UKRAINE UPDATE: 31 MAY 2022
Biden says no to long-range weapons as part of military aid; EU wrangles over Russian oil ban
President Joe Biden said the US would not send Ukraine ‘rocket systems that can strike into Russia’, seemingly quashing reports that the administration would consider long-range weapons in a new aid package. Ukraine has repeatedly called for more offensive weapons as it battles Russian troops in the east.
European Union members continue to wrangle over the terms of a potential ban on Russian oil purchases. Leaders are being pushed to at least give political backing to an agreement, an official said, with formal approval of sanctions at a later date.
Hungary remains the key holdout, with Prime Minister Viktor Orban saying there is no consensus but signalling he’s ready to agree if the bloc guarantees his country still receives the fuel via a pipeline and other measures in case that avenue is disrupted.
- Todd Boehly completes takeover of UK’s Chelsea Football Club
- Russia comes up with a new bond-payment plan to avoid default
- Pimco fund added to Russia swap exposure in weeks before war
- Rosneft plans to pay record-high annual dividend on oil’s rally
- Europe faces an old methane hotspot in rush to exit Russian gas
Chelsea Football Club sold to Dodgers owner
US investor Todd Boehly has completed his $5.4-billion takeover of Chelsea Football Club from the Russian oligarch Roman Abramovich, who was forced to put the team up for sale before being sanctioned in the UK’s response to Russia’s invasion of Ukraine.
The deal ends almost 20 years of ownership under Abramovich, during which the club rose to become one of the dominant forces in the English Premier League. It also represents another instance of wealthy Russians being forced from high-profile positions in Western countries as a result of President Vladimir Putin’s war.
Chelsea won 21 trophies under Abramovich. Boehly owns the Los Angeles Dodgers baseball team.
Biden says no to long-range rocket systems for Ukraine
Ukraine has been calling for weeks for longer-range, multiple-launch rocket systems it says are needed to halt Russian advances in the east. Biden told reporters the US would not send “rocket systems that can strike into Russia”.
The comment seemed to contradict previous reports that the US would consider offering Ukraine the systems – some of which have a range of 300km – as part of a new military aid package expected to be announced within days.
Dutch energy firm says Russia to cut gas flows
After cutting gas supplies to Poland, Bulgaria and Finland, Russia has now warned it will halt pipeline shipments to a Dutch energy firm. GasTerra will stop receiving supplies from Gazprom on Tuesday after refusing to accept new payment terms imposed by Russia, including opening a roubles account with Gazprombank.
The move will remove about two billion cubic metres of gas from the market from now until October 1, when GasTerra’s contract with the Russian gas giant was set to expire.
Russia’s seaborne crude flows rise as EU tussles over ban
Europe’s avoidance of the country’s supplies is forcing barrels on longer routes to willing buyers in Asia, with India the biggest market for crude from western Russia.
Overall, crude shipments edged higher in the seven days to 27 May, largely shrugging off mid-month EU restrictions that trading houses see as prohibiting them from dealing with Russian state energy companies.
Estonian premier says future of government at risk
Estonian Prime Minister Kaja Kallas – a fierce critic of Putin – cited a legislative standoff with a junior coalition partner.
Kallas, who has seen her popularity soar at home and abroad as she urges EU nations to do more to confront Putin, signalled that she’d seek to end her coalition if the Centre Party under former premier Juri Ratas wins a parliamentary vote on a family benefits package with help from the opposition.
“Politics is so that one day you’re in power and the next day, you’re not – so I can’t be sure of that,” Kallas told Bloomberg Television. A government collapse would leave the Baltic nation potentially rudderless at a time of heightened security risks and record inflation.
Orban sets out two conditions for EU oil embargo
“There is no compromise at this moment at all,” the Hungarian prime minister said on arrival at the EU summit in Brussels. “There is no agreement at all.”
While he said a European Commission proposal to impose an embargo on Russian crude purchases was no longer an “atom bomb” hurled at the Hungarian economy, he echoed the sentiments of other EU leaders that a deal wouldn’t be clinched at the meeting.
“In the next round we can discuss investments and timeline for us to do without Russian oil via pipelines but we don’t need to discuss that today,” he said. “If I get my guarantees today then we’re safe.”
Russia suffers heavy ground force losses since the war started
Russia has probably lost about one-third of the ground combat forces it committed on 24 February, according to a senior Nato official. Still, its troops are slowly and incrementally gaining territory in the east and the limited terrain captured is militarily important to press a sustained offensive, the official told reporters.
Russian commanders are trying to redistribute forces swiftly, often without adequate preparation, deploying more green soldiers and combat-fatigued soldiers from other battles to form reconstituted units, the official said.
Moscow also appears to be mobilising Soviet-era T-62 battle tanks from storage, which are likely to be vulnerable to anti-tank weapons. That shows its shortage of modern combat equipment, the official said.
Russian LNG plant halts loading ex-Gazprom tankers
The operator of Russia’s Sakhalin-2 liquefied natural gas plant stopped supplying the fuel to a former Gazprom trading unit seized by Germany, according to people with knowledge of the matter.
Sakhalin Energy isn’t loading LNG vessels for Gazprom Marketing & Trading due to sanctions imposed by Moscow, said the people, who asked not to be identified as discussing sensitive matters.
The Sakhalin-2 plant on the Pacific coast mainly supplies customers in Japan, South Korea and China.
