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UKRAINE UPDATE: 5 MAY 2022

US spells out its weapons training in Germany; EU proposes ban on Russian crude oil

Relatives, friends and comrades attend a funeral ceremony for Ukrainian serviceman Ruslan Borovyk at St Michael's Golden-Domed Monastery in Kyiv, Ukraine, on 4 May 2022. (Photo: EPA-EFE / SERGEY DOLZHENKO)
By Bloomberg
04 May 2022 0

The European Union proposed a ban on Russian crude oil phased in over the next six months, part of the bloc’s sixth package of sanctions as President Vladimir Putin seeks to cement military gains in Ukraine.

Germany threw its weight behind the EU plan, though Hungary said it would not back the proposal as it stands and other nations asked for more flexibility. The Kremlin called the measure a “double-edged sword” as it will have an impact on households. The EU is also proposing to cut off Sberbank and other lenders from the international Swift messaging network used by financial institutions.

Russia’s war in Ukraine is nearing the 10-week mark. Having failed to achieve a quick victory, Moscow is focused on reinforcing both military and political control over territory taken so far, according to people familiar with the Kremlin’s thinking. US military officials provided details of the training on weapons that they’re providing for Ukrainian troops in Germany. 

Key developments

US military spells out weapons training for Ukrainians 

The US is training Ukrainians on new weapons systems, including artillery and drones, in Grafenwoer, Germany, according to Brigadier General Joseph Hilbert, head of the 7th Army Training Command in Europe. He told reporters that a first group of Ukrainian trainees is back in the fight in Ukraine, and a second group of about 50 to 60 is now being instructed.

“They understand how to operate it and employ it as effectively as they can on their own and in accordance with their own tactics and their own doctrine,” Hilbert said of the new equipment. “The soldiers that we are receiving here are absolutely motivated, incredibly professional.”

The US hasn’t had any problems getting the small groups of Ukrainians into Germany and back again, according to Hilbert and Lieutenant-Colonel Todd Hopkins, who is also overseeing training. The officials acknowledged challenges, including providing instruction through translators.

Biden wants to talk to G7 about more Russia sanctions 

President Joe Biden said he would consult with Group of Seven allies this week about more potential sanctions on Russia. After the EU proposed a ban on Russian oil imports by year’s end, Biden told reporters the US is “always open to additional sanctions” and that he would discuss with G7 members “what we’re going to do or not do”. 

Senior Biden administration officials have said they are looking at ways to tighten existing sanctions in order to prevent Moscow from evading them.

Russian billionaire challenges EU sanctions 

Russian metals billionaire Alisher Usmanov is appealing against the European Union’s decision to impose strict sanctions on him in response to Russia’s invasion of Ukraine. He filed his appeal at the EU’s General Court on April 29, asking judges also to suspend the sanctions until there’s a final ruling, according to a court filing. A spokesperson for Usmanov declined to comment. 

Usmanov’s case is part of an increasing number of challenges at the Luxembourg-based court since the bloc started issuing sanctions on February 28.

The EU, along with the US and UK, has targeted Russia’s ultra-wealthy and Usmanov has had his 156m yacht detained. 

 

 

 

EU tussles with holdouts over latest sanctions 

EU diplomats discussed the sixth package of sanctions on Wednesday, with Hungary objecting to the oil phase-out timing. Greece, Malta and Cyprus raised questions about banning the transport of oil between third countries, saying the move would just help Europe’s competitors, according to two diplomats. The diplomats aim to conclude the package by the end of the week, or by May 9 at the latest, the diplomats said.

Greece and Cyprus have large shipping industries, while Malta is a so-called flag state, where companies can register their vessels for ownership purposes.

UK bars Russia from using consultants  

The UK cut Russia off from using management consultants, accountants and public relations firms, part of a further tranche of sanctions.

Read more: Truss bars Russia from using UK consultants, accountants, PR

The government in London also announced additional measures against 63 Russian individuals and organisations, many of them targeting people connected to news outlets in an effort to punish what it called “the spread of lies”.  

Portuguese premier to visit Kyiv soon 

Portuguese Prime Minister Antonio Costa announced he will travel to Kyiv in the near future to sign a “significant” financing agreement, part of the International Monetary Fund’s support for Ukraine.

Read more: Ukraine sees rebuild costing $600bn as it seeks global aid

“Regardless of the dynamics of the EU accession process, we have to provide immediate answers to the emergency needs of the Ukrainian state and the Ukrainian people,” Costa said.

EU plans to block Russians from buying real estate 

The EU added a ban on property transactions with Russian nationals to its latest sanctions. The European Commission’s proposal would halt property deals with Russian citizens, residents and entities – prohibiting the sale or transfer, directly or indirectly, of “ownership rights in immovable property located within the territory of the Union or units in collective investment undertakings providing exposure to such immovable property”, according to the legal text seen by Bloomberg.

EU suggests sanctioning Russian Patriarch Kirill  

The EU is also proposing to sanction Patriarch Kirill, the head of Russia’s Orthodox Church, according to documents seen by Bloomberg and people familiar with the matter.

The list, which still needs to be approved by European governments and could change, also includes family members of President Putin’s spokesperson, Dmitry Peskov, as well a number of senior military personnel. Kirill is a long-time Putin ally and has become one of the most vocal supporters of Russia’s war. 

Sanctions need the approval of all member states and some Orthodox nations are reluctant to target a senior religious figure, one of the people said.

Kremlin calls oil embargo ‘double-edged sword’  

The EU’s plans to ban the import of Russian crude oil are a “double-edged sword”, the Kremlin said.

“In seeking to cause us harm, they also pay a high price,” Peskov told reporters on a conference call. “The price of these sanctions for EU citizens will increase every day.”

