone has to pay for the higher wages, and employers have passed those costs on to consumers by charging higher prices, fueling inflation.In response, the Fed has raised interest rates five times this year to increase the cost of borrowing money. The goal: More expensive loans will result in less investment, then less business expansion, then fewer jobs, then lower pay, then less inflation.There are hints that the Fed’s moves are working. For example, stock markets have declined as the Fed has raised interest rates — partly a signal that investors expect the economy to cool off, just as the Fed wants. “Markets going down is not an indictment of the Fed’s policy,” my colleague Jeanna Smialek, who covers the economy, told me. “Markets going down is the Fed’s policy.”But the rest of the intended chain of reaction, from less investment to less inflation, will take time to work through the economy. The Fed’s interest rate hikes may have done enough, but the full effects aren’t visible yet.Some experts worry the Fed will not wait long enough to see the full effects of its previous actions before it takes more aggressive steps. That could lead to more harm to the economy than necessary. “The risk that the Fed is moving too slowly to contain inflation has declined, while the risk that high interest rates will cause severe economic damage has gone up — a lot,” Paul Krugman, the economist and Times columnist, wrote last week.The case for moreOn the other side, there’s the risk of the Fed doing too little.We have seen the consequences. The Fed, believing inflation would be temporary, was slow to raise interest rates last year. That probably exacerbated the rising prices we’re dealing with now.But things could get worse. The longer inflation goes on, the likelier it is to become entrenched. For example, if businesses expect costs to keep rising, they will set prices higher in anticipation — leading to a vicious cycle of increasing costs and prices.Longer bouts of inflation are also more likely to result in stagflation, when inflation is high and economic growth slows. In such a situation, people have a harder time finding a job and the pay they can get quickly loses value. The U.S. endured stagflation in the 1970s; Europe is facing it now as prices rise and the continent’s economy stumbles.Entrenchment and stagflation could force the Fed to act even more drastically, with grave side effects. It has happened before: In the 1970s and ’80s, the Fed raised interest rates so dramatically and so quickly that the unemployment rate spiked to more than 10 percent.By acting aggressively now, the Fed hopes to avoid such harsh measures — and produce a “soft landing” that reduces inflation without wrecking the economy.The central bank’s record suggests it could pull off the feat, Alan Blinder, a former Fed vice chairman, argued in The Wall Street Journal: The Fed achieved a soft landing or came close in six of 11 attempts over the past six decades. “Landing the economy softly is a tall order, but success is not unthinkable,” Blinder wrote.Related:Stocks rose yesterday for the second straight day, while Amazon became the latest large company to announce a slowdown in hiring.America’s gross national debt yesterday exceeded $31 trillion for the first time.THE LATEST NEWSWar in UkraineSource: Institute for the Study of War | By Marco Hernandez and Josh HolderUkrainian troops expelled Russian forces from a key town in Kherson Province, pushing farther into Russian-controlled territory by attacking several places at once.Russian forces are outnumbered in Kherson, according to pro-Kremlin bloggers.Russians are fleeing to countries like Kyrgyzstan to avoid the military draft.President Biden spoke with Volodymyr Zelensky, Ukraine’s president, and pledged to send four more of the mobile rocket launchers known as HIMARS.PoliticsIn oral arguments, the Supreme Court justices suggested that they might uphold Alabama’s congressional map but not profoundly limit the Voting Rights Act.Donald Trump asked the Supreme Court to let a special master review documents seized from Mar-a-Lago.Doctors and midwives in blue states are working to get abortion pills to red states, setting up a legal clash.InternationalMumbai and the monsoon.Saumya Khandelwal for The New York TimesSouth Asia’s monsoon season is becoming more violent.Protests in Iran over a young woman’s death entered a third week. Women are at the forefront.He was a die-hard soccer fan. She was a chatty aerobics lover. Both perished in an Indonesian stadium.New vaccines are raising hopes of eradicating malaria.Other Big StoriesElon Musk proposed buying Twitter for the price he agreed to in April, after months of trying to back out of the deal.Micron will build a computer chip factory in upstate New York, a sign that government spending on semiconductors is bringing private investment.Days after Hurricane Ian pummeled Florida, many residents face homelessness.The scientists Carolyn Bertozzi, Morten Meldal and Barry Sharpless won the Nobel Prize for their work in “click chemistry.”OpinionsVladimir Putin’s nuclear threats heighten the danger that miscalculation will cause annihilation, Michael Dobbs argues.More school funding is one solution to the male resentment fueling right-wing politics, Michelle Goldberg says.MORNING READSIndigenous Alaskans’ freezers hold a winter’s worth of food.Katie Basile for The New York Times Cold storage: In rural Alaska, the stand-alone freezer is everything.“Beavis and Butt-Head”: The ’90s cartoon that mattered.Academia: Students were failing organic chemistry. Was the professor to blame?A Times classic: Sarah Paulson opens up.Advice from Wirecutter: Party favors for a kid’s birthday.Lives Lived: Loretta Lynn built her stardom not only on her Grammy-winning country music but also on her image as a symbol of rural pride. She died at 90.SPORTS NEWS FROM THE ATHLETICJudge stands alone: With his record-breaking 62nd home run last night, one can argue Aaron Judge’s 2022 season is definitively better than Roger Maris’s 1961 campaign. Relive all 62 home runs here.N.W.S.L. fallout continues: Players are “horrified and heartbroken” after the release of the Sally Yates report, according to the U.S. women’s national team and Portland Thorns star Becky Sauerbrunn, who called for the removal of top executives involved in the ongoing women’s soccer crisis.2023 N.B.A. champs? A survey of the league’s general managers revealed the Milwaukee Bucks as favorites, but familiar contenders also got some votes in what may be an open field for the 2023 title. M.V.P. favorite: Mavericks superstar Luka Doncic.ARTS AND IDEAS Jimmy Smits on the set of “East New York.”George Etheredge for The New York TimesA new era for cop showsAfter the police killing of George Floyd in 2020, public confidence in policing reached a record low. Police officers’ roles on television changed, too: Some shows like the ride-along reality program “Cops,” criticized as “copaganda,” were taken off the air or rewritten.Two years later, the police drama has survived. Eighteen crime-related programs are slated for prime-time slots in the coming months. But there are signs that the genre has evolved in response to public opinion, delivering more nuanced portrayals of law enforcement.Series like “East New York” aim to explore the complexity of policing, raising the question of whether cop shows can answer calls for change without losing the viewers that have kept them popular.Related: A history of the police procedural, in six shows.PLAY, WATCH, EATWhat to CookCraig Lee for The New York TimesFeed a crowd with overnight French toast.What to Read“Waging a Good War” examines the civil rights movement through military history.What to WatchA diverse intern class has arrived in the 19th season of “Grey’s Anatomy.”Late NightThe hosts joked about Herschel Walker, who denied paying for a former girlfriend’s abortion.Now Time to PlayThe pangram from yesterday’s Spelling Bee was mooching. Here is today’s puzzle.Here’s today’s Mini Crossword, and a clue: Home for birds (six letters).And here’s today’s Wordle. After, use our bot to get better.Thanks for spending part of your morning with The Times. See you tomorrow. — GermanP.S. Listen to the trailer for “Hard Fork,” a new Times podcast that explores tech’s wild frontier.Here’s today’s front page. “The Daily” is about the floods in Pakistan. On “The Argument,” Andrew Yang and David Jolly make the case for a third political party.Matthew Cullen, Natasha Frost, Lauren Hard, Lauren Jackson, Claire Moses, Ian Prasad Philbrick and Ashley Wu contributed to The Morning. You can reach the team at themorning@nytimes.com.Sign up here to get this newsletter in your inbox. More

