Russian President Vladimir Putin arrived in the Islamic Republic on Tuesday to join Iranian President Ebrahim Raisi and their Turkish counterpart Recep Tayyip Erdoğan in what was the Russian leader’s first trip outside the former Soviet Union since he ordered the February invasion. 

Russia is poised to restart gas exports via the Nord Stream 1 pipeline to Germany at a reduced capacity on Thursday. Earlier, an International Monetary Fund working paper warned a cutoff of Russian natural gas supplies in retaliation for economic sanctions over the war could result in a hit of as much as 2.65% to the European Union’s economy.  

Key developments

• Putin arrives in Iran for talks dominated by war
• Seaport trades billions of Russian bonds as Wall Street retreats
• Germany to wait until early next week to count Russia gas damage
• Russian gas halt may spark 2.65% hit for EU economy, study shows
• Gazprom poised to restart gas flows through Nord Stream pipeline
• EU, China to cooperate on tackling food crisis, fertilisers

On the ground

Russia struck the Odesa region with seven missiles overnight, one of which was shot down by air defence, while six hit a village, according to the Ukrainian military’s southern command. Six people, including a child, were injured. Kremlin forces are trying to create conditions for resuming the offensive in the Donetsk region, Ukraine’s General Staff said in a statement. The Russian military continued shelling, hitting areas from the Chernihiv region in the north to the Dnipropetrovsk region in the south, according to Ukrainian officials. 

Putin says not all Ukraine grain issues are resolved  

Not all issues related to the export of grain from Ukraine’s Black Sea ports are resolved, but there’s progress, Putin told Turkey’s Erdoğan at a meeting in Iran. 

“With your mediation, we’ve moved forward,” Putin said in televised comments. “Not all issues have been resolved yet, but there is movement and that is already good.”

Russia poised to restart gas flows through Nord Stream  

Gazprom is poised to resume gas flows via the Nord Stream 1 pipeline on time at a reduced capacity on Thursday after the completion of scheduled maintenance, according to people familiar with the matter.

Shipments will resume on Thursday but remain below normal after the Russian gas giant declared force majeure on some European clients, said the people, who asked not to be named because the information is private. Flows via Russia’s biggest link to Europe were capped at 40% of capacity before the work. 

EU Budget Commissioner Johannes Hahn said earlier that he did not expect Russia to restart the link on July 21 as planned.

Ukraine ‘plans Eurobond payment freeze’

Ukraine’s Cabinet approved a two-year freeze on Eurobond payments to conserve its hard-currency reserves, Ekonomichna Pravda reported, citing an unidentified official who attended the meeting. 

The decision still must be approved by the Parliament’s budget committee, according to the report. Finance Minister Serhiy Marchenko didn’t reply to a text message or phone call seeking comment. 

Ukraine, which has $24.5-billion in foreign debt, has been in an increasingly precarious position financially as the war saps its ability to pay its bills. Last week, its state-owned energy company Naftogaz Ukrainy moved to delay payments on its bonds. 

Read more: Ukraine’s debt future in flux as state gas giant asks for delay

Seaport trades billions of dollars of Russian bonds 

Investment bank and brokerage firm Seaport Group has traded several billion dollars of Russian government bonds in recent weeks, becoming one of the main venues for clients to buy and sell securities that many of Wall Street’s biggest firms will no longer handle.

Seaport’s brokerage business, best known for trading debt and distressed situations, continues to settle and trade billions of Russian sovereign bonds daily and remains a buyer of such assets, it told clients last week in a note seen by Bloomberg News.

While the Biden administration hasn’t explicitly outlawed the brokering of such debt, the US Treasury in June forbade US investors from acquiring the securities. 

Ukraine-linked cyberattacks could lead to escalation, EU says  

Russia’s war in Ukraine has been accompanied by a significant increase in malicious cyberattacks around the world that risk possible escalation of tensions, Josep Borrell, the EU’s foreign policy chief, said in a statement.

Borrell said recent denial-of-service attacks against several EU member states claimed by pro-Russian hacker groups were “another example of the heightened and tense cyber threat landscape”. He said a “striking and concerning” number of hackers have been indiscriminately targeting essential entities globally.

IMF warns of economic fallout from potential gas cutoff 

A natural gas halt would probably reduce gross national expenditures in the EU by at least 0.4% over one year, researchers Silvia Albrizio, John Bluedorn, Christoffer Koch, Andrea Pescatori and Martin Stuermer said in an International Monetary Fund (IMF) working paper. 

Earlier, a European Commission estimate forecast a gas embargo could reduce the bloc’s gross domestic product by as much as 1.5% if next winter is cold, according to a draft EU document seen by Bloomberg News. 

Russia expects grain talks to restart soon – Tass 

Russia expects talks over Ukrainian grain exports will continue in the near future, Kremlin spokesman Dmitry Peskov said, state-run Tass reported.

