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UKRAINE UPDATE: 1 APRIL 2022

Putin says Russia will continue gas supply to Europe amid rouble row; direct talks to resume

A member of the Ukrainian military walks past the remains of a downed Russian helicopter on 31 March 2022 in Malaya Rohan, Ukraine. (Photo: Chris McGrath / Getty Images)
By Bloomberg
31 Mar 2022 0

President Vladimir Putin said Russia will continue supplying gas to Europe even as it demands customers pay in roubles, easing fears that the change could lead to damaging disruptions. Russia 'values its business reputation', Putin told officials in televised comments. European officials said the change isn’t likely to affect supplies.

Direct talks between Russia and Ukraine were set to resume on Friday, according to a top Ukrainian official, seeking to build on in-person talks this week in Turkey that failed to produce significant progress. Separately, Turkey is trying to broker a meeting between Russian and Ukrainian foreign ministers.  

Ukrainian President Volodymyr Zelensky accused Russia of seeking to damage the country’s agriculture sector, potentially provoking a global food crisis. Nato’s chief said that Russian forces were not pulling out of parts of Ukraine even as it focuses on the eastern Donbas region – and will maintain pressure on Kyiv.  

Key developments

 Russian Railways among firms to miss bond deadlines 

Russian Railways, EuroChem and Chelyabinsk Pipe Plant have missed deadlines to make interest payments on foreign-denominated bonds after the cash got stuck for compliance checks on its way to investors. 

The companies now face the risk of creditors declaring they’re in default. The spectre of default hash shadowed Russia in the wake of sanctions imposed in response to the invasion of Ukraine.  

Russian stocks rise after short-selling ban ends 

Russian equities rose on Thursday after a short-selling ban on local stocks was lifted, one of the measures that helped limit the declines in the market after a record-long shutdown.

The MOEX Russia Index jumped 7.6%, with gas giant Gazprom and oil producer Lukoil leading the gains. 

With dissent muzzled, Russians embrace Putin’s war 

Support for President Vladimir Putin has surged among Russians following his invasion of Ukraine, according to the country’s leading independent pollster, even as a Kremlin crackdown on protest raises questions about public willingness to express opposition to the war.

Some 83% approved of Putin’s actions as president in a March 24-30 survey of 1,632 respondents, an increase of 12 percentage points on the previous month and the highest since 2017, the Moscow-based Levada Center reported. 

 

 

 

Congress in bipartisan effort on tracking war crimes 

The top Democrat and Republican on the House Foreign Affairs Committee introduced legislation on a coordinated effort to collect and preserve evidence of potential war crimes committed by Russian troops in Ukraine. The measure also outlines a process for submitting the evidence to relevant courts or tribunals.

The effort follows the passage in the Senate of legislation introduced by South Carolina Republican Lindsey Graham encouraging countries to submit evidence of war crimes committed in Ukraine to the International Criminal Court.

EU to offer members €40 a week per refugee 

The European Commission plans to offer member states €40 a week for each refugee they’re hosting from Ukraine as part of a new mechanism to speed up the payment of existing EU funds to cope with the ongoing crisis, a senior EU official said. 

The mechanism was adopted on Thursday by the commission and is expected to be signed off by the European Parliament and member states next week, the official said. It’s part of the EU’s effort to facilitate cash for front-line countries.

Some four million people have fled Ukraine since February 24 – more than 9% of the country’s pre-war population – with about 2.4 million entering Poland in the first instance.  

Biden orders record oil release from US reserves 

Blaming Russia’s war in Ukraine for a surge in energy costs, the US will release roughly a million barrels of oil a day from its reserves for six months, a historic drawdown that underscores White House concern about rising prices and supply shortages. 

The administration also will push the International Energy Agency to coordinate releases from reserves by other oil-consuming nations. The organisation will meet within days, two people familiar with the matter said, and the administration expects other countries will make some reserve releases but not as much as the US 

“This record release will provide a historic amount of supply to serve as a bridge until the end of the year when domestic production ramps up,” the White House said in a statement.

Putin says Russia will keep supplying gas 

Russia aims to keep supplying gas to European customers even as it demands they shift to payment in roubles, President Vladimir Putin said. The comment eased fears that the shift could lead to disruptions from the continent’s biggest supplier.

“We will continue to supply gas in the volumes and at prices set down in the current long-term agreements,” Putin said in televised comments. “Russia values its business reputation.” 

