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BOSTON — Massachusetts employers turned pessimistic about the economy for the first time since December 2020 last month as the state economy slowed to a crawl and the Federal Reserve continued to raise interest rates.

The Associated Industries of Massachusetts (AIM) Business Confidence Index lost a half-point to 49.6 in May, just below the 50 mark that separates optimistic from pessimistic outlooks. Confidence ended the month 5.1 points lower than a year earlier.

Only twice in the nearly 11-year history of the WSJ/Vistage Small Business CEO Confidence Index has sentiment about the future of the U.S. economy been worse. The Index dropped to 73.3, falling 7% compared to last month, making it the lowest reading since the COVID-19 pandemic shutdown in June 2020. Small business confidence about the future of the U.S. economy fell nearly 24% in the same time period; just 8% of small businesses believe the economy will get better, while a staggering 57% believe it will worsen.

Highlights of the data — informed by 499 leaders of small businesses that responded to the May WSJ/Vistage Small Business CEO Confidence Index survey in the field May 1-8, 2023 — include:

In the spring of 2022, the competent financial managers at Russia’s central bank and finance ministry, forced to deal with unprecedented Western sanctions and a capital flight at almost three times the 2021 rate, drove down the exchange rate with temporary capital controls. An even bigger help was a jump in energy prices caused by Europe’s war-driven fears of a cold winter. Russia reaped its benefits until the actual cold season, which showed Europe could survive almost without Russian gas and with much less Russian oil than it had been using. The second quarter of 2022 saw the third highest exports since 1994, when the central bank started publishing trade balance statistics, but only the 60th highest imports: The massive sanctions hit left Russia’s private and state-owned companies struggling to keep their supply chains going.

Since that first shock, energy prices stabilized and a $60 price cap on Russian oil supplies came into force in December. Russia has found ways to keep oil exports stable and even increase seaborne deliveries despite a Western embargo: More than 70% of Russian crude supplies now go to India and China, compared with less than 20% before the invasion. But the price cap has weakened Russia’s negotiating position in Asia, and the fears of a fuel crisis have subsided. At the same time, exporters found ways to bypass the sanctions, switching to suppliers in China and South Asia and moving Western goods via Turkey and some former Soviet republics. In the first quarter of 2023, Russia’s balance of goods and services trade shrank to $22.6 billion from $91.4 billion in the second quarter of 2022.

The rupture of the Russian Federation will be the third phase of imperial collapse after the unravelling of the Soviet bloc and the disintegration of the Soviet Union in the early 1990s. It’s driven by elite power struggles and intensifying rivalries between the central government and disaffected regions, which in some parts of the country, could lead to civil wars and border disputes. However, it will also embolden the emergence of new states and inter-regional federations, which will control their own resources and no longer send their men to die for Moscow’s empire.

As Moscow turns inward, its capacity for foreign aggression will diminish. And as a rump state, under intense international sanctions and shorn of its resource base in Siberia, it will have severely reduced capabilities to attack neighbors. From the Arctic to the Black Sea, NATO’s eastern front will become more secure; while Ukraine, Georgia and Moldova will regain their occupied territories, and petition for European Union and NATO integration without fear of Russia’s reaction.

On December 5, a $60 per barrel price cap on Russian seaborne oil – agreed upon by the European Union, the G7 and Australia just a few days earlier – came into effect, marking the beginning of a new phase in the economic war between Russia and the West.

The price cap may be one of the most significant ripostes to Russia’s weaponisation of its energy reserves since the beginning of its all-out invasion of Ukraine, but what it entails and hopes to achieve appear to be widely misunderstood.

MOSCOW—The opening months of Russia’s invasion of Ukraine last year drove an increase in oil and natural-gas prices that brought a windfall for Moscow. Those days are over.

As the war continues into its second year and Western sanctions bite harder, Russia’s government revenue is being squeezed and its economy has shifted to a lower-growth trajectory, likely for the long term.

There has been much speculation about the reasons that prompted President Putin’s increasingly hostile reaction in 2012-13 to the negotiations on an EU-Ukraine association agreement. The chain of events is well known. Russian pressure led the then President of Ukraine, Viktor Yanukovich, to decline to sign an Association Agreement with the EU, which sparked the Euro Maidan in Kyiv. These protests were then used a pretext for the annexation of Crimea and the support for anti-Maidan rebels in the Donbass region, which was then followed by an outright, even if covert, invasion. It is often argued that Russia is reacting to a perceived encroachment of the EU/NATO on an area that it considers its own neighbourhood (and President Putin said as much during his annual end-of-the-year press conference in December). However, history suggests that the underlying reason for Russian aggressiveness is simpler: A decade-long period of a steadily rising oil prices (and that of other raw materials) created a feeling of strength, bordering on invulnerability, which made Russia more assertive, and ready to use any opportunity to deploy its military power. The abrupt reversal of this trend since the summer of 2014 will thus be the harbinger of a much less aggressive Russian stance as long as oil remains at present levels.

