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Ukraine update: EU warns against rouble payments for ga...

World

UKRAINE UPDATE: 28 APRIL 2022

EU warns against rouble payments for gas; Putin threatens retaliation against any ‘interfering’ country

A hangar containing the damaged Ukrainian transport plane Antonov An-124 Ruslan at the Gostomel airfield near Kyiv, Ukraine, on 27 April 2022. (Photo: EPA-EFE / ANDRII NESTERENKO)
By Bloomberg
27 Apr 2022 1

Russia said it stopped natural gas flows to Poland and Bulgaria, making good on a threat to cut off buyers if they refuse Russian President Vladimir Putin’s demand to pay in roubles.

Some European companies had already acceded to the ultimatum, which the European Commission warned would breach sanctions. European gas prices surged more than 20% on the move before settling back. The European Union’s gas coordination group met to chart a joint response, and EU energy ministers set a May 2 meeting to discuss Ukraine. Germany signalled it’s open to banning Russian oil imports in new sanctions.

Putin threatened “lightning-fast” retaliation against any country that tried to “interfere” in Russia’s invasion of Ukraine, as he insisted Moscow will fulfil its intended military objectives. 

Key developments

Italian energy giant prepares to open rouble accounts for gas 

Italian energy giant Eni is preparing to open rouble accounts at Gazprombank, potentially allowing it to comply with Russian demands that gas be paid for in local currency if doing so isn’t found a breach of sanctions, people familiar with the matter said.

The move is described as precautionary as Eni seeks more guidance from the Italian government and European authorities. Earlier on Wednesday, European Commission President Ursula von der Leyen warned companies not to bend to Russia’s demands to pay for gas in roubles, saying that doing so would go against sanctions.

Finland to boost Ukraine aid with seized bitcoin sale 

Finland’s government will donate part of the proceeds from the sale of a bitcoin stash seized in drug busts to help Ukraine’s defence against Russia, the newspaper Helsingin Sanomat reported. 

Ukraine will receive “a sizable part” of the planned sale of 1,981 bitcoins – valued at about $78-million and forfeited to the state by court order – the newspaper said, citing government sources it didn’t identify. The exact share has yet to be determined, it added.

Russia ‘began preparing Ukraine cyberattacks in early 2021’  

Russian-affiliated hackers were positioning themselves for cyberattacks against Ukraine as early as March 2021, according to researchers at Microsoft. 

A handful of hacking groups secured access to Ukrainian organisations – including defence, IT and energy networks – for strategic and battlefield intelligence collection, the technology giant revealed in a report published on Wednesday. The campaigns appeared to be setting the groundwork for attacks before and after the invasion began in February.

Read more: Russia began preparing cyberattacks early

US sharing more intelligence with Ukraine for Donbas fight  

The US has lifted some restrictions on sharing intelligence with Ukraine as it confronts a renewed Russian military assault in the east and south, where it has backed separatist groups since annexing Crimea in 2014, according to a person familiar with the matter.

Director of National Intelligence Avril Haines told Congress of the moves this month after Representative Mike Turner, the top Republican on the House Intelligence Committee, wrote a classified letter urging the Biden administration to remove the restrictions. The expanded sharing is designed to help Ukraine defend and potentially retake territory in the Donbas region, the person said, speaking on condition of anonymity about the sensitive matter.

Pentagon official warns of Russia’s electronic warfare 

US Air Force Secretary Frank Kendall said that the Russian forces invading Ukraine have “the ability to deploy and employ a wide range of ground-based electronic warfare capabilities”.

Kendall said in prepared testimony to the House Armed Services Committee that those capabilities include jamming GPS navigation, satellite communications and radar.

EU’s Breton warns on sanction breach by paying for Russian oil in roubles  

EU Internal Markets Commissioner Thierry Breton told Bloomberg Television’s Maria Tadeo that if European companies don’t buy Russian oil in euros or dollars “it’s a breach of the sanctions, so I think everyone will be very careful now”.

Breton also said that “if there is a shutdown for one country to another, we are ready to support the country which will be affected”.

 

 

 

Germany’s tank offer falls flat on ammunition shortage 

Germany risks stumbling in its effort to bolster Ukraine’s defence with 50 anti-aircraft tanks as there’s little ammunition readily available for the vehicles.

Currently, there is only enough for about 20 minutes of intense action, according to a report by tabloid Bild. Germany is in talks with Brazil, Qatar and Jordan to fill the gap, but could also run into issues with transfer approvals from the Swiss government.

Ukraine’s central bank buys more government bonds 

Ukraine’s central bank has expanded its portfolio of so-called government war bonds by 50 billion hryvnia this month to a total of 70 billion.

The central bank in Kyiv has expanded its portfolio of government bonds to fill a financing gap that’s not covered by budget revenue and aid from Ukraine’s international donors.

Germany ready to back gradual Russian oil ban 

Berlin is prepared to back a gradual ban on Russian oil as EU countries scramble to respond to Moscow’s decision to cut off gas supplies to member states Poland and Bulgaria.

Germany would support a phased approach to targeting oil rather than some of the other options that have been discussed, such as a price cap or payment mechanisms to withhold parts of Moscow’s revenue, according to people familiar with talks among EU ambassadors.

Any ban would need to come with a transition period, said the people, similar to how the EU approached a delayed coal ban earlier this month. This would be part of the EU’s sixth sanctions package, with formal proposals being put forward for approval as early as next week.

Swiss adopt EU ban on Russian coal imports 

The Swiss federal government enacted further sanctions against Russia and Belarus following an April 13 decision to adopt the European Union’s latest package of sanctions.

The new measures include far-reaching sanctions on goods, including a ban on imports of lignite and coal as well as on products that are important sources of revenue for Russia. Any support to Russian entities in public ownership or under public control is also prohibited.

Putin warns of retaliation if West interferes in his ‘military operation’  

Those posing “threats of a strategic nature that are unacceptable to us” will face a “lightning-fast” response, Putin told legislators in St Petersburg. “We have all the tools for this, such as no one can boast of now. And we won’t brag. We will use them if necessary. And I want everyone to know about it.”

Putin’s warning follows comments this week by Russian Foreign Minister Sergei Lavrov that there’s a “serious” risk of nuclear war over Ukraine. The US called Lavrov’s remarks “the height of irresponsibility” and said they were an attempt to distract from Russian military failures in Ukraine.

Germany says it’s taking Russian gas threat seriously  

Germany is taking Russia’s threats to halt gas supplies seriously after the country stopped deliveries to Poland and Bulgaria over disputed payment terms.

“They’re ready to put a stop to gas deliveries,” Economy Minister Robert Habeck said on Wednesday in Berlin. “We have to take that seriously, and that also goes for other European countries.” A sudden halt of Russian gas, which still accounts for 35% of German supplies, would trigger a recession, he added.

US, Russia agree on surprise prisoner swap 

Russia has exchanged American Trevor Reed for a Russian held in the US after being convicted of conspiracy to smuggle cocaine, in a rare example of cooperation between the two countries amid the confrontation over Moscow’s war in Ukraine.

Former US Marine Reed, who had been in detention since 2019, was swapped for Konstantin Yaroshenko, a Russian pilot jailed more than a decade ago. “The negotiations that allowed us to bring Trevor home required difficult decisions that I do not take lightly,” President Joe Biden said in a statement.

 

 

 

Companies would break sanctions with rouble payments – EU  

European Commission President Ursula von der Leyen warned companies that bending to Moscow’s demands to pay for gas in roubles would be a breach of sanctions. 

“We have round about 97% of all contracts that explicitly stipulate payments in euros or dollars, so it’s very clear. The request from the Russian side to pay in roubles is a unilateral decision and not according to the contracts,” she said. “Companies with such contracts should not accede to the Russian demands. This would be a breach of the Russian sanctions.”

Germany vows to continue to pay for gas in euros 

Germany said its companies will continue to pay for Russian gas in euros or dollars, hours after European Union partners Poland and Bulgaria were cut off by Gazprom for refusing to pay in roubles as President Vladimir Putin has demanded.

Responding to the dramatic escalation, which sent gas prices soaring, Economy Minister Robert Habeck said Germany’s gas supply situation is “stable” and “we are doing everything we can to keep it that way”.

Zelensky thanks Indonesia for invite to G20 summit 

Ukrainian President Volodymyr Zelensky said he’s been invited to attend this year’s Group of 20 summit in Indonesia, raising the prospect he crosses paths with Vladimir Putin if the Russian leader opts to attend in person.

Zelensky thanked Indonesian President Joko Widodo “for the support of Ukraine’s sovereignty and territorial integrity, in particular for a clear position in the UN”. The US and its allies had been frustrated by Indonesia’s refusal to withdraw a summit invitation to Putin and pressed it to invite Zelensky as a guest to the Group of 20 summit in November. 

Russia breaks up protest in Kherson 

Ukrainian protesters in the Russian-occupied city of Kherson were dispersed by tear gas on Wednesday, Ukraina 24 television channel reported. Three people were injured with burns and one suffered a broken leg, according to a local hospital.

Russian forces had blocked Ukrainian Kherson city council workers from entering the official building on Monday, and Russia’s military introduced a new chairman of the city administration, the city’s mayor, Ihor Kolykhayev, said in a letter to Ukraine’s president posted on his Facebook account on Monday.

Gas prices ease as traders bet Germany will avoid cutoff 

Gas prices eased back after an initial surge of more than 20% as traders started to bet that Germany would avoid a gas cutoff.

After flows to Poland and Bulgaria were switched off, the question for markets is what happens to Germany. Uniper, a massive buyer of Russian gas, has said it believes it can meet the Kremlin’s demands without violating sanctions. The EU, which last week left the door open to a possible compromise, hasn’t responded to specific moves by companies.

Some EU gas buyers said to have paid in roubles 

Four European natural gas buyers have already paid for supplies in roubles as Putin demanded, according to a person close to Russian gas giant Gazprom.

Ten European companies have opened accounts at Gazprombank to facilitate the transactions, the person said, speaking on condition of anonymity to discuss confidential matters.