Putin and Erdoğan will “100%” discuss efforts to reach a deal on unblocking exports of millions of tonnes of Ukrainian grain from Black Sea ports, Kremlin foreign policy aide Yuri Ushakov said, Tass reported on Monday. Grain talks between Russia, Turkey, Ukraine and UN representatives could resume on July 20-21, the news service said last week. 

Russians drive record Turkish home sales to foreigners  

Sales of Turkish homes to foreigners jumped by more than 80% in June from a year ago to a record 8,630, thanks primarily to accelerating demand from Russian citizens since the start of the war in Ukraine. 

Russians purchased 1,887 properties last month, and have now bought 5,849 homes in Turkey this year, making them the biggest buyers by nationality. 

Russia to start buying grain in August – Interfax 

Russia’s Agriculture Ministry plans to purchase as much as one million tonnes of grain from Siberia, Urals and central Russia this year, starting in August, Interfax reported, citing the ministry. 

The purchases will be for the State Intervention Fund, according to Interfax. The announcement comes as global wheat prices are much higher than usual for this time of year after Russia’s invasion of Ukraine cut Kyiv’s grain shipments and other major producers are hit by drought.

Read more: Russia’s wheat exports are off to flying start amid bumper crop

Ukrainian Parliament dismisses prosecutor-general 

Ukraine’s Parliament voted to dismiss Chief Prosecutor Iryna Venediktova after she was suspended by President Volodymyr Zelensky this week in a shakeup of the nation’s security services.

Her ouster follows accusations from Zelensky’s office that the state prosecutor’s office and the state security service — whose head the president also dismissed — employed more than 60 people who worked for Russia and leaked information to undermine Ukraine’s efforts to beat back Moscow’s invasion.

Zelensky’s deputy chief of staff, Andriy Smyrnov, said on Tuesday the president expected officials to step up work to remove traitors from state security bodies and investigations would be launched into Venediktova and Ivan Bakanov, who led the security service.

EU proposes new sanctions on Sberbank 

The European Union has proposed additional sanctions on Sberbank, Russia’s largest bank, according to people familiar with the matter.

The measures against Sberbank, which has already been cut off from the international payments system Swift, would include a total asset freeze, the people said. Under the current proposal, the measure would kick in after six months. EU sanctions need the backing of all member states and details could change before that happens.

The EU’s latest package of proposals includes a derogation to allow listed banks to continue transactions related to essentials such as food and agricultural goods. The suite of measures also includes a proposal that would oblige sanctioned individuals to register their assets and a ban on imports of Russian gold. At a meeting of EU ambassadors on Monday, a number of member states asked that the gold ban also cover jewellery, the people said.

Russians split over peace talks – The Bell 

Russians were evenly divided over the need to hold peace talks or continue what the authorities call a “special military operation” in Ukraine, The Bell reported, citing a non-public June survey by state pollster VTsIOM.

The VTsIOM poll found 44% in favour of each option, with 12% declining to answer the question, The Bell said, citing an unidentified person close to the Kremlin who was familiar with the survey of 1,600 Russians conducted in late June. In another question, 57% said they favoured continuing the war compared to 30% supporting ending it as soon as possible, The Bell said.

VTsIOM did not immediately respond to a request for comment.

EU aims to replenish weapons stock 

The European Union is proposing a €500-million investment tool to incentivise a minimum of three member states to buy weapons jointly, including artillery, air defence systems and anti-tank missiles. 

“This initiative will make it possible to replenish part of the stocks following Europe’s united and supportive response by way of transfer of arms to Ukraine,” EU Internal Market Commissioner Thierry Breton said, adding the project would “boost our European industrial base”.

The measure would draw from the bloc’s budget for the next two years, and only European companies based in Europe will be able to benefit. 

Ukraine picks chief anti-graft prosecutor 

Ukraine appointed a new head of the anti-corruption prosecutor’s office after months of delay, fulfilling a requirement from the European Union and other international financial donors.

The former Soviet state, which is seeking closer integration with the West as it fights off Russia’s military invasion, has agreed to a demand by the bloc and the International Monetary Fund to demonstrate progress in fighting endemic corruption as a condition for receiving financial aid.

Ukraine military commander says situation has stabilised 

Ukraine’s military chief, Valeriy Zaluzhnyi, said Ukraine “has managed to stabilise the situation” in the country. 

“It is complex, intense, but completely controlled,” Zaluzhnyi said on Facebook after speaking with General Mark Milley, chairman of the US Joint Chiefs of Staff. “An important factor contributing to our retention of defensive lines and positions is the timely arrival of M142 Himars, which deliver surgical strikes on enemy control posts, ammunition and fuel storage depots.”

Zaluzhnyi and Milley also discussed a meeting of the Ukraine Defence Contact Group, scheduled for Wednesday, where military needs will be discussed. DM