One needs to go back only 40 years to find a similar development. The 1970s had seen a similar increase in Soviet assertiveness which culminated in the invasion of Afghanistan at the very end of the decade. This came also at the tail of a decade of sharply increasing oil prices (and Soviet oil production). Between 1965 and 1980, the value of Soviet oil production went up by a factor of almost 20 (from about $20 billion annually in 1965 to almost $400 billion in today’s purchasing power in 1980). This was due in large part to the oil price increases following the first oil embargo. But there was also a large increase in Soviet oil production. In the 1960s, Soviet oil production had been lower than that of the US, but thanks to the discovery of some large fields it became much larger by 1980. This combination provided the main growth elements of the Soviet economy, making its regime much more credible, and not only in the eyes of its own population. The resulting increase in the real resources available to the Soviet elites was spent to a large extent on the military budget, allowing the Soviet Union to become a much more credible threat. The increase in relative, and absolute, economic and military strength emboldened an ageing (and therefore naturally not adventurous leadership) to become more assertive abroad. The invasion of Afghanistan appeared also at first sight to be an improvised reaction to a local development (a putsch in Kabul). The parallel to Putin’s reaction to the Euro Maidan is instructive. In both cases, a seemingly low-cost opportunity was seen as yielding a large strategic gain, at least in the short run.

IN DECEMBER 1979 Soviet troops invaded Afghanistan. The oil price at the time was at its peak of $101 a barrel. The high price combined with fast-growing production of oil in Western Siberia provided the Soviet Union with unprecedented revenues. Instead of saving this money for a rainy day, the Soviet government financed foreign adventures and imports of food. Seven years later the Brent crude oil price fell to around $30 a barrel and Mikhail Gorbachev launched the policy of Perestroika (restructuring) and convergence with the West. The high oil price coincided with Soviet aggression, but as the price fell the Soviet Union became more democratic and friendly to the West.

That the oil price correlated with Soviet politics is not surprising – in the uncompetitive command economy oil and gas revenues accounted for 67% of all exports. But the correlation remained just as strong after the end of the Soviet Union and transition to a market economy, and oil and gas remained the main source of Russian export revenues. When Vladimir Putin came to power the price of oil was $25 a barrel. Mr Putin allied himself with America, did not object to NATO’s enlargement that took in the Baltic States and saw September 11th 2001 as Russia’s chance to get closer to NATO. Seven years later, when the oil price was at $105 a barrel, Russia invaded Georgia, and its relationship with America deteriorated dramatically. Thanks to the global financial crisis, oil prices soon fell to $67 a barrel, and Russia accepted Barack Obama's attempted "reset" (though that effort soon went sour).

Russia’s revenue from fossil fuel exports collapsed in December, according to a new report, significantly hampering President Vladimir Putin’s ability to finance the war in Ukraine.

The findings, Ukrainian officials and campaigners say, illustrate the effectiveness of targeting Russia’s oil revenue and underscore the urgent need for Western policymakers to ratchet up the financial pressure on Moscow in order to help Kyiv prevail.

In early June, at the behest of the Biden administration, German leaders assembled top economic officials from the Group of 7 nations for a video conference with the goal of striking a major financial blow to Russia.

The Americans had been trying, in a series of one-off conversations last year, to sound out their counterparts in Europe, Canada and Japan on an unusual and untested idea. Administration officials wanted to try to cap the price that Moscow could command for every barrel of oil it sold on the world market. Treasury Secretary Janet L. Yellen had floated the plan a few weeks earlier at a meeting of finance ministers in Bonn, Germany.

President vladimir putin boasts about the strength of the Russian economy in the face of Western sanctions, citing estimates by international financial institutions that Russian gdp shrank only modestly in 2022. The Russian leader’s bullishness is hardly surprising, and he is not alone: it is a widely held view that the sanctions imposed on his regime have had little economic impact.

A recent overview of the Russian economy by the Re: Russia Project, a network of experts, challenges this thesis. The report, prepared by a group of economists including former top figures from Russia’s finance ministry and central bank, a professor at the University of California and myself, finds that sanctions have indeed had a big effect: they have led to capital outflows from Russia equivalent to 12% of its gdp. Under normal circumstances, that would precipitate an economic disaster. However, there is a powerful force that mitigates the effect of sanctions, namely high energy prices.

US president Donald Trump’s critics spent the decade’s end worrying a presidential tweet could trigger World War III. But as soon as 2020 put a foot in the door, it was a good old-fashioned targeted killing that put everyone on edge.