Even if other buyers reject the Kremlin’s terms, more cutoffs after the halt in gas flows to Poland and Bulgaria aren’t likely until the second half of May, when the next payments are due, according to the person.

Polish premier accuses Russia of gas imperialism 

Russia has pushed the boundaries of its “gas imperialism” by another step by halting gas deliveries to Poland, Prime Minister Mateusz Morawiecki said on Wednesday.

“It’s a direct attack on Poland,” he told legislators in Warsaw, adding that Russia was attacking the European economy through inflationary measures. Morawiecki also said that Poland has enough gas in storage for more than 1.5 months, or longer if the temperature rises.

 

 

 

Germany says it’s meeting with EU countries on gas 

Germany said it’s discussing the decision by Russia’s Gazprom to halt gas flows to Poland and Bulgaria with EU partners, and although it views the move with concern, security of supply is currently guaranteed.

“All in all, gas flows are currently at a stable level but we are monitoring the situation very closely,” the economy ministry in Berlin said on Wednesday in an emailed statement.

Read more: Germany says it’s meeting now with EU partners on gas supplies

Transnistria says it was fired upon from Ukraine 

Shots were fired from Ukraine at a town in the breakaway Transnistria region of Moldova where Russia has ammunition warehouses, Interfax reported, citing the area’s police. Ukraine launched several drones overnight, including armed ones, Interfax said.

There has been a spike in violence in recent days in the self-proclaimed republic, where Russia has about 1,500 troops stationed. Moldova has blamed factions among the separatists for some of the attacks.

Russia targets bridge, railway near Odesa 

Russian missiles hit the bridge across the Dniester estuary west of Odesa for the second consecutive day, state railway company CEO Oleksandr Kamyshyn said on Telegram. The bridge provides access to Transnistria via a navigable inlet from the Black Sea.

“The enemy is trying to cut off part of the Odesa region and to create tensions against the backdrop of events in Transnistria,” the head of the Odesa regional military administration, Maksym Marchenko, said on Telegram.

Russian Speaker backs cutting gas to ‘unfriendly’ states 

Russia should cut off natural gas supplies to other “unfriendly” states that refuse to pay in roubles, according to Vyacheslav Volodin, the Speaker of the lower house of Parliament and a close ally of Putin.

“Bulgaria and Poland had the chance to take up our president’s offer of payment for gas in roubles,” he wrote on Telegram on Wednesday, saying the cutoff to those countries announced on Wednesday had the full support of the Parliament. 

“The leaders of these countries didn’t want to. Let them explain to their citizens how they will cope with this and in whose interests they were acting when they made this decision.”

EU planning coordinated gas response – Von der Leyen 

European Commission President Ursula von der Leyen said the EU’s gas coordination group is meeting to chart a joint response to Russia’s “unjustified and unacceptable” decision to use gas supplies as “blackmail”.

“Member states have put in place contingency plans for just such a scenario and we worked with them in coordination and solidarity,” she said in a statement on Wednesday. “We will also continue working with international partners to secure alternative flows.” 

EU ambassadors were meeting on Wednesday to discuss issues including a new sanctions package that would target Russian oil exports.  

Russia reports explosions in three regions near Ukraine 

Three Russian regions near Ukraine reported explosions, including an ammunition depot that caught fire in the Belgorod area, state-run Tass reported, citing local authorities.

Officials in the Voronezh and Kursk regions, both of which border Ukraine, reported that local air defence systems were fired. Voronezh Governor Vyacheslav Gladkov said a small drone was destroyed, according to Tass. No casualties were reported in any of the incidents.

Bulgaria says it has gas for at least a month 

Bulgaria has secured uninterrupted supplies of gas for at least a month from alternative sources, Energy Minister Alexander Nikolov told reporters in Sofia.

“Natural gas is used more as a political and economic weapon in the current war, and not in the context of legal, commercial relations,” Nikolov said, adding that Bulgaria hadn’t violated any contracts and had paid its April invoices in US dollars. “Bulgaria won’t hold negotiations under pressure and with its head low.” 

Russia cuts gas to Poland and Bulgaria  

Gazprom said it had halted gas flows to Poland and Bulgaria and will keep the supplies turned off until the two countries agree to Moscow’s demand to pay for the fuel in roubles.

Gas surged more than 20% on Wednesday as traders digested the sudden move and calculated which countries will be hit next. 

Read More: Gazprom says it cuts gas to Poland, Bulgaria on non-payment 

Chinese drone maker DJI to suspend business 

Drone maker SZ DJI Technology is temporarily suspending business to comply with regulations in various jurisdictions, it said in a brief statement without elaborating. Its halt follows US sanctions on Russia for invading Ukraine, which Washington has threatened to enforce broadly.

DJI’s move to halt business sets it apart from other major Chinese corporations. China has urged an end to the war in Ukraine but refuses to criticise the invasion, vowing instead to maintain trade relations with Russia, a key global energy supplier.

Read more: DJI becomes most prominent Chinese firm to halt Russia business DM

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  • Nothing scares Putin more than a large scale military conflict. Russian military might is a myth other than for its nuclear arms. Any of the major NATO members can take down Russia without nuclear involved.

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