UKRAINE UPDATE: 1 JULY 2022
US Treasury blocks Russian oligarch’s $1bn trust; Russia withdraws troops from Snake Island
Ukrainian officials are exploring the possibility of debt restructuring as the war-ravaged country’s funding options are at risk of running out, according to three people familiar with the discussions.
The US plans to announce an additional $800-million in defence assistance for Ukraine, President Joe Biden said at the Nato summit in Madrid, which concluded with support for Sweden and Finland’s bids for membership. The US Treasury Department said it blocked a trust holding more than $1-billion in assets tied to a Russian oligarch.
Russia confirmed it withdrew troops from a strategically important island in the Black Sea, after Ukraine said they were forced to leave by its missile and artillery strikes. Moscow framed the move as a gesture toward facilitating grain exports from Ukraine. Russia also banned rice exports through the end of the year, Interfax reported.
- Ukraine considering debt restructuring options as payments loom
- Russia withdraws troops from Snake Island after Ukraine strikes
- Oil set for first monthly drop this year as Opec+ hikes supply
- Lawmakers slam London’s ‘dirty money’ habit and UK sanctions
On the ground
As the largest-scale military operation in Europe since World War 2 continues in its fifth month, Russia pressed ahead with its goal of occupying Ukraine’s Donetsk and Luhansk regions. Kremlin forces are closing in on Lysychansk, Ukraine’s last major foothold in Luhansk. The region’s governor described the situation as “extremely difficult” with evacuations not possible and Russian troops at the city’s outskirts. Russia fired two missiles at Odesa but damage was limited. Russia continued to strike targets far from the eastern front, keeping up a volume and intensity that’s risen since last weekend.
World Bank provides €447m for Ukraine’s budget
Ukraine received €447-million from the World Bank to support budget expenditures and state governance, the Finance Ministry said on its website. Most of the loan, €424.6-million, is guaranteed by the UK, according to the statement.
The funds will support financing for state sector employees, including in education, Finance Minister Serhiy Marchenko said.
US blocks oligarch’s $1bn trust
The US Treasury Department said it’s blocking a Delaware-based trust containing more than $1-billion of assets linked to Russian oligarch Suleiman Kerimov.
“This action ensures that those assets remain blocked and inaccessible to Kerimov,” the Treasury Department said in an announcement on the issuance of a notification of blocked property to Heritage Trust. Kerimov “holds a property interest” in the trust, according to the statement.
Kerimov is a Russian gold billionaire who was first sanctioned by Washington in 2018. He’s worth about $13.3-billion, according to the Bloomberg Billionaires Index.
Ukraine considers debt restructuring
Ukrainian officials are looking into the possibility of a debt restructuring, according to three people familiar with the plans. The country has time to make a decision — until September 1, when it faces a $1.4-billion redemption and interest payments, according to Bloomberg calculations.
The International Monetary Fund (IMF) is offering advice and analysis about Ukraine’s financial and debt situation, according to two of the people, all of whom asked not to be identified discussing a sensitive issue.
IMF staff have been engaging with the Ukrainian authorities since the invasion began in late February and continue to do so, a fund spokesman said, without commenting directly on questions regarding the possibility of debt restructuring.
Indonesia’s Joko Widodo says he handed Zelensky message to Putin
Indonesian President Joko Widodo said he handed a message to Russian counterpart Vladimir Putin from Ukrainian leader Volodymyr Zelensky, whom he met in Kyiv on Wednesday. Jokowi, as he’s known, didn’t comment on the content. “I expressed my readiness to facilitate dialogue between the two leaders,” Widodo said after talks with Putin in the Kremlin on Thursday.
The Indonesian leader said food shortages since the war in Ukraine started in February were affecting hundreds of millions of people in developing nations.
His visit came as efforts have stalled on restarting the export of grains from Black Sea ports blockaded by Russian navy ships. Russia has said its own grain and fertiliser exports are being limited, even though the US has assured buyers they won’t be breaking any sanctions by making purchases.
