News brief: Sanctions on Russia, economic fallout, opioid settlement negotiations
A MARTINEZ, HOST:
The United States is targeting Russia's financial system as part of a first wave of sanctions following Russia's troop movements in Ukraine.
RACHEL MARTIN, HOST:
President Biden characterized Russia's deployment of troops into eastern Ukraine as an invasion.
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PRESIDENT JOE BIDEN: He bizarrely asserted that these regions are no longer part of Ukraine, and they're sovereign territory. To put it simply, Russia just announced that it is carving out a big chunk of Ukraine.
MARTIN: Hours after Biden spoke, Secretary of State Antony Blinken canceled a meeting that he was supposed to have later this week with his Russian counterpart, Sergey Lavrov.
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ANTONY BLINKEN: We will not allow Russia to claim the pretense of diplomacy at the same time it accelerates its march down the path of conflict and war.
MARTIN: And the preliminary plans for a Biden-Putin summit are off now.
MARTINEZ: NPR national political correspondent Mara Liasson joins us now. Mara, what are these sanctions going to do?
MARA LIASSON, BYLINE: They're going to block two banks with more than $80 billion in assets from doing any business with the U.S. or Europe. They've locked out Russia's central bank and its government from raising new money from U.S. and European investors. They've also sanctioned five Russian individuals. These are oligarchs and their families. And the U.S. has worked with Germany to agree to shut down the Nord Stream 2 pipeline, gas pipeline, from Russia. The president said more sanctions are in the works. U.S. officials say this is the beginning of the invasion, so this is the beginning of sanctions. As the invasion escalates, if it does, sanctions will escalate, too.
MARTINEZ: Yeah. In the weeks leading up to this point, the president has said the measures would be, in his words, swift and severe. So, Mara, are these sanctions swift and severe?
LIASSON: They're certainly swift. Whether they're severe is being debated. These aren't the biggest Russian banks or the biggest number of Russian oligarchs. As for Putin himself, White House officials say all options are on the table - about sanctioning his financial assets. There's no sign yet of sanctioning - or banning exports of strategic assets, like semiconductors to Russia, export controls. That's something that's been talked about. But the strategy here is to try to deter further Russian action. Daleep Singh, who's Biden's deputy national security adviser, explained it this way yesterday.
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DALEEP SINGH: They're meant to prevent and deter a large-scale invasion of Ukraine that could involve the seizure of major cities, including Kyiv. They're meant to prevent large-scale human suffering that could involve tens of thousands of casualties in a conflict. And they're meant to prevent the installation of a puppet government controlled by Moscow.
LIASSON: So they're keeping more sweeping sanctions in reserve.
MARTINEZ: You know, there was a lot of work and a lot of talk to get buy-in from European allies on this plan, Mara, but let's look inward for a second. Does President Biden have domestic support for this strategy?
LIASSON: At this point, he does. There is bipartisan support in Congress. Polls show that Americans are supportive of these sanctions. But there are also dangers here. Gas prices might go up. President Biden said yesterday, defending freedom will have costs. We have to be honest about it. He said he's using everything at the United States' disposal to protect Americans from rising gas prices. One of the sanctions that hasn't been put on Russia yet is to keep Russian oil and gas off of world markets. That's also really important for Europe. But inflation is already a top political concern for Biden, and it's one of the problems he has going into the November midterms. But so far, I would say there is support for this. This is a big switch from the Trump administration. Donald Trump was openly admiring of Putin. And as a matter of fact, yesterday, in a Fox News interview, Trump said that Putin's move in Ukraine was, quote, "genius" and that Putin himself was very savvy and smart.
MARTINEZ: NPR's Mara Liasson. Thanks a lot.
LIASSON: You're welcome.
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MARTINEZ: As we just heard from Mara, the economic fallout from the events transpiring in Ukraine may soon be felt at your local gas pump.
MARTIN: The administration hopes to minimize pain for U.S. consumers, but Biden did acknowledge retaliatory sanctions may carry a price tag.
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BIDEN: Defending freedom will have cost for us as well and here at home. We need to be honest about that.
MARTINEZ: For more on the economic consequences, we're joined now by NPR's Scott Horsley. Scott, consumers are already facing the highest inflation in four decades, so how is this going to feed into that?
SCOTT HORSLEY, BYLINE: Well, the first place you're likely to see the impact is in energy prices, which have been a big factor in inflation. Russia, of course, is a major exporter of both oil and natural gas, and supplies of oil on the world market are already fairly tight. Daniel Yergin is an oil expert and vice chairman at IHS Markit. He says demand for crude oil has bounced back strongly after that deep slump early in the pandemic, and so far, he says, suppliers have not really caught up.
DANIEL YERGIN: Then on top of that, you have this crisis, and so there's a geopolitical premium or call it a fear premium in the price of oil - an expectation that as this crisis spirals worse, that supplies of oil from Russia are going to be disrupted.
HORSLEY: Now, as Mara mentioned, President Biden is urging other oil producers both here at home and around the world to boost production. But in the short run, we could easily see higher prices at the gas pump. And gas prices are already up about 20 cents over the last month.
MARTINEZ: What about natural gas, which affects people's heating and electricity bills?
