Russia’s Defence Ministry said three more drones were brought down outside Moscow in what it described as an attempted attack by Ukraine.

The US said it would provide an additional $1.3-billion towards the cost of reversing the devastation inflicted on Ukraine by Russia’s invasion, estimated by the World Bank at more than $400-billion over the next decade.

US Secretary of State Antony Blinken made the pledge at Wednesday’s Ukraine Recovery Conference in London, where host Rishi Sunak announced the creation of a framework for war-risk insurance designed to encourage private investors. The UK premier said that more than 400 businesses from 38 countries had signed up to join the reconstruction effort.

While Sunak insisted that the Kremlin must be made to pay for rebuilding Ukraine, a document obtained by Bloomberg showed that the European Union has assessed that it can’t legally confiscate frozen Russian assets and is focusing on exploiting them temporarily. Austrian Foreign Minister Alexander Schallenberg urged caution in an interview with Bloomberg TV, warning that a successful legal challenge “would be a diplomatic and economic disaster”.

Latest developments

• EU backs fresh Russia sanctions to crack down on circumvention
• Sunak unveils war-risk scheme to spur Ukraine reconstruction
• Blinken pledges $1.3bn aid for Ukraine grid, infrastructure
• EU sees legal hurdles to seizing €200bn in Russian assets
• Ukrainian telecom giant plans rebuild – with Chinese kit for now
• Poland lures US big tech to frontline of east-west tension

Ukraine worried about crucial grain deal’s chances of extension

Ukraine was “not optimistic” that the grain-export corridor that has allowed it to ship more than 30 million tonnes of crops amid the war with Russia would be extended beyond July, the country’s infrastructure minister said on Wednesday.

The efficiency of the Black Sea corridor was faltering and crop volumes were declining, said Oleksandr Kubrakov, who signed the deal when it was first agreed on almost a year ago. Even if prolonged, it won’t be as helpful in offloading the nearing 2023 harvests in its current state, he said at the Ukraine Recovery Conference in London.

“We are doing our best in order to maintain this initiative,” Kubrakov said. “For us, it is critical.”

The deal – which was brokered by the United Nations and Turkey – has helped lower world food prices and maintain a sector that is vital for Ukraine’s economy. It is next up for renewal on 17 July. Russian President Vladimir Putin has already signalled that his nation may quit the pact, though the UN has urged all parties to press on.

Ukrainian telecom giant to rebuild with Chinese kit – for now 

Ukraine’s biggest telecom operator pledged to boost spending by a third to rebuild systems destroyed by Russian forces, relying on Chinese suppliers for the time being as its Western allies are pulling back.

Kyivstar plans to spend $600-million on reconstruction, upgrades and digital services in the next three years, Chief Executive Officer Oleksandr Komarov said in an interview with Bloomberg in London. The company, owned by Dutch-domiciled Veon, will use longstanding vendors like Huawei Technologies and ZTE to rebuild the critical infrastructure.

The decision highlights how the fallout from Russia’s invasion is politicising the way that companies like Kyivstar may operate in the future. As Ukraine begins the process of joining the European Union and Nato, its businesses may have to join those alliances’ wide-ranging reckoning with Chinese technology.

“In case of, let’s say, a Chinese swap across the whole market, it should be a long-term vision and plan in place, with probably even some financial support provided to the Ukrainian operators,” Komarov said in an interview with Bloomberg in London on Tuesday.

Reducing reliance on Chinese technology would not be “straightforward” for Kyivstar, and would probably require a joint plan developed between Europe, the US and Ukraine, he added. “We have networks in place. We are providing critical services.”

EU backs fresh Russia sanctions to crack down on circumvention

European Union member states backed a fresh package of sanctions targeting Russia for its invasion of Ukraine, including measures aimed at countering sanctions circumvention and individual listings.

The 11th set of EU measures since President Vladimir Putin started his war includes a ban on many goods from transiting through Russia and a new tool to crack down on third countries who are not doing enough to stop Moscow from evading the bloc’s sanctions. Sweden, which holds the EU’s rotating six-monthly presidency, announced the deal on Twitter.

The main aim is to tighten loopholes and tackle circumvention. That relates especially to Moscow’s ability to source banned technologies – via states such as the United Arab Emirates, Armenia, Kazakhstan and others in central Asia – that end up in Russian weapons on the battlefield in Ukraine.

The new mechanism provides EU nations with powers to restrict key exports to targeted third countries if diplomatic efforts to deter them fail. Its scope was watered down during weeks of negotiations between envoys, according to the latest draft, to the extent that some officials worry the bar to using it is now too high.

EU ambassadors approved the package, and that decision now needs to be formally signed off by the bloc’s capitals before the measures are formally adopted and come into force. Some final details could still change during that process, which should see the measures come into force on Friday.

EU sees hurdles to seizing €200bn in Russian assets

The European Union has assessed that it can’t legally confiscate outright frozen Russian assets and instead is focusing on using those assets temporarily, according to a document obtained by Bloomberg.

The EU is zeroing in on two options as it keeps exploring how it could harness more than €200-billion in frozen Russian central bank assets and channel them to Ukraine, the report said. Many of the funds are at settlement giant Euroclear, where they generated nearly €750-million by the first quarter of this year.

The bloc is expected to seek a mandate to work on this policy from EU leaders when they meet in Brussels next week.

An EU working party on the use of Russian reserves frozen under the bloc’s sanctions has been discussing how to gather information and assessing options under EU and international law. Its members see “no credible legal avenue allowing for the confiscation of frozen or immobilised assets on the sole basis of these assets being under EU restrictive measures,” it concluded. Instead, it favours channelling windfall profits from the investments to Ukraine.

Read more: Seize, not just freeze, Russian assets? why it’s hard: QuickTake

Austrian Foreign Minister Alexander Schallenberg urged caution in an interview with Bloomberg Television on Wednesday. “I fully understand the emotionality of the debate and that we say we have to get our hands on these assets,” he said.

“But we are rule-of-law states. We are defending a rules-based international order,” Schallenberg added. “So whatever we do in this endeavour has to be absolutely watertight. It can be challenged, and it might be challenged in front of European or American courts. If any of these actions were to be lifted by a judge, it would be a diplomatic and economic disaster.”

Sunak unveils war-risk scheme to spur Ukraine reconstruction

UK Prime Minister Rishi Sunak announced the creation of a framework for war-risk insurance backed by the Group of Seven and designed to encourage private investors to help rebuild Ukraine.

Speaking at the opening of the Ukraine Recovery Conference in London on Wednesday, Sunak said that while Russia must pay for the destruction it has inflicted during its invasion of its neighbour, a partnership of governments, international financial institutions and business leaders was also needed to underpin the nation’s reconstruction.

He said that more than 400 businesses from 38 countries with a combined market value of $4.9-trillion had signed up to the Ukraine Business Compact and encouraged investors to tap the City of London’s “deep and liquid capital markets and world-class finance expertise”.

The insurance framework “is a huge step forward towards helping insurers to underwrite investments into Ukraine, removing one of the biggest barriers and giving investors the confidence they need to act”, Sunak told conference delegates.

“With this and everything we do here we are sending a message,” he added. “That our support on the battlefield and beