[BUG] VS Code extension: Subprocess initialization always times out (60s) — TCP/TLS/proxy all confirmed working externally

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

The VS Code extension's subprocess initialization always times out after
60 seconds, even though the underlying network, TLS, and certificate trust
chain are all confirmed working. The hang reproduces identically when running
claude -p ping manually in VS Code's integrated terminal — it is not
specific to the extension's spawn mechanism, but to something in the
process environment VS Code provides to its child processes.

What Should Happen?

The VS Code extension's subprocess initialization always times out after
60 seconds, even though the underlying network, TLS, and certificate trust
chain are all confirmed working. The hang reproduces identically when running
claude -p ping manually in VS Code's integrated terminal — it is not
specific to the extension's spawn mechanism, but to something in the
process environment VS Code provides to its child processes.

Error Messages/Logs

Error: Subprocess initialization did not complete within 60000ms — check authentication and network connectivity

Steps to Reproduce

1. Open VS Code on Windows 11 with Claude Code extension installed (2.1.112

or 2.1.209 both reproduce)

1. Open integrated terminal (Terminal > New Terminal)
2. Run: claude -p ping
3. Observe: hangs indefinitely, no response, no error
4. Separately: open Claude Code panel in VS Code, send any message
5. Observe: after 60s, "Subprocess initialization did not complete within

60000ms — check authentication and network connectivity"

1. Open a terminal OUTSIDE VS Code (e.g. standalone PowerShell window)
2. Run: claude -p ping
3. Observe: responds immediately

Claude Model

Sonnet (default)

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.1.209 and 2.1.112 both fail

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

PowerShell

Additional Information

_No response_