    • 138 Shares149 Views

      in Elections

      Truss Takes a Bold Economic Gamble. Will It Sink Her Government?

      by

      Three weeks into her term, Prime Minister Liz Truss’s financial plans have thrown the markets and Britain’s currency into chaos and put her future in peril.LONDON — Prime Minister Liz Truss of Britain campaigned as a tax cutter and champion of supply-side economics, and she won the race to replace her scandal-scarred predecessor, Boris Johnson. Now she has delivered that free-market agenda, and it may sink her government.Four days after Ms. Truss’s tax cuts and deregulatory plans stunned financial markets and threw the British pound into a tailspin, the prime minister’s political future looks increasingly precarious as well.Her Conservative Party is gripped by anxiety, with a new poll showing that the opposition Labour Party has taken a 17 percentage point lead over the Tories. It’s a treacherous place for a prime minister in only her third week on the job.Labour is seizing the moment to present itself as the party of fiscal responsibility. With some experts predicting the pound could tumble to parity with the dollar, economists and political analysts said the uncertainty over Britain’s economic path would continue to hang over the markets and Ms. Truss’s government.“It’s entirely possible she could be replaced before the next election,” said Tim Bale, a professor of politics at Queen Mary University of London, who is an expert on the Conservative Party. “It would be very, very difficult to conduct a full-blown leadership contest again, but I wouldn’t rule anything out.”That Ms. Truss should find herself in this predicament so soon after taking office attests to both the radical nature and awkward timing of her proposals. Cutting taxes at a time of near-double-digit inflation, when central banks in London and elsewhere are raising interest rates, was always going to mark Britain as an economic outlier.But the government compounded the shock last Friday when the chancellor of the Exchequer, Kwasi Kwarteng, unexpectedly announced that the government would also abolish the top income tax rate of 45 percent applied to those earning more than 150,000 pounds, or about $164,000, a year.And Mr. Kwarteng did not submit the package to the scrutiny a government budget normally receives, deepening fears that the tax cuts, without corresponding spending cuts, will blow a hole in Britain’s public finances.Cutting taxes at a time of near-double-digit inflation, when central banks in London and worldwide are raising interest rates, has made Britain an economic outlier.Carl Court/Getty ImagesOn Tuesday, the pound stabilized briefly against the dollar, as did 10-year rates on British government bonds, though both began to gyrate later in the day after a senior official at the Bank of England signaled an aggressive rise in interest rates.The International Monetary Fund, which bailed out Britain in 1976, added to the deepening sense of anxiety when it urged the British government to reconsider the tax cuts. In a statement, it said the cuts would exacerbate inequality and lead to fiscal policy and monetary policy working at “cross purposes.”Rising Inflation in BritainInflation Slows Slightly: Consumer prices are still rising at about the fastest pace in 40 years, despite a small drop to 9.9 percent in August.Interest Rates: On Sept. 22, the Bank of England raised its key rate by another half a percentage point, to 2.25 percent, as it tries to keep high inflation from becoming embedded in the nation’s economy.Energy Bills to Soar: Gas and electric charges for most British households are set to rise 80 percent this fall, further squeezing consumers and stoking inflation.Investor Worries: The financial markets have been grumbling with unease about Britain’s economic outlook. The government plan to freeze energy bills and cut taxes is not easing concerns.Already, the specter of higher interest rates was causing the housing market to seize up. Two major British mortgage lenders announced that they would stop offering new loans because of the market volatility. Higher rates will hurt hundreds of thousands of homeowners who need to refinance fixed-term mortgages — property owners, analysts noted, who are the bedrock of the Conservative Party.“It’s not like the U.S., where people are on 30-year mortgages,” said Jonathan Portes, a professor of economics and public policy at King’s College London.An estimated 63 percent of mortgage holders have either floating rate mortgages or loans that will expire in the next two years. And the steep decline of the pound means that interest rates will have to rise even further than they would have merely to curb inflation.Ms. Truss, he said, could have taken a more cautious approach: rolling out the supply-side measures first, like plans to untangle Britain’s cumbersome residential planning rules and build more housing, which are hurdles to economic growth. Then, when inflationary pressures had eased, the government could have cut taxes.But that was never in the cards, Professor Portes said, because Ms. Truss and Mr. Kwarteng are free-market evangelists who ardently believe that cutting taxes will reignite growth, and because they have little more than two years to turn around the economy before they face voters in a general election.