Ukraine

• Russia’s Moskva guided missile cruiser was seriously damaged and evacuated near Odessa today. Russia says a fire on board caused an ammunition stockpile to blow up; Ukraine says it caused that fire with Neptune missile strikes.
• There are reports that the Moskva has already sunk, but stormy weather is blocking satellite verification of those reports.
• If Ukraine’s missiles did indeed sink the Moskva, it could be the largest warship ever sunk with a missile, and it would certainly be a big symbolic victory for Ukraine—as well as a major loss for Russia: as one analyst pointed out, “only the loss of a ballistic missile submarine or the Kutznetsov (Russia's lone aircraft carrier) would inflict a more serious blow to Russian morale and the navy's reputation with the Russian public.”
• Separately, Ukraine detained a pro-Russian oligarch, Viktor Medvedchuk, on charges of treason. Pres. Zelensky suggested Medvedchuk—who’s so close with Putin that Putin is rumored to be his daughter’s godfather—might be used in a prisoner trade with Russia.

International Reaction

• Pres. Biden referred to Russian atrocities in Ukraine as “genocide” for the first time: “Putin is just trying to wipe out even the idea of being Ukrainian.” The g-word carries heavy connotations: the 1948 Convention on the Prevention of the Crime of Genocide obliges signatories to take action against people and countries found to be committing genocide.
• Biden also pledged another $800 million in military assistance for Ukraine, including 11 Mi-17 helicopters and heavy artillery like 18 155mm howitzers to defend against Russia’s onslaught in the Donbas. Including this package, the U.S. has allocated total of over $2.5 billion in military aid for Ukraine since Russia invaded it in February.
• The PMs of previously-nonaligned Sweden and Finland said their countries were considering joining NATO, and would make their decisions “within weeks” (though the subsequent application process could take years). As the NYT insightfully noted:

“Should these militarily nonaligned Nordic countries opt to [join NATO], it would be yet another example of the counterproductive results of Putin’s war in Ukraine. Instead of crushing Ukrainian nationalism, Putin has enhanced it. Instead of weakening the trans-Atlantic alliance, he has solidified it. And instead of blocking NATO’s growth, he has catalyzed its potential expansion.”

China

• U.S. Treasury Secretary Yellen delivered a momentous policy speech challenging China to step up to its obligations as a leader of the new world order and criticizing it for “fence-sitting” by continuing to trade with Russia despite the war in Ukraine.
• China’s oil major, CNOOC, is planning to exit its operations in Canada, the UK, and the U.S. Reuters says the divestment is motivated by a desire to protect CNOOC assets from possible (but improbable) seizure over China’s reluctance to condemn Russia for invading Ukraine; it’s equally likely CNOOC just wants to cash out of assets it doesn’t want while oil prices are high.
• AP reports that the U.S. and Australia are lobbying the Solomon Islands to abandon the security agreement it made with China over concern that the deal could lead to a threatening Chinese military presence there. The U.S. offered to reopen its embassy in Honaira—which has been closed since 1993—as an incentive to switch allegiances.

Libya

• Delegates from Libya’s rival governments began UN-backed talks in Egypt yesterday. Rival PMs Dbeibah and Bashagha don’t seem interested in making concessions, so it’s unlikely they’ll reach a quick deal.

Other News

• Over 250 people died after several days of rain caused landslides and flooding in KwaZulu Natal, eastern South Africa. Devastated survivors blamed their government for failing to maintain adequate drainage infrastructure.

Yellen Challenges China in ‘Moment for Choosing’ on World Order (Bloomberg)

Treasury Secretary Janet Yellen has sketched out her vision for a new era of economic cooperation among nations that share key values and principles, in a sweeping speech that laid down a stern challenge to China.

Yellen, speaking a week before global finance chiefs meet in Washington, called Beijing to account for its ever-closer relationship with Moscow and blasted China for practices that “unfairly damage” the national-security interests of others. She alluded to the use of market positions -- China is a key provider of crucial rare-earth metals -- for “geopolitical leverage.”