Macron ‘very cautious’ on chances of deal on Russian oil ban
“I remain very cautious because there are new demands from Hungary,” French President Emmanuel Macron told Bloomberg on his way into the EU summit. “We will try to move forward.”
European Commission president Ursula von der Leyen told reporters her “expectations are low that it will be solved in the next 48 hours”, but added she was confident “that thereafter there will be a possibility”.
German heavy weapons for Kyiv still pending
The ruling coalition and the main opposition conservatives sealed a deal on enshrining a €100-billion fund to boost military spending in the constitution amid continued criticism over delays in supplying Ukraine with promised heavy weapons.
Germany announced plans to supply heavy weaponry a month ago. But so far, none of the seven armoured howitzers and an initial 15 Gepard armoured vehicles has been delivered. Defence minister Christine Lambrecht said that Ukrainian soldiers need to undergo a 40-day training programme to use the howitzers, while the vehicles aren’t in a condition to be sent yet.
Pimco fund added to Russia swap exposure before war
Pacific Investment Management’s largest fund increased its exposure to Russian default swaps by selling more than $100-million of protection to banks including Barclays and JPMorgan & Chase.
Pimco’s Income Fund already had almost $1-billion of bets on Russia via credit-default swaps coming into the year, and added a net $106-million in the first quarter, according to documents filed this month with the Securities and Exchange Commission. The bulk of the new swaps was sold in January, with some added in February before the war began, according to a person with direct knowledge of the matter.
Brussels seeks political deal on Russian oil ban
The embargo would cover seaborne oil, which makes up two-thirds of the bloc’s oil imports from Russia, according to an official who spoke on condition of anonymity to discuss the negotiations.
Some temporary exceptions would be granted to several members that will take more time to resolve. It’s unclear whether Hungary – which has resisted supporting the ban citing its dependence on supplies from Moscow – is on board. All 27 members must agree on sanctions.
The package will include the exclusion of Russia’s largest bank, Sberbank, from the Swift international payment messaging network, plus a ban on three more Russian state-owned broadcasters, the official said.
Read our QuickTake explainers
- How Europe became so dependent on Putin for its gas: QuickTake
- How war and sanctions have sparked rouble volatility: QuickTake
Ukraine starts first rape trial for Russian soldier
The Prosecutor-General of Ukraine says it has sent for a court trial the first case of an alleged wartime rape. The trial will be held in absentia, as the accused Russian soldier is not in Ukraine’s custody.
Denmark’s Orsted warns Russia may cut gas
Denmark could be the next country cut off from Russian natural gas as its biggest utility is refusing to cave in and make payments in roubles. Orsted is preparing for Gazprom to cut off one of Denmark’s biggest sources of the fuel, the firm said, adding it expects it will be able to secure alternate sources of supply in the European wholesale market. The payment deadline is Tuesday and the company said it will continue to pay in euros.
Daily power prices in Finland surged after Russia suspended energy exports to its western neighbour earlier this month. European nations are split over how to handle Moscow’s demand that all payments for the fuel should be made in the local currency, and utilities have responded to the challenge differently.
Rosneft plans record dividend
Russian oil giant Rosneft promised record dividends on the back of soaring prices, but some foreign investors may struggle to access the payout.
The board recommended 23.63 roubles a share for the second half of 2021, bringing full-year dividends to an all-time high of 41.66 roubles. That follows an announcement last week by Gazprom, which proposed its highest ever payout after benefiting from a supply crunch in Europe. The decisions of both companies will see the Russian state gaining the most, as it’s the biggest shareholder. Many foreign investors could have difficulties obtaining the payout following restrictions imposed by Putin.
Crypto exchange buys Eurovision trophy to fund drones
A crypto-currency exchange bought this year’s Eurovision crystal microphone trophy from Kalush Orchestra, the Ukrainian rap-folk band that won the competition, to help it raise funds for their country’s military.
Estonian crypto exchange WhiteBit bought the trophy for $900,000 in an auction held on Instagram over the weekend. Oleh Psiuk, Kalush Orchestra’s lead singer, also sold his signature pink hat for 11 million hryvnia ($374,000). The money will be spent on drone systems, according to the band.
Kherson farmers ‘start grain sales to Russia’
Part of last year’s grain harvest is being shipped from the southern Kherson region to Russia, Tass reported, citing Kirill Stremousov, a representative of the occupation administration there. Ukrainian farmers and officials have accused Russia of confiscating and stealing grain from areas it has seized. Russia almost completely occupies Kherson and Stremousov is deputy head of the administration.
Separately, Taras Kachka, a deputy Ukrainian economy minister, called for warships to patrol the Black Sea to protect vessels carrying food exports from Russian attacks. His comments on Facebook followed reports of multiple Russian air strikes on a bridge in Zatoka between the Black Sea and the Bilhorod-Dnistrovskyi estuary, which is key for Ukrainian export shipments.
Ukraine’s exports have been limited to rail and road routes via neighbouring EU nations since the war started, helping to keep grain prices near a record high.
Russian advance in Sievierodonetsk continues
Russian troops continue to advance toward the city centre in Sievierodonetsk in the eastern Luhansk region, according to Serhiy Haiday, the local governor. “Battles are continuing, the situation is very difficult,” he said on his Telegram channel.
The city’s infrastructure has been ravaged, with 60% of residential buildings so severely damaged that they can no longer be repaired, he said, adding that about one million people in the occupied areas of Luhansk remain without a functioning water supply. DM