“This is ‘shock and awe,’” he said. “Truss, Kwarteng, and the people around them think they had to act quickly. The longer they wait, the more the resistance will build up.”Kwasi Kwarteng, Britain’s chancellor of the Exchequer, announced tax cuts that some fear will blow a hole in Britain’s public finances.Clodagh Kilcoyne/ReutersDuring the campaign, Ms. Truss modeled herself on Margaret Thatcher, who also announced a series of free-market measures after taking office as prime minister and endured a turbulent couple of years. Unlike Ms. Truss, though, Thatcher worried about curbing inflation and shoring up public finances; she even raised some taxes during a recession in 1981 before reducing them in later years.But Thatcher came in after an election victory over an exhausted Labour government, which gave her more time to weather the downturn and for her deregulatory measures to take effect. She also got a lift after Britain vanquished Argentina in the Falklands War in 1982, which uncorked a surge of patriotism.“Thatcher was thinking in 1979 that I only need to give voters something they like by 1982,” said Charles Moore, a former editor of The Daily Telegraph who wrote a three-volume biography of the former prime minister. “Liz Truss hasn’t got this amount of time.”The better analogy to Ms. Truss, he said, is Ronald Reagan, with his emphasis on tax cuts and other supply-side policies, as well as his relative lack of concern for their effect on public deficits. Like Thatcher, Reagan weathered a recession before the United States began growing again in 1983. And like her, he had a cushion before he had to face voters.Ms. Truss, by contrast, has taken office after 12 years of Conservative-led governments, and three years into Mr. Johnson’s tenure. She will have to call an election by the beginning of 2025, at the latest. The Labour Party, which had been divided by Brexit and internal disputes, has been galvanized by the new government’s chaotic start, in particular Mr. Kwarteng’s plan to cut the top tax rate, which has allowed Labour to stake out a clear contrast on issues of economic equity.Speaking at the party’s annual conference in Liverpool on Tuesday, the Labour leader, Keir Starmer, declared that the Conservatives “say they do not believe in redistribution. But they do — from the poor to the rich.”Keir Starmer’s Labour Party is seizing the moment to present itself as the party of fiscal responsibility.Henry Nicholls/ReutersLabour’s lead of 17 percentage points in a new poll by the market research firm, YouGov, is the largest advantage it has had over the Conservatives in two decades. The Tories won the support of just 28 percent of those surveyed, raising questions about its ability to hold on to its existing seats, according to Professor Bale.That forbidding political landscape only adds to the challenge facing Ms. Truss. For the tax cuts to have one of their desired effects — which is to encourage businesses to invest more — economists said companies would need some reassurance that the policy is not going to be reversed by a new government in two years.“This is a very inexperienced government swinging for the fences in a situation where Labour is the strong favorite in the next election, if they don’t swing too far left,” said Kenneth S. Rogoff, a professor of economics at Harvard. “If one believes that the tax cuts are going to be reversed under Labour, and that there is a high chance of a Labour government, why would they influence long-term investment?”Britain, Professor Rogoff said, was also rowing against much greater forces in the global economy. After years of low inflation and extremely low interest rates, the flood of public spending because of the coronavirus pandemic has brought back the scourge of inflation and a shift toward higher rates.“The verdict will almost certainly be that governments borrowed too much and should have raised taxes on the wealthy more,” he said.In the short term, Ms. Truss is likely to find herself increasingly at odds with the Bank of England. The bank was already expected to raise rates at its next meeting in November. On Tuesday, its chief economist, Huw Pill, said the government’s new fiscal policies would require a “significant monetary policy response.”Adam S. Posen, an American economist who once served on the Bank of England’s monetary policy committee, said, “The government’s policies are not only outrageously irresponsible, but they don’t seem to understand that the bank has to respond to these policies by raising interest rates a lot.”The Bank of England, like many other banks worldwide, is expected to raise rates at its meeting next month.Andy Rain/EPA, via ShutterstockMr. Posen, who is the president of the Peterson Institute of International Economics, likened Britain’s loss of credibility in the markets to that of Britain and other European countries in the 1970s and Latin American countries in the 1980s. The best course, he said, would be for the government to reverse its fiscal policy, though he said Ms. Truss and Mr. Kwarteng seemed “willfully committed to it.”Certainly, they have given no indication that they plan to back down. On Tuesday, Mr. Kwarteng told bankers and asset managers that he was confident the government’s plan would work.After the turmoil that led to Mr. Johnson’s ouster in July, and the protracted contest to replace him, few in the Conservative Party have the stomach to move against Ms. Truss now. But analysts note that the new prime minister has a shallow reservoir of support among lawmakers. Barely a third of them voted for her in the final ballot against her primary opponent, Rishi Sunak, and she won the subsequent vote among party members by a closer margin than expected.Taking note of the new YouGov poll, Huw Merriman, a Conservative lawmaker, may have spoken for many of his colleagues when he said on Twitter, “Those of us who backed Rishi Sunak lost the contest, but this poll suggests that the victor is losing our voters with policies we warned against.”“For the good of our country, and the livelihoods of everyone in our country,” he added, “I still hope to be proven wrong.” More

