Ukraine’s central bank kept borrowing costs unchanged at 25% as President Volodymyr Zelensky warned citizens that shutdowns will continue across most of the country, even as workers race to repair damage to power infrastructure inflicted by Russian attacks.

In his evening address on Wednesday, Zelensky said capacity was constantly being expanded, but warned that it won’t be possible in the short term to return the energy system to its pre-war state.

Read more: Plunged into darkness, Kyiv braves Putin’s latest barrage

Key developments:

• Oil price cap is no game changer for Putin’s budget geared to war;
• Turkey tanker spat escalates with millions of barrels stuck;
• Putin bombs energy grid, so defiant Kyiv uses camping gear;
• WNBA star Griner released in one-for-one swap for arms dealer;
• Ukraine holds rates at 25% as Russian attacks batter economy.

On the ground

Ukrainian troops repelled Russian attacks near 15 settlements in the eastern Donetsk, Luhansk and Kharkiv regions over the past day, Ukraine’s General Staff said on Facebook. 

According to its statement, Russian forces conducted seven missile attacks and 16 air strikes as well as more than 40 assaults with multiple-launch rocket systems. 

The Nikopol district in the central Dnipropetrovsk region was shelled again overnight, according to local authorities. Russia may have modified its drones to operate in colder weather and could increase their use in coming weeks to help target Ukrainian critical infrastructure, according to the latest report by the Washington-based Institute for the Study of War.

Ukraine sees no compromise over Crimea with Russia, official says

People should take Vladimir Putin seriously when he talks about using nuclear and other non-conventional arms, because he is running out of instruments to defeat Ukraine, Ihor Zhovkva, deputy chief of staff to Zelensky, told Bloomberg Television.

Even so, Ukraine sees no room for compromise on Crimea with Russia and needs long-range air defence systems to protect its territory more effectively, Zhovkva said. Currently, Ukraine is able to intercept as much as 80% of missiles launched by Russia, he added.

Nations seek EU sanctions tweaks to boost agricultural trade

Several EU member states, including Germany and France, are urging the bloc’s executive arm to propose amendments to existing sanctions on Russia to clarify that agricultural goods and fertilisers are excluded from the measures, according to a position paper seen by Bloomberg.

“The existing derogations regarding agricultural and food sectors are considered by operators as not sufficient, as they may enter into conflict with asset freeze measures,” says the paper, which is also signed by Belgium, the Netherlands, Portugal and Spain. 

This leads to a situation that “hinders the transit of agricultural products and particularly fertilisers of Russian origin to third countries,” the paper says, noting that the largest Russian exporters, including Uralchem, Eurochem and Acron, are controlled by sanctioned individuals, which means their assets are considered frozen by several states.

The countries say the problem can’t be addressed by guidance alone and are urging the EU to work on an exemption for agricultural products that specifically states asset-freezing measures should not apply to funds or economic resources needed for the purchase, sale, import or export of agricultural products from or through Russia or Ukraine.

Ukraine holds rates at 25% as Russian attacks batter economy

Ukraine’s central bank kept borrowing costs unchanged at 25% even as a barrage of Russian missile attacks have further imperilled the economic outlook.

“An extended full-scale war by Russia and escalating terrorist attacks on the country’s critical infrastructure are the key risks for Ukraine’s economic development,” the National Bank of Ukraine said in a statement.

Prices climbed 26.6% in October, though the acceleration was less than estimated, the bank said. Inflation will begin easing in the second quarter of next year and “well-coordinated fiscal and monetary policies will remain essential for steady disinflation next year,” the central bank said.

Russians placed rocket systems at nuclear plant – Energoatom

Russian troops have placed several Grad rocket launchers near power unit No. 6 of the occupied Zaporizhzhia nuclear power plant, near the plant’s dry storage of spent nuclear fuel, Ukraine’s nuclear power generation company Energoatom said on Telegram. 

The operator said it worries the system may be used to shell towns of Nikopol and Marganets on the opposite bank of the Dnipro river.

EU to boost weapons fund

EU foreign ministers could sign off on the €2-billion increase in the military fund when they meet in Brussels on 12 December, said the people, who asked not to be identified because the deliberations are private. If not finalised by then, EU leaders could take up the matter later in the week.

The European Peace Facility, which currently has a ceiling of about €6-billion, reimburses governments for military deliveries to Ukraine, but is also used to support other countries. More than half of the fund has been pledged for military aid to Ukraine and member states see the need for further support.

Russia ‘not planning further annexations’

Kremlin spokesman Dmitry Peskov said “a lot of work remains” to retake the parts of the Ukrainian territories Russia annexed in September that remain under the control of Kyiv’s forces.

Russia isn’t seeking to annex additional territory, he added. He was responding to a question about whether President Vladimir Putin’s statement on Wednesday citing the absorptions to date as positive results of the invasion meant the Kremlin might try to take yet more.

Russia’s absorption of the lands was declared illegal by the United Nations and has been widely condemned as illegitimate. 

Ukraine’s forces, which controlled some of the area when the Kremlin claimed to annex it, have retaken more of the land since then. Kyiv has said it aims to push Russian troops out of all the territory taken since the invasion.

Record European military spending last year

European defence spending surged to a record €214-billion in 2021, jumping by 6% compared with 2020 and marking a seventh consecutive year of growth, according to a report by the European Defence Agency.

While defence expenditure grew in real terms, it again amounted to about 1.5% of the bloc’s overall GDP, the same as in 2020, the EDA said. The report was based on data from 26 member states. 

The trend of higher spending continued despite the fallout from the Covid pandemic, the agency said, adding that member states’ announcements following Russia’s invasion of Ukraine suggests further annual increases.

Mol plunges after Orban seizes profits

Mol Nyrt.’s shares plunged after Hungarian Prime Minister Viktor Orban seized the energy company’s profit on Russian crude processing.

Mol’s shares dropped as much as 6.1% after Orban signed a decree late Wednesday raising a windfall tax on Russian crude refining to 95% from 40%. The move came a day after the government scrapped a fuel price cap following a nationwide gasoline shortage.

Europe pushing ahead with missile shield

German Chancellor Olaf Scholz said a planned European anti-missile shield probably won’t be installed before 2027. 

“My hope is that the defence shield will be in place within the next five years,” Scholz told the Funke media group. 

“Right now, the government is talking to the manufacturers of the various systems to prepare the concrete decisions,” he added.

Read more: “Nato states back German-led anti-missile shield for Europe”

Scholz reiterated that Germany is aiming to spend 2% of economic output each year on the military thanks to a new debt-financed fund worth €100-billion. 

The government has said it will likely miss the spending target this year, and probably in 2023 as well, due to bottlenecks at defence contractors and other procurement problems.

Turkey seeking discount on Russian gas

Turkey will host talks with a Russian delegation in Ankara on Friday to seek a discount of more than 25% for the price of its gas imports from Russia, senior Turkish officials said.

Read more: “Turkey plans talks with Russia to seek discount on gas imports”

A deal with Russia could ease the pressure on the lira, one of the world’s worst-performing currencies over the last year, and help President Recep Tayyip Erdoğan avoid hiking energy prices ahead of elections next year to boost his popularity at a time when Europe is facing an energy crunch. DM