Kremlin hints Putin may not attend G20 in person
Putin may attend the Group of 20 summit in Indonesia in person or send a representative, the Interfax news service reported, citing his spokesman. “Russia will take part in the G20; we’ll decide what format best suits our interests,” Dmitry Peskov said.
Indonesian President Joko Widodo, who will host this year’s meeting on the island of Bali in November, met with the Russian leader in Moscow on Thursday.
Italian President Mario Draghi said on Tuesday that he’d heard from Widodo that Putin wouldn’t attend in person. The Kremlin rejected that comment.
Biden backs Turkey F-16 purchase
Biden said he told Turkish President Recep Tayyip Erdoğan that he supported the sale of F-16 jets to modernise Turkey’s air force, after the two leaders met following Ankara’s decision to drop its opposition to Nato expansion.
Biden spoke at the conclusion of a Nato summit in Madrid on Thursday. Erdoğan’s change of heart on supporting Nato membership for Sweden and Finland brought the alliance one step closer to bolstering its eastern front with Russia. The US president said his support for the F-16 sale is long-standing and wasn’t a “quid pro quo” for Turkey’s support of the Nato ascension deal.
Kyiv cuts diplomatic relations with Syria over Donbas
Ukraine said it was breaking diplomatic ties with Syria after the Middle Eastern country officially recognised the “independence and sovereignty” of Luhansk and Donetsk, breakaway regions in eastern Ukraine that together are known as the Donbas.
Kyiv sees Syria’s move as an “unfriendly gesture” and a danger to Ukraine’s sovereignty and territorial integrity, the foreign ministry said on its website. Consular relations with Syria will continue.
Zelensky foreshadowed the move in his nightly video address on Wednesday, saying Moscow had “squeezed out the message of Syria about the alleged recognition of the occupation structures in Donbas as alleged states”.
Biden says US to announce another $800m in defence aid
Biden said the US will announce another $800-million in defence assistance for Ukraine in the next few days. The new tranche would include a “new advanced Western air defence system” as well as “more artillery and ammunition”.
Speaking at a news conference at the end of the Nato summit in Madrid, Biden said the military alliance is rallying the world to stand with Ukraine.
Johnson targets UK defence spending at 2.5% of GDP
The UK will raise defence spending to 2.5% of annual GDP from its current 2.3% by the end of the decade and wants other Nato members to do likewise, said Prime Minister Boris Johnson.
The UK premier spoke at the Nato summit in Madrid of “a more dangerous and competitive world.” “We want Jens Stoltenberg, the general secretary, to start work on that new target now and he has agreed to do that,” Johnson said.
On Wednesday, Stoltenberg said that 2% “is increasingly considered a floor, not a ceiling” for members’ defence spending. Some 19 allies “have clear plans to reach it by 2024”, he said.
Canada to send dozens of armoured troop transport vehicles
Canada will send 39 troop transports to Ukraine this summer, Prime Minister Justin Trudeau announced at the Nato summit in Madrid. The General Dynamics vehicles, known as armoured combat support vehicles, will be new and part of an order of 360 recently made by the Canadian military.
Canada will also provide an additional six drone surveillance cameras to Ukraine, supplementing a delivery of 18 made this spring.
Stoltenberg says Nato is ready for anything
Stoltenberg said the alliance was “prepared for all eventualities” concerning Finland and Sweden joining the alliance, when asked about Putin’s comments that Moscow would respond in the event of a military buildup.
“We are ready to protect all allies, and of course Finland and Sweden,” Stoltenberg said after a gathering of Nato leaders in Madrid. He said Russia is, for now, “fully focused” on Ukraine.
Voluntary Russian withdrawal called ‘fake’
Ukraine’s armed forces expelled Russian troops from the Black Sea territory known as Snake Island and the idea that it was a voluntary withdrawal is “a complete fake,” according to the head of Zelensky’s office, Andriy Yermak.