    • 150 Shares109 Views

      in Elections

      Giorgia Meloni Leads Voting in Italy, in Breakthrough for Europe’s Hard Right

      by

      ROME — Italy appeared to turn a page of European history on Sunday by electing a hard-right coalition led by Giorgia Meloni, whose long record of bashing the European Union, international bankers and migrants has sown concern about the nation’s reliability in the Western alliance. Early projections based on a narrow sampling of precincts, as well as exit polls, on Sunday night suggested that Ms. Meloni, the leader of the nationalist Brothers of Italy, a party descended from the remnants of fascism, had led a right-wing coalition to a majority in Parliament, defeating a fractured left and a resurgent anti-establishment movement. The final results would not be clear until Monday, and it will still be weeks before the new Italian parliament is seated and a new government is formed, leaving plenty of time for political machinations. But Ms. Meloni’s strong showing, with about 25 percent of the vote, the highest of any single party, makes her the prohibitive favorite to become the country’s first female prime minister. While she is a strong supporter of Ukraine, her coalition partners deeply admire Russia’s president, Vladimir V. Putin, and have criticized sanctions against Russia.“From the Italians has arrived a clear indication,” Ms. Meloni, known for her crescendoing rhetoric and cult of personality, said in a measured victory speech at nearly 3 a.m., “for the center-right to guide Italy.”After saying she had suffered through a “violent electoral campaign” filled with unfair attacks, Ms. Meloni spoke about “reciprocal respect” and recreating “trust in the institutions.” She posed flashing a victory sign. “We are at the starting point,” she said, adding, “Italy chose us, and we will never betray it.”The victory, in an election with lower turnout than usual, comes as formerly taboo and marginalized parties with Nazi or fascist heritages are entering the mainstream — and winning elections — across Europe. This month, a hard-right group founded by neo-Nazis and skinheads became the largest party in Sweden’s likely governing coalition. In France this year, the far-right leader Marine Le Pen — for a second consecutive time — reached the final round of presidential elections. In Spain, the hard-right Vox, a party closely aligned with Ms. Meloni, is surging.But it is Italy, the birthplace of fascism and a founding member of the European Union, that has sent the strongest shock wave across the continent after a period of European-centric stability led by Prime Minister Mario Draghi, who directed hundreds of billions of euros in recovery funds to modernize Italy and helped lead Europe’s strong response to Russia. Giorgia Meloni preparing to cast her vote at a polling station in Rome on Sunday.Gianni Cipriano for The New York Times“This is a sad day for the country,” Debora Serracchiani, a leader of the Democratic Party, which will now lead the opposition, said in a statement early Monday morning.Ms. Meloni’s victory showed that the allure of nationalism — of which she is a strong advocate — remained undimmed, despite the breakthroughs by E.U. nations in coming together to pool sovereignty and resources in recent years, first to combat the coronavirus pandemic and then Mr. Putin’s initiation of the largest conflict in Europe since World War II.How, and how deeply, a right-wing coalition in Italy led by Ms. Meloni could threaten that cohesion is now the foremost concern of the European establishment.Ms. Meloni has staunchly, and consistently, supported Ukraine and its right to defend itself against Russian aggression. But her coalition partners — Matteo Salvini, the firebrand leader of the League, and the former prime minister Silvio Berlusconi — have clearly aligned themselves with Mr. Putin, questioning sanctions and echoing his propaganda. That fracture, and the bitter competition between the right-wing leaders, could prove fatal for the coalition, leading to a short-lived government. But some political analysts say Ms. Meloni, having attained power, may be tempted to soften her support for sanctions, which are unpopular in much of Italy. If she does, there is concern that Italy could be the weak link that breaks the European Union’s strong united position against Russia.Ms. Meloni had spent the campaign seeking to reassure an international audience that her support of Ukraine was unwavering. She sought to allay concerns by condemning Mussolini, whom she once admired, and Italy’s Fascist past. She also made more supportive noises about Italy’s place in the European Union and distanced herself from Ms. Le Pen and Prime Minister Viktor Orban of Hungary, whom she had previously emulated. But that pivoting was more for international markets than Italian voters, who didn’t much care about her past, or even her affinity for illiberal democracies. The Italian electorate had not moved to the right, political scientists said, but instead again resorted to a perennial desire for a new leader who could possibly, and providentially, solve all its ills. Ms. Meloni found herself in the right place at the right time. Hers was virtually the only major party to remain outside Mr. Draghi’s national unity government, allowing her to soak up an increasing share of the opposition. Her support surged from 4 percent to nearly about 25 percent.After a revolt by a party in Mr. Draghi’s broad unity government in July, the right-wing parties, eager to go to elections they were favored to win, sensed opportunity and bolted, with Ms. Meloni in the pole position.There is little concern in the Italian establishment that she will undermine Italian democracy — she has been a consistent advocate for elections during unelected technocratic governments and has long served in Parliament. There is also a widespread belief