European officials said the change to roubles isn’t likely to affect supplies. “For us, with regard to Putin’s threat or announcement or plan – one doesn’t really know what to call it any more – to get paid in roubles, the main point is that the contracts are being kept,” said German Economy Minister Robert Habeck said.

US sanctions Russian chip exporter 

The US announced sanctions against what it said was Russia’s biggest chipmaker and largest exporter of microelectronics among a group of 21 entities and 13 individuals. The move constitutes a fresh effort to penalise Moscow’s “war machine,” Treasury Secretary Janet Yellen said in a statement.

The Treasury Department said Mikron, the chipmaker, received tax benefits from Russia’s government to help develop the Mir payment system, which Moscow has used to help insulate it from financial penalties levied by US, European and allied governments and the subsequent withdrawal of Visa and Mastercard from the country. 

 

 

 

Latvia to ban use of war symbols 

The Baltic country’s Parliament banned the use at public events of symbols used to support Russia’s war in Ukraine, like the letters “Z” and “V.” 

The law would prohibit praise of Soviet or Nazi ideology, victories and battles. The new rules will also block permits for events that are closer than 200m to Soviet memorials or statues. 

Scholz says Russia must allow European companies to pay in euros 

German Chancellor Olaf Scholz reiterated that Putin must honour contracts for Russian gas that allow companies to pay in dollars and euros. 

“We looked at the gas supply contracts and there it says that payment is to be made in euros, sometimes in dollars but most of the time in euros,” Scholz told reporters in Berlin on Thursday. 

“And I made it clear in the conversation with the Russian president that it will remain this way. And what his ideas are that that can happen – that’s something we’re going to look at right now. But in any case, it remains the case that companies want to, can and will continue to pay in euros.”

EU must accelerate economic ties with Ukraine, Belgium says 

The European Union should speed up economic integration with Ukraine, instead of making it wait for the long process to join the bloc, Belgian Prime Minister Alexander de Croo told lawmakers in reply to Zelensky’s address to the country’s Parliament in Brussels.

“Europe would make a terrible mistake if it made Ukraine wait for the formal process of joining the European Union,” De Croo said. The premier also said that sanctions imposed by the EU and its partners “are working and let there be no mistake, these sanctions are here to stay for a long time”.

Oil slumps as US reserve release poised to cool prices  

Futures in New York fell as much as 7.1%, wiping out Wednesday’s gains. The administration is weighing a release of roughly one million barrels a day for several months, according to people familiar with the matter. Meanwhile, the Opec+ group of producers agreed to another modest output hike for May.

Nato warns Russia is regrouping, not withdrawing 

Russian forces are not pulling out of Ukraine, but regrouping to focus their attention on the eastern Donbas region, Nato Secretary-General Jens Stoltenberg told reporters in Brussels.

“According to our intelligence, Russian units are not withdrawing but repositioning. Russia is trying to regroup, resupply and reinforce its offensive in the Donbas region,” he said. “At the same time, Russia maintains pressure on Kyiv and other cities, so we can expect additional offensive actions bringing even more suffering.” 

Putin tells Draghi EU may pay for gas in euros, dollars  

Italian Prime Minister Mario Draghi said the Russian leader told him in a phone call on Wednesday that EU companies will still be able to pay for gas in euros or dollars and the rouble conversion will take place internally, echoing statements made to German Chancellor Olaf Scholz that were relayed by the government in Berlin. Draghi said switching currencies for such contracts is no simple matter. 

“It is absolutely not easy to change the currency used to pay for key goods internationally,” Draghi said during a press conference on Thursday. Converting to euro payments in recent years has been difficult enough, he said. 

The Kremlin was less clear on the details. Putin’s chief spokesman, Dmitry Peskov, said there will be practically no change for buyers of Russian gas after the payment procedure is changed, though he told reporters in Moscow that “they just buy roubles with the currency set down in the supply contract”. 

UK unveils sanctions on Russian media, Mariupol general 

The UK announced new sanctions targeting Russian state media, including the owners of broadcasters RT and Sputnik, as well as Sergey Brilev, a state television host accused of spreading Kremlin propaganda. Sanctions will also be placed on Russian Colonel-General Mikhail Mizintsev, who has been central to the military’s brutal siege of Mariupol.

“We will keep on going with more sanctions to ramp up the pressure on Russia and ensure Putin loses in Ukraine,” Foreign Secretary Liz Truss said. “Nothing and no one is off the table.”