Valeriy Zaluzhnyi, the commander-in-chief of Ukraine’s military, added: “Invaders have left Snake Island as they can’t endure our artillery, missile and air strikes.” He praised a Ukrainian-made howitzer that “played an important role in liberating the island”, as well as Western partners, who he said delivered the “means to strike”. He didn’t provide further details.
Ukraine has plans to install its presence on the island eventually and at the moment it controls the area with the help of far-range artillery, military spokesman Oleksiy Hromov said at a briefing.
ECB to ask banks to factor in Russian gas on shareholders payouts
The European Central Bank (ECB) plans to ask the region’s lenders to factor in the economic hit of a potential cutoff of Russian gas when considering payouts to shareholders.
“We will propose to ask banks to recalculate their capital trajectories under a more adverse scenario including also potentially a gas embargo or a recession,” said Andrea Enria, who leads the ECB’s supervisory board. European banks have seen their prospects clouded as Russia’s invasion of Ukraine threatens to foster a wave of soured loans given a spike in inflation and difficulties in sourcing commodities.
German unemployment unexpectedly rises
German unemployment unexpectedly rose, snapping 15 consecutive months of decline as refugees from the war in Ukraine were included in those searching for work.
Joblessness jumped by 133,000 in June, lifting the jobless rate to 5.3% — the highest since November. Economists had estimated a drop of 5,000. The European Central Bank predicted this month that refugees fleeing Russia’s invasion could end up boosting the euro area’s active labour force by as many as 1.3 million people.
EU ‘should seek joint debt’ to address Ukraine fallout
The European Union should channel more resources to deal with the fallout from Russia’s invasion of Ukraine and a host of growing domestic emergencies and global crises, a senior official said.
Janez Lenarcic, the commissioner for crisis management, said that options include a new joint borrowing scheme, similar to the bloc’s response to the Covid-19 pandemic, or setting up a trust fund.
“What is not an option is to look for internal reserves in the EU budget because they don’t exist anymore,” Lenarcic said in an interview in Brussels.
Zelensky thanks UK for latest aid
Zelensky thanked Prime Minister Boris Johnson after the UK said it will almost double its military support for Ukraine with an extra £1-billion.
Britain is “our true friend and strategic partner,” Zelensky said in a tweet. He also spoke with New Zealand Prime Minister Jacinda Ardern and invited the country to contribute to Ukraine’s “post-war reconstruction”.
First grain shipment leaves occupied port
A first merchant ship left Russian-occupied Berdyansk carrying 7,000 tonnes of grain after the Azov Sea port reopened following a mine-clearing operation, Yevgeny Balitsky, the head of occupation authorities in the Zaporizhzhia region, was quoted as saying by the Tass news agency.
The grain is headed for “friendly countries” under the protection of Russia’s Black Sea fleet, Balitsky said, without identifying which ones. According to Balitsky’s earlier comments, there are 1.5 million tonnes of grain in occupied territories in Ukraine.
Nato expansion ‘will deter Russia’, says Latvian president
Latvian President Egils Levits said the formalities for Sweden and Finland joining Nato will be completed “in one to two weeks” and their accession is designed to help the military alliance deter a newly aggressive Russia.
“Nato is a defensive alliance and when new threats arise the whole purpose of Nato is to react to guarantee the security of its members,” Levits said on Thursday in an interview with Germany’s Deutschlandfunk radio. “The goal is to be so strong that a potential aggressor — and in this case that is Russia — doesn’t think about attacking Nato.”
Russia committed war crime in Mariupol: Amnesty International
Amnesty International accused Russia of committing a war crime when its forces struck a theatre in Mariupol in March where hundreds of civilians had been sheltering, killing at least a dozen people and probably many more.
The human rights group commissioned a physicist to construct a model of the blast that levelled the theatre. Its investigation concluded the most plausible cause was a deliberate air strike most likely using two 500kg bombs.
Ukraine has said Russia killed 300 people in the strike and US President Joe Biden called Putin a war criminal after news emerged that the theatre sheltering civilians had been targeted. Russia accused Ukraine of mounting what it said was a “false flag” operation. DM
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