that Italy’s dependence on hundreds of billions of euros in relief funds from the European Union will force Ms. Meloni and her government to follow the spending plans, reforms and overall blueprint established by Mr. Draghi. The money comes in tranches and the plans have to meet strict criteria. If she reverses course, Italy could lose out on billions of essentially free euros as rising energy prices and inflation — much of it stemming from the sanctions against Russia — are expected to worsen in coming months.Giorgia Meloni, addressing supporters during a rally in Piazza Duomo in Milan earlier this month.Piero Cruciatti/Agence France-Presse — Getty ImagesBut there is concern about Ms. Meloni’s lack of experience and her party’s lack of technical expertise, especially in running the eurozone’s third-largest economy, and Mr. Draghi has kept in close touch with her, both to ensure her support for Ukraine and, insiders say, to help find someone who can provide economic continuity.Nevertheless, Ms. Meloni represents a historic break at the top of Italian government. She came of political age in a post-Fascist, hard right that sought to redefine itself by seizing on new symbols and texts, especially “The Lord of the Rings” and other works by the British writer J.R.R. Tolkien, to distance itself from the taboos of Fascism. She grew up with a single mother in a working-class area of Rome, and being a woman, and mother, has been central to her political identity. She once ran for mayor while pregnant because she said powerful men had told her she couldn’t. Her most famous speech includes the refrain “I am a woman. I am a mother.” Being a woman has also distinguished her, and marked a major shift, from her coalition partners, especially Mr. Berlusconi, the subject of endless sex scandals.But Ms. Meloni, Mr. Berlusconi and Mr. Salvini share a hard-right vision for the country. Ms. Meloni has called for a naval blockade against migrants and spread fears about a “great replacement” of native Italians. The three share populist proposals for deep tax cuts that economists fear would inflate Italy’s already enormous debt, and a traditionalist view of the family that liberals worry will at least freeze in place gay rights and which could, in practice, roll back abortion rights.Despite the constraints of an Italian Constitution that is explicitly anti-Fascist and designed to stymie the rise of another Mussolini, many liberals are now worried that the right-wing coalition will erode the country’s norms. There was concern that if the coalition were to win two-thirds of the seats in Parliament, it would have the ability to change the Constitution to increase government powers. From left to right, Matteo Salvini, Silvio Berlusconi, and Giorgia Meloni attending the final rally of the center-right coalition in Rome on Thursday.Alessandra Tarantino/Associated PressOn Thursday, during one of Ms. Meloni’s final rallies before the election, she exclaimed that “if the Italians give us the numbers to do it, we will.”But the coalition appeared not to hit that mark. The main party of the left, the Democratic Party, all but guaranteed its defeat by failing to heal its differences with other liberal and centrist parties, including a new group of moderates. The moderates, backed by former Prime Minister Matteo Renzi, and attracting some former leaders of Mr. Berlusconi’s party, who were disillusioned with his following of the hard right, did better than expected, but still seemed to remain in the single digits.What really held the right back from a landslide were their former governing partners, the Five Star Movement, the once anti-establishment movement that triggered the collapse of Mr. Draghi’s government when it revolted in July.In 2018, the party’s burn-down-the-elite rhetoric led it to become the country’s most popular party and largest force in Parliament. Years of governing — first with the hard-right Mr. Salvini, and then with the Democratic Party, and then under Mr. Draghi — exposed its incompetence and infighting and it imploded. It seemed on the brink of extinction. But during the campaign, led by former Prime Minister Giuseppe Conte, the party surged in the country’s underserved south.That development was mainly because Five Star passed a broad unemployment benefit known as the “citizen’s income,” which though roundly criticized by moderates and the right as a handout to the lazy and a disincentive to work, has become a cherished benefit.As a result, Five Star appeared to be becoming the party of the south.“This is what is emerging,” said Angelo Tofalo, himself a southerner and a leader in the party, as he cheered Mr. Conte, at a rally in Rome on Friday. He said the party had laid down deep roots in the south, but acknowledged, “the citizen’s income is a factor.”That unexpected strength ate into Ms. Meloni’s support, while she devoured the backing of the League party of Mr. Salvini. Only years ago he was the country’s most popular populist. Now he appeared to sink to single digits. Mr. Berlusconi, once the hinge upon which the coalition turned, and who legitimized the marginalized post-Fascists and secessionist League in the 1990s, also registered a modest result.But together they had enough to govern and Ms. Meloni had the clearest claim on the office of prime minister during negotiations and consultations with Italy’s president, Sergio Mattarella, which will take place over the next month. The new government is likely to be seated in late October or early November.But the message of the end of a period of European taboos, and of new change, has already been sent.Ms. Meloni said in one of her last interviews before the election that her victory would be “a redemption” for all the people who “for decades had to keep their heads down” and who had an “alternative vision from the mainstream of the system of power.”Elisabetta Povoledo More