Russian refiners signal more run-time cuts – Reuters 

Refiners including Rosneft, Surgutneftegaz, Lukoil and Gazprom Neft told Russia’s energy ministry they expect to make deeper cuts to refinery runs in the coming weeks, Reuters reports, citing people familiar with the matter. The issue was raised at a meeting on March 25. 

Turkey trying to set up Lavrov-Kuleba meeting  

Turkish Foreign Minister Mevlut Cavasoglu told the A Haber television channel that he’s trying to broker another meeting of his Ukrainian and Russian counterparts, Dmytro Kuleba and Sergei Lavrov, after this week’s talks in Istanbul between lower-level negotiators. 

“We texted both Kuleba and Lavrov. It is not possible for us to give an exact date, but they said that there could be a higher-level meeting in one or two weeks,” Cavasoglu said. Lavrov and Kuleba met in Turkey on March 10. 

Zelensky says Russian troops sabotaging Ukraine farms 

Russian forces are deliberately trying to damage Ukraine’s agriculture sector, a main source of income, the Ukrainian president told Dutch lawmakers. Troops have placed landmines in fields and agricultural equipment has been destroyed, he said. 

Russians are “doing everything to ruin our agriculture potential and to provoke a food crisis not only in Ukraine but in the world”, Zelensky said. 

Global food security faces “serious threats” including the potential loss of production in Ukraine, according to Syngenta, the Swiss seed and fertiliser business owned by ChemChina. Ukraine and Russia account for more than a quarter of the world’s annual wheat sales.

Ukraine needs fast help to rebuild farming, World Bank head says

Ukraine appeals for more aid from Australia 

Zelensky told Australian legislators his country needs immediate help defending itself against the Russian invasion. Earlier on Thursday, Australia announced an additional A$25-million ($19-million) in military support for Ukraine.   

 

 

 

France fires head of military intelligence  

The head of French military intelligence was fired for offering poor information before Russia’s invasion of Ukraine, l’Opinion newspaper reported. General Eric Vidaud, who had been in the job for only seven months, lacked mastery of the subject, according to the report. Authorities didn’t immediately reply to a request for comment. 

Romania to help Ukraine redirect grain shipments 

Romania is in talks with Ukraine on potentially redirecting grain exports through the port of Constanta on the Black Sea, Defence Minister Vasile Dincu said.

Ukraine, one of the world’s largest grain exporters, is considering easing curbs on wheat shipments once it’s confident spring sowing is progressing enough despite Russia’s invasion. Export capacity is limited as some seaports are effectively closed by fighting, Ukraine’s trade minister said this week. 

Germany to send €300m of weapons 

German Defence Minister Christine Lambrecht has given the green light for the delivery to Ukraine, her spokesman said, confirming a report by Sueddeutsche Zeitung newspaper. The items will be sent directly from Germany’s defence industry, with the ministry acting only as a mediator, the spokesman said. 

Ukraine’s government has provided a list of weaponry it needs, including anti-tank missiles, reconnaissance drones, mortars and automatic cannons.  

Shelling continues near Chernihiv, Ukraine holds Mariupol – UK 

Ukrainian forces remain in control of central Mariupol, where heavy fighting continues, the British government said. 

The UK said Russian shelling and missile strikes remain “significant” around Chernihiv, despite Russian statements indicating an intention to reduce military activity in the area. 

Russia holds positions to the east and west of Kyiv despite the withdrawal of a limited number of units. “Heavy fighting will likely take place in the suburbs of the city in coming days,” the UK said. 

Russia offers oil to India at steep discount 

Russia is offering India steep discounts on the direct sale of oil as mounting international pressure lowers the demand for its barrels elsewhere, according to people with knowledge of the matter.

The US warned India not to ramp up its buying of Russian oil, saying it had no objection to purchases, provided they are made at a discount and are not in significantly higher volumes than previous years, Reuters reported, citing an unidentified senior administration official. 

US Commerce Secretary Gina Raimondo said she was disappointed at the news that India is considering a Russian proposal to facilitate bilateral payments outside of the Swift system.

Putin’s advisers afraid to speak truth, says UK spy chief 

Putin “massively misjudged” the resistance of the Ukrainian people, the strength of Russia’s military and the economic fallout from his invasion, Jeremy Fleming, director of GCHQ – the branch of British intelligence dealing with intercepts and cybersecurity – said in a speech in Australia. 

“Even though we believe Putin’s advisers are afraid to tell him the truth, what’s going on and the extent of these misjudgments must be crystal clear,” Fleming said. DM 

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