While she said she didn’t want the evolution of a “bipolar” global system between U.S.-led and China-led elements, the Treasury chief said that Russia’s invasion of Ukraine marked a moment where nations need to decide where they sit. “The future of our international order, both for peaceful security and economic prosperity, is at stake,” she said.

“The key section for me was the ‘fence-sitting’ section calling out China -- that they should not be helping Russia economically in this moment,” said Josh Lipsky, director of the GeoEconomics Center at the Atlantic Council, where Yellen spoke. It was “an implicit warning to other countries, who are unnamed in the speech, that this is a moment for choosing.”

Yellen laid out a number of proposals or warnings without detailing specifically what Washington is seeking:

• “Modernize” the approach to trade integration that deepens economic efficiences but protects workers and favors “friend-shoring” -- where supply chains are made up of “trusted” countries

• Potentially revamp the governance of the International Monetary Fund “to ensure that it reflects both the current global economy and also members’ commitments to the IMF’s underlying principles and objectives”

• “Revisit our strategies, policies, and institutions to better mobilize capital in support of people in developing countries,” where funding needs are seen in the trillions of dollars, not billions. Private capital can be better mobilized, in a world so “awash” with savings that interest rates have been dropping for decades

Yellen also said she’ll convene a meeting of top international financial officials next week to address a global food-security crisis stemming from record prices for agricultural goods in the wake of Russia’s Ukraine invasion.

The Treasury chief didn’t pledge any specific new U.S.-led financial assistance commitments or trade negotiations. That would require the backing of Congress, amid an increasing focus on reducing fiscal deficits while expanding defense spending.

The Biden administration has consistently spoken about confronting the challenge of a rising China, and demonstrating that democracies can follow through on grand economic and social visions -- as Chinese President Xi Jinping extolls an alternative, authoritarian model.

China’s stance on Ukraine is “objective and just,” Foreign Ministry spokesman Zhao Lijian said Thursday at a regular press briefing in Beijing, adding the nation has supported peace talks and provided aid. Xi’s government opposed any “smearing of China’s position,” he said.

Yellen’s speech marked another attempt to show renewed American leadership on the international stage, said Martin Muhleisen, a former director of the IMF’s strategy, policy and review department. The push would likely be welcome, but other governments may also be wary about how long such leadership might last, he said.

“The United States will need to reassure its partners that its policies will remain constant even after the fall elections and the presidential elections” in 2024, Muhleisen said.

Dollar’s Role

While the European Union, Japan, Australia and others have aligned with the U.S. in joining sanctions against Russia for its Ukraine invasion, key nations have remained largely neutral -- including India. Indonesia, the world’s fourth most-populous nation, said in late March it planned to invite Russian President Vladimir Putin to a Group of 20 summit later this year.

Yellen defended the U.S.-led sanctions, and rebutted any criticism that the efforts led by Washington to isolate Russia from the dollar-based global financial system were “motivated by any one country’s foreign-policy objectives.”

Russia “predestined an exit from the global financial system” when it decided to invade Ukraine, she said.

As for China, Yellen said, “it will be increasingly difficult to separate economic issues from broader considerations of national interest, including national security. The world’s attitude towards China and its willingness to embrace further economic integration may well be affected by China’s reaction to our call for resolute action on Russia.”

Former IMF board member Douglas Rediker, who is also founder of political-consultancy firm International Capital Strategies, said the language on China and on national economic-security considerations “was a huge evolution on the part of Treasury.”

The remarks come a week before the annual spring gathering of global finance chiefs in Washington for meetings hosted by the IMF and World Bank -- known as the Bretton Woods institutions, set up in the 1940s to help build a stable global economy after World War II.

Yellen’s timing was deliberate, not only because of the coming meetings, but also for her proposal to modernize the international financial institutions so they are better able to respond to modern global crises.

“The new Bretton Woods won’t be built overnight,” said Lipsky. “But I think she was saying that we should have that ambition.”