    • 113 Shares179 Views

      in Elections

      After Lebanon’s Collapse, Can an Election Fix the Country?

      by

      On Sunday, Lebanese voters get their first chance to pass judgment on lawmakers since the economy fell apart. Few expect things to improve.BEIRUT, Lebanon — Onstage, Lebanese politicians spoke of upholding national sovereignty, fighting corruption and fixing the state. Their leader said he would fight to disarm Hezbollah, the political party that is also Lebanon’s strongest military force.But those concerns were far from the mind of Mohammed Siblini, 57, who like many Lebanese had watched his life fall apart over the past two years as the country collapsed.The national currency’s free-fall meant that his monthly salary from a rental car company had fallen to $115 from $2,000, he said. The state’s failure to provide electricity meant that most of his earnings went to a generator to keep his lights on. What was left failed to cover the small pleasures that had been, until recently, a normal part of life.“I want meat!” Mr. Siblini yelled at the politicians. “Get us one kilogram of meat!”On Sunday, Lebanon votes for a new Parliament for the first time in four years. It is hard to overstate how much worse life has gotten for the average citizen in that period, and how little the country’s political elite have done to cushion the blow.The vote is the public’s first opportunity to formally respond to their leaders’ performance, so at stake is not just who wins which seats, but the larger question of whether Lebanon’s political system is capable of fixing its many dysfunctions.Few analysts think that it is, at least in the short term.Flags of the Lebanese Forces political party in Byblos, Lebanon, on Sunday. The election is the public’s first opportunity to pass judgment on their leaders since the economic collapse.Joseph Eid/Agence France-Presse — Getty ImagesThe country’s complex social makeup, with 18 officially recognized religious sects and a history of civil conflict, drives many voters to elect their coreligionists, even if they are corrupt.And in a country where citizens seek out a party boss to cut through bureaucracy or get their children government jobs, corruption actually helps established political parties serve their constituents.But the collapse has put new strain on that old system.The crisis began in late 2019, when protests against the political elite spilled into the streets of the capital, Beirut, and other cities.That exacerbated pressure on the banks, which had been engaging in creative accounting with the central bank to prop up the currency and earn unsustainable returns for depositors.Critics have called it a Ponzi scheme, and it suddenly failed. The value of the Lebanese pound began a decline that would erase 95 percent of its value, and commercial banks placed limits on withdrawals, refusing to give people their money because the banks had effectively lost it.The financial turmoil tore through the economy. Prices spiked, businesses failed, unemployment skyrocketed and doctors, nurses and other professionals fled the country for better salaries abroad.The state, which had never managed to provide 24-hour electricity, ran so low on cash that it now supplies barely any at all, even to power traffic lights.Making matters worse, a huge explosion in the port of Beirut in August 2020, also caused by gross mismanagement, killed more than 200 people and did billions of dollars in damage.A view of Beirut’s port on Friday. Official negligence led to the explosion there in August 2020, which killed hundreds.Mohamed Azakir/ReutersDespite losses that the government says total $72 billion, none of the banks have gone out of business, the central bank chief remains in his job, and none of the politicians who backed the policies that led to the collapse have been held accountable. Some of them are running in Sunday’s election — and are likely to win.Many of the candidates are familiar faces who would struggle to bill themselves as agents of change.They include Nabih Berri, the 84-year-old speaker of Parliament, who has held that job, uninterrupted, for nearly three decades; Ali Hassan Khalil, a former finance minister who worked to hobble the investigation into the cause of the Beirut explosion; and Gebran Bassil, the president’s son-in-law, whom the United States accuses of corruption and placed sanctions on last year. Mr. Bassil denies the accusation.Hezbollah, which has a substantial bloc in Parliament and is considered a terrorist organization by the United States and other countries, is fielding a range of candidates. Others are warlords from the Lebanese civil war, which ended in 1990, or, in some cases, their sons.Many voters are just fed up, and have little faith that their votes will make a difference.“A candidate comes now and says ‘I will do this and that,’ and I tell them, ‘Many came before you and couldn’t change anything,’” said Claudette Mhanna, a seamstress.She said she would like to vote for a new figure who came out of the 2019 protests, but because of the way the election is run, she has to vote for lists that include candidates she hates.“We are suffocating,” she said. “If I get myself to think about going and voting, I can’t think of who I would vote for.”Supporters of Hezbollah at a rally in Baalbek, Lebanon, on Friday.Francesca Volpi/Getty ImagesMany of those running have ties to the financial system, which Olivier De Schutter, a United Nations expert on poverty, said shared responsibility for the “man-made crisis” in Lebanon that had resulted in human rights violations.“Lifetime savings have been wiped out by a reckless banking sector lured by a monetary policy favorable to their interests,” he wrote in a report published last week. “An entire generation has been condemned to destitution.”On Friday, the Organized Crime and Corruption Reporting Project reported that a son of Lebanon’s central bank governor had transferred more than $6.5 million out of the country at a time when most depositors were locked out of their savings.Those transactions were carried out by AM Bank, whose chairman, Marwan Kheireddine, bought a Manhattan penthouse for $9.9 million from the actress Jennifer Lawrence in August 2020, when Lebanon’s economy was plummeting.Mr. Kheireddine has said the purchase was for a company he managed, not for him personally.Now he is running for Parliament, and he told The New York Times in an interview that he wants to use his experience to help fix the economy.“I’m experienced in finance,” he said. “I’m not going to make promises, but I will do my best to work hard to get the depositors’ money back.”For many Lebanese, party loyalty remains strong.“There’s no list more deserving of my vote than Hezbollah,” said Ahmad Zaiter, 22, a university student from Baalbek in eastern Lebanon.He said Hezbollah’s weapons were necessary to defend the country, and that the party had helped its supporters weather the crisis by providing cheap medication from Syria and Iran.“If there’s a party besides Hezbollah that is offering weapons to the government to strengthen it so we can defend ourselves or offering services, then where is it?” he said.Soldiers were deployed in Beirut on Saturday, the eve of the election.Mohamed Azakir/ReutersMany first-timers are running, too, marketing themselves as being cleaner and closer to the people. Most projections have them winning only a limited number of seats in the 128-member Parliament, and analysts expect them to struggle without the infrastructure of a political party.“I will be the people’s voice inside the Parliament, but I cannot promise that I will fix the electricity or the infrastructure,” said Asma-Maria Andraos, who is running in Beirut. “I cannot say that I will stop the corruption, which is deeply rooted in our system.”Many Lebanese who have the means have already left the country, and many more are seeking ways out. A recent poll by the research group Arab Barometer found that 48 percent of Lebanese citizens were seeking to emigrate. For those between ages 18 and 29, the percentage rose to 63 percent, the poll found.Fares Zouein, who owns a Beirut sandwich shop, said he intended to vote for his local political boss, whom he refused to name, because the man uses his position to help the neighborhood.“That’s our problem in Lebanon: If you don’t have someone to help you, you’re stuck,” said Mr. Zouein, 50.He, too, had little faith that the election would make life better.“This is why everyone in Lebanon has three goals in life: to get a second passport, to open a bank account abroad, and to send their children abroad for school,” he said. More