HORSLEY: Natural gas prices have been rising in the U.S., but they're really high in Europe. Germany did bite the bullet when it said it would not allow the new Nord Stream 2 gas pipeline from Russia to begin operating while this Ukraine conflict's underway. That's a big move. It deprives Russia of what the White House says would have been a cash cow. But it also means supplies in Europe will remain tight. Now, Yergin notes, the U.S. has been stepping up its exports of liquid natural gas to Europe, and that has somewhat loosened what had been a Russian chokehold.
YERGIN: For a good part of last month. U.S. LNG exports to Europe exceeded Russian pipeline deliveries, showing the change in the global energy balance and that, while Russia has a strong position as a gas exporter to Europe, it's not as strong as it used to be.
HORSLEY: Yergin has written a book about these changing energy dynamics called "The New Map," even as Vladimir Putin tries to go back to something like a map from the mid-20th century.
MARTINEZ: All right, Scott, the multibillion-dollar question here is can Russia handle these sanctions?
HORSLEY: Russia has built up a lot of reserves that officials there say will enable it to weather whatever the U.S. and its allies throw in its direction. One thing you have to keep in mind is that for all its tanks and nuclear weapons, Russia's economy is pretty small, and its trading relationship with the U.S. is very limited. Jeff Schott, who's with the Peterson Institute for International Economics, says European countries who have a much closer commercial tie to Russia - Europe does about eight times the trading volume that the U.S. does.
JEFFREY SCHOTT: The U.S. does very little trade of goods and services with Russia. So the cost of a disruption will have a more immediate and profound effect on the European economy than on the U.S. economy.
HORSLEY: Over time, of course, those disruptions could be felt on this side of the Atlantic, and investors are watching for that. The S&P 500 index fell about 1% yesterday, and it's now in correction territory, down 10% from its peak way back at the beginning of January.
SCHOTT: That's NPR's Scott Horsley. Scott, thanks a lot.
HORSLEY: You're welcome.
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MARTINEZ: Opioid overdoses kill tens of thousands of Americans every year.
MARTIN: Some of the biggest corporations accused of fueling the opioid crisis, including Johnson & Johnson and Purdue Pharma, they've been taken to court over their role. NPR has now learned that final settlements in those cases are expected to come down soon. The settlements that would be worth roughly $32 billion include some controversial provisions, but the money could help a lot of people and communities struggling with addiction.
MARTINEZ: Let's hear more about it with NPR's Brian Mann, our addiction correspondent. Brian, $32 billion sounds like a lot of money, but is it enough money to make a difference?
BRIAN MANN, BYLINE: Yeah, you know, the experts I talked to say, yes, under these deals, the way they're being finalized, that money would be paid out over the next 20 years - so a new steady stream of funding for things like drug treatment and harm-reduction programs. And that'll save lives at a time when drug overdoses are killing record numbers of Americans, as you mentioned. It is important to say, though, A, that experts also agree this is not nearly enough money. Thirty-two billion-dollars is a fraction of the cost of tackling the opioid epidemic. Taxpayers are already carrying most of the burden, paying for everything from rehab programs to new law enforcement, and that's not going to change because of this.
MARTINEZ: What are the companies involved in these talks accused of doing wrong?
MANN: So over the last 20 years, opioid medications like OxyContin became big business, and so drugmakers like Purdue Pharma and Johnson & Johnson and also drug wholesalers got into this and made huge profits year after year. And what they're accused of doing is pushing the use of highly addictive pain pills far more aggressively than made medical sense. They're also accused of not having enough safeguards in place to keep these products from being abused and diverted for sale on the black market. I should say, the companies involved deny any wrongdoing.
MARTINEZ: OK, now, which companies are close to deals?
MANN: So two major deals appear to be close to the finish line. One is Purdue Pharma and its owners, members of the Sackler family. They reached one deal last year worth about $4.5 billion, but a federal judge threw that out - too many states and the U.S. Justice Department objected to a provision that granted the Sacklers immunity from future lawsuits. The big news now is that the mediator involved is saying publicly that the Sacklers have sweetened their offer to a total payout of roughly $6 billion. A mediator says there's been significant progress getting everyone on board, but they're not quite there yet.
The other big deal, which is expected to be larger and sooner, involves three big drug distributors - AmerisourceBergen, Cardinal Health and McKesson, along with Johnson & Johnson. They've agreed to pay roughly $26 billion to settle opioid claims. And my sources tell me that deal, involving most state and local governments, could come as early as Friday. And here again, the companies, while they're paying out lots of cash, they deny any wrongdoing.
MARTINEZ: So are the Sacklers sticking to this demand that they be protected from any future opioid lawsuits?
MANN: Yeah, the Sacklers have never budged from that demand, and this is the controversial piece of that negotiation. If the deal is finalized, they'll be sheltered from any future opioid lawsuits. One interesting development is that there are growing calls, including from a group of U.S. senators, for criminal investigations into the Sacklers' involvement in the opioid crisis. So far, no state or federal prosecutor's been willing to take on that fight. And here again, important to say, the Sacklers have repeatedly denied any wrongdoing.
MARTINEZ: That's NPR addiction correspondent Brian Mann. He'll be watching these negotiations in the days ahead. Brian, thanks.
MANN: Thank you. Transcript provided by NPR, Copyright NPR.