India wants Russia to discount its oil 

India is trying to get deeper discounts on Russian oil to compensate for the risk of dealing with the Opec+ producer as other buyers turn away, according to people with knowledge of the matter.

Read more: India wants Russia to discount its oil to below $70 a barrel

The South Asian nation is seeking Russian cargoes at less than $70 a barrel on a delivered basis to compensate for additional hurdles, such as securing financing for purchases, in high-level talks between the two countries, said the people.

 

 

 

EU targets Russia’s global oil sales 

The EU is seeking to go beyond its proposed ban on Russian oil by also targeting Moscow’s ability to sell crude and refined products anywhere in the world.  

The bloc is looking at banning European vessels and companies from providing services, including insurance, linked to the transportation of Russian oil globally, according to officials and a draft document seen by Bloomberg.

Oil rallies on EU proposal to phase out Russian supply 

Brent futures rose as much as 3.8% to trade near $109 a barrel. The EU’s plan is the most significant energy response from the bloc to the war in Ukraine as it seeks to cut reliance on Moscow. Traders have been keenly focused on just how much the war will affect output from Russia, one of the biggest producers.

Read our QuickTake explainers:

Hungary sceptical about EU oil ban  

The EU has yet to resolve Hungary’s concerns over the oil plan, according to Zoltan Kovacs, a spokesman for the Hungarian government. Hungary and Slovakia, which are heavily reliant on Russian energy, will be given until the end of 2023 to comply with sanctions, a year later than other member states, according to people familiar with the matter.

“We see no plan or guarantees in the current proposal to manage even a transition period nor what would guarantee Hungary’s energy security,” Kovacs said by phone on Wednesday.

Hungarian energy refiner prepares for Russian oil curb 

Mol, Hungary’s largest refiner, has already taken steps to prepare for EU sanctions on Russian oil, including by stocking up on supplies, its chairman and CEO, Zsolt Hernadi, told Telex news website.

Without access to Russian crude, output would drop by 20% at Mol’s refinery in Hungary and by 30% at its Slovak unit, due to the technological issues in processing other oil types, according to the CEO. Prime Minister Viktor Orban has threatened to block EU sanctions on Russian oil if they hindered Hungarian procurements from Russia.

Ukraine says Russian missiles hit transport targets  

Russian missiles targeted transportation infrastructure in eight regions of Ukraine late on Tuesday, the General Staff of the Armed Forces said. Missiles hit railway electric grid equipment across the country, wounding several people. Russia is trying to use missiles to stop “new and powerful” weapons arriving to Ukraine from the West, President Volodymyr Zelensky’s chief of staff, Andriy Yermak, said on Tuesday on Telegram. 

Russia’s defence ministry appeared to acknowledge the strikes, saying its forces destroyed six power sub-stations near railway stations in Podbortsy, Lviv, Volonets, Timkovo and Piatikhatka, Tass news agency reported.

EU proposes phasing out Russian oil by year-end  

Hungary and Slovakia, which had been opposed to a swift cut-off of Russian oil, will be granted a longer timeframe – until the end of 2023 – to cut off Russian oil, according to people familiar with the matter. 

Read more: EU proposes phasing out Russian oil by the end of the year

The move increases the stakes with Moscow as the EU, the single largest consumer of crude and fuel from Russia, seeks to pressure President Vladimir Putin. In 2019, almost two-thirds of the bloc’s crude oil imports came from Russia.

 

 

 

EU proposes sanctions on main Belarus potash companies  

The move would see the bloc targeting Belaruskali  and its export arm, Belarusian Potash, according to a person familiar with the matter. The EU is also proposing sanctions on oil refinery Naftan. 

Read more: EU proposes sanctions on main Belarus potash companies

All three companies provide significant revenue to President Alexander Lukashenko’s regime and have been previously sanctioned by the US. The EU and the US have accused Belarus of aiding Putin in his invasion of Ukraine.

Belarus calls unexpected drills after Lukashenko-Putin talk  

Belarus announced a “sudden check” of its military forces, the day after President Alexander Lukashenko had a phone call with Russian President Vladimir Putin where they also discussed Ukraine, according to RIA Novosti.

The country’s defence ministry doesn’t say how many troops will take part in the training, only that their size will “grow over time” and will involve moving “significant” amounts of military equipment. The statement doesn’t mention any involvement of Russian forces while claiming the drills threaten neither neighbouring countries nor Europe. 

Europe stuck pursuing long-term gas contracts 

Europe is finding it next to impossible to put an end to the decades-long natural gas supply contracts it has opposed for years. The war in Ukraine is driving Europe’s energy firms to sign long-term deals to secure alternatives to Russian gas. The continent needs such agreements to fill the gap of losing supplies from Russia, its biggest provider of the fuel.

Read more: War forces Europe to keep long-term gas deals it once resisted

Europe’s jobs market slows amid war 

There were fewer help-wanted advertisements in Europe on jobs-search website Indeed in the week to April 22 than there would have been had the pre-war growth trend continued. The survey adds to evidence that the war is weighing on the region’s economic recovery.

Australia imposes sanctions on separatists in Ukraine, Russian legislators

Australia expanded targeted financial sanctions and travel bans on a further 110 people, including Ukrainian separatists and Russian members of Parliament. The measures target 34 senior members of the Russian-backed movements in Donetsk and Luhansk and 76 lawmakers of the state Duma. 

Zelensky reports on Mariupol evacuation 

In his nightly video address, Zelensky discussed the evacuation from the besieged steelworks in Mariupol. “We finally have the result, the first result, of our evacuation operation,” he said. “It took a lot of effort, long negotiations and various mediations. Today 156 people arrived in Zaporizhzhia.” DM

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