    • 150 Shares99 Views

      in Elections

      As Marine Le Pen Moves Closer to French Presidency, Putin Ties Persist

      by

      As elections approach Sunday, the far-right candidate is linked to the Russian president by a web of financial ties and a history of support that has hardly dimmed despite the war in Ukraine.PARIS — When Europe’s far-right leaders gathered in Madrid in January, they had no problem finding unity on the issues they hold dear, whether cracking down on immigrants or upholding “European Christian ideals.” But as Russian troops massed on the Ukrainian border, they were divided on one issue: the threat posed by President Vladimir V. Putin.Marine Le Pen, the extreme-right challenger for the French presidency, objected to a paragraph in the final statement calling for European solidarity to confront “Russian military actions on the eastern border of Europe.” Even in a gathering of illiberal nationalists, she was an outlier in her fealty to Mr. Putin.Now, on her campaign website, the leaders’ statement appears with that paragraph cut in an unacknowledged change to the text. This little subterfuge is consistent with an embrace of Mr. Putin so complete that even his ravaging of Ukraine has hardly diminished it.Over the past decade, Ms. Le Pen’s party, the National Rally, formerly the National Front, has borrowed millions from a Russian bank, and Ms. Le Pen has supported Mr. Putin’s annexation of Crimea in 2014, as well as his incendiary meddling that year in the Donbas region of eastern Ukraine, where just this week Russia redoubled its offensive.Her support for Mr. Putin is one thing in a time of peace and another in a time of war. Russia, a nuclear power, has invaded a European state, and Ms. Le Pen is closer than ever to her cherished goal of becoming president of France, having narrowed the gap with President Emmanuel Macron before the decisive round of the election on Sunday.Supporters of Ms. Le Pen at a campaign rally in Stiring-Wendel, France, on April 1. She has come closer to Mr. Macron in polls as a decisive election round nears.Andrea Mantovani for The New York TimesWith polls showing Ms. Le Pen gaining about 44.5 percent of the vote to Mr. Macron’s 55.5 percent, she is within range of the shocks that produced Brexit and Donald J. Trump’s victory in 2016. As in Britain and the United States, alienation and economic hardship have fed a French readiness to gamble on nationalist dreams.If Ms. Le Pen wins, which is not likely but possible, her victory will almost certainly fracture the allied unity engineered by President Biden in an attempt to defeat Mr. Putin. It would hand Mr. Putin by far his most important ally in Europe, one he could leverage in his aims to divide Europe from the United States and fracture Europe’s decades-old project of unity.France, a core member of the European Union and NATO, is suddenly the possible soft underbelly of the West.Julien Nocetti, a Russia expert at the French Institute of International Relations, said there was “a complete ideological alignment between Putin and Le Pen” — one that would be deeply worrying to France’s American and European allies.The Ukraine war has caused Ms. Le Pen to pivot a little by saying Mr. Putin crossed “a red line” with the invasion, but she still says her foreign-policy priority is a rapprochement with Russia once the fighting stops.Bodies being loaded onto a truck in Bucha, Ukraine, where evidence of Russian atrocities mounted. Ms. Le Pen said that Mr. Putin crossed “a red line” with the invasion but also that she will seek a rapprochement with Russia.Daniel Berehulak for The New York TimesSince Ms. Le Pen, 53, took over the leadership of her party in 2011, she has only deepened its Putin predilection, making four trips to Moscow and one to Crimea. She would support sanctions against Russia, she says, but not cutting off imports of Russian oil and gas, which she has equated with economic death for France.“We have to think of our people,” she said in a recent TV interview, a position consistent with the strong focus on pocketbook issues that has propelled her campaign. The majority of French people are more focused on getting to the end of the month than getting Russia out of Ukraine.Certainly, Ms. Le Pen vaunted her connection with Mr. Putin until he went to war on Feb. 24. She included a photo of herself shaking hands with him in her election brochure as evidence of her “international stature.” This handout disappeared abruptly from view after the Russian invasion.The photo was taken at the Kremlin on March 24, 2017. That was less than five weeks before the first round of the last presidential election, in which Mr. Macron defeated Ms. Le Pen by 66.1 percent to 33.9 percent. The National Rally leader said then that she would immediately review lifting “unjust” sanctions against Russia if elected.As for Mr. Putin, he said with a knowing smirk that Russia did “not want to influence events in any way.”Shopping at a supermarket in Livry-Gargan, Paris, in December. Most French voters are more concerned about the economy than the Ukraine war.Andrea Mantovani for The New York TimesJean-Maurice Ripert, the French ambassador in Moscow from 2013 to 2017, said in an interview that a fellow European ambassador, a close friend, had asked the Russian leader after the French election why he had backed Ms. Le Pen.