The US Department of Defense confirmed it killed major general Qassem Soleimani, the head of Iran’s elite Quds Force unit, on Friday. Soleimani is one of the most important figures in Iran, and has shaped events across the Middle East for decades, often at America’s expense.

With over 30,000 troops in the Middle East at multiple locations, the United States' commitment to the Middle East hasn't changed — despite the U.S. withdrawal from Afghanistan and its significant drawdown in Iraq, said the deputy assistant secretary of defense for the Middle East.

"The significant capabilities across our Navy, our Air Force, our Army and our Marines — it's still in the region," Dana Stroul told the Jerusalem Post during an interview yesterday in New York City. "And they're still doing those important activities every day."

The International Monetary Fund (IMF) has pointed out that Saudi Arabia's economy faces a sharp slowdown in growth this year. However, it has also stressed that government-led reforms and increased private investment in new sectors will help to support non-oil economic growth in the country. On the other hand, the IMF also stressed that the development of non-oil sectors, such as technology and tourism, is key to economic diversification and reducing dependence on oil.

Last year, Saudi Arabia's economy grew by 8.7 per cent thanks to high oil prices, generating higher revenues and enabling the country to post its first budget surplus in almost 10 years.Despite this strong growth, the International Monetary Fund (IMF) forecasts that the country's GDP growth will more than halve to 3.1% this year, which is in line with projections for other Middle Eastern oil exporters. Although this growth rate is lower than last year's, it is higher than the IMF's January projection of 2.6% growth. The IMF has noted that while high oil prices have boosted economic growth, it is important that the country continues to diversify its economy to reduce its dependence on oil and increase its long-term economic stability. In this regard, Saudi Arabia has been implementing economic reforms and investing in non-oil sectors, such as technology and tourism, as part of its Vision 2030 programme.

DUBAI, May 3 (Reuters) - Government-led reforms and the growth of private investment in new sectors will help support non-oil economic growth in Saudi Arabia amid an expected sharp slowdown in overall growth this year, a senior IMF official said.

The Saudi economy grew 8.7% last year, as high oil prices boosted revenue and led to the kingdom's first budget surplus in almost 10 years.

On 10 March 2023, Saudi Arabia and Iran announced their intention to restore diplomatic relations over a two-month period, in a deal brokered by China. Riyadh’s reconciliation with Bashar al-Assad in Syria is also underway, and its behind-the-scenes engagement with Israel has increased.

This rapprochement with Iran and other regional efforts matter because they shed light on a significant region-wide trend of de-escalation that has been underway since the resumption of high-level UAE–Iran relations in 2019. In the wake of geopolitical tensions and distraction, it also marks a shift towards direct Middle East regional conflict management which – should it last – is a first for countries in the region.

China’s new diplomatic role in the Middle East is another factor that could help sustain trends of de-escalation. Beijing eschews the U.S. approach of offshore balancing against Iran via Saudi Arabia and Israel; it sees such an approach as escalatory. Rather, China is taking a more neutral approach to regional conflicts, on the premise it will calm rather than stoke tensions.

Several Iranian sources have highlighted China’s emerging critical role as a regional stabilizer. Iranian state-run media reported that after Iran attacked Saudi petroleum assets in 2019, China warned Tehran that such acts undermine its interests, given Beijing’s energy security policy is based on unhindered import of Saudi and Gulf oil.

One theme of the present moment is that countries in the Middle East are making deals based on their own national interests rather than dancing to the tune of outsiders. This independence is paradoxically because of great power rivalry in the region, not despite it. With heightened rivalry between great powers, regional powers have more options and are acting more as free agents than committed allies of global powers

For example, Israel and Saudi Arabia are showing considerable independence from the United States on issues ranging from energy policy to approaches toward Russia’s war in Ukraine. Iran, in the context of its role in supplying drones to Russia for the Russia-Ukraine war, is also feeling more confident.

The need for energy security has never been more critical in the history of mankind. Amid heightened political tensions, energy diversification programs and sustainability initiatives are a key part of the global agenda today, and countries are working hard to achieve their net-zero targets within the stipulated deadline.

As the world continues its journey to achieve zero emission targets, Saudi Arabia, a country that has been dependent on oil for several decades, is spearheading the energy transition mission in the Middle East region.

The immediate sources of instability are clear. Most of the region has some form of internal conflict, faces rising external threats, or is dealing with violent extremism. The violence and wars that have resulted from the political upheavals in 2011 will at best leave lasting challenges for unity and development even if the fighting ends. All the major causes of violent extremism remain, and there are few prospects that the fight against ISIS will eliminate the extremist threat in even one MENA country. Tensions between Israel and the Palestinian persist, each side has seen rising internal political barriers to a compromise peace, and the tensions between Israel and Iran and Hezbollah are creating new military threats.