“Because I had been told she was going to win,” Mr. Putin said.Certainly that is what he wanted. Ms. Le Pen, committed to “equidistance” between great powers and hostile to “America’s protectorate on European soil,” sees in Mr. Putin the defender of the nation-state, family and Christianity against border-eroding multilateralism and irreligious cultural decay.“It’s all about sovereignty,” said Marlène Laruelle, the French director of the Institute for European, Russian and Eurasian studies at George Washington University. “The sovereign state against international organizations; the sovereign traditional family against L.G.B.T.Q. rights.”Then there is the money. Unable to get a loan from French banks, Ms. Le Pen and several of her top aides scrambled for cash in Russia, accepting a 9.4 million euro loan, then $12.2 million, at a 6 percent interest rate, from the First Czech-Russian Bank in September 2014. It was supposed to be repaid by 2019.A branch of the First Czech-Russian Bank in Moscow, before it collapsed in 2016. Ms. Le Pen received millions in loans from the bank.Dmitry Serebryakov/TASS/Alamy Live NewsWallerand de Saint-Just, who was long the National Rally’s treasurer before leaving the position last year, negotiated the deal in Moscow. In a written answer to a question as to why French banks had refused any loan to the National Rally, he said “My experience with the six big French banking groups is that they obey orders from the political executive.”But given the lack of transparency and accountability in Russia’s financial sector — and Mr. Putin’s sway over it in his pay-to-play system — the sum has long raised hard questions of just how beholden Ms. Le Pen actually is to the Russian president, and whether some of her outspoken backing for him has been a consequence.I asked Ms. Le Pen this month at a news conference whether the outstanding loan did not create at least the impression of dependence on Russia, a liability for any future president?“Absolutely not,” she said. “I am totally independent of any link to any power.”In her current campaign, again unable to get a loan from a French bank, Ms. Le Pen turned to Hungary, where Viktor Orban, the anti-immigrant Hungarian prime minister, has been in power for 12 years. A Hungarian bank has now lent the National Rally another $11.4 million, so if she were to win she would be indebted to both Mr. Putin and Mr. Orban.Hungary’s prime minister, Viktor Orban, center, attending a meeting of far-right and conservative leaders in Madrid, in January.Oscar Del Pozo/Agence France-Presse — Getty ImagesAlready her backing of Mr. Putin has been borderline fawning. Ms. Le Pen visited Moscow and Crimea in June 2013; Moscow in April 2014; and Moscow again in May 2015. She was received by the president of the Duma, the lower chamber of Russia’s Parliament, during the first of these visits, and sprinkled her Russian sojourns with pro-Putin remarks.In 2013, she blamed the European Union for a new “Cold War on Russia.” In 2015, also while in Moscow, she criticized France’s pro-American stance and suggested this would change “in 2017 with Marine Le Pen as president.” In 2021, she recommended Russia’s uncertain Sputnik vaccine for the coronavirus, saying “our anti-Russian ideology should not ruin our capacity to vaccinate our fellow citizens.”The 2014 visit came at a particularly delicate moment, given the Crimea annexation. It was one of several demonstrations of support for Mr. Putin from prominent members of Ms. Le Pen’s party who visited Crimea that year, and the Donbas, the Ukrainian region where clashes kindled by Moscow had begun.Among them was Aymeric Chauprade, her former top diplomatic adviser, who went to Crimea to observe the dubious March 2014 referendum that massively backed the Russian annexation. A United Nations General Assembly resolution declared the vote invalid.“It was the West that began changing European borders with Kosovo’s independence in 2008,” Mr. Chauprade, who has since left the National Rally, said in an interview. “There was an openness to accepting invitations from Russia, a good atmosphere.”Russian troops guarded a Ukrainian marine base in Crimea as Mr. Putin moved to annex the peninsula in March 2014. Le Pen has visited Moscow and Crimea and made remarks that were supportive of Russia.Sergey Ponomarev for The New York TimesMediapart, a French investigative news website, was the first to expose the Russian loan to the National Rally in September 2014. In an earlier interview with Mediapart, Mr. Chauprade said visits to the Donbas that year and in 2015 by Jean-Luc Schaffhauser, a former National Rally member of the European Parliament, had been a “quid pro quo” for the loan.What to Know About France’s Presidential ElectionCard 1 of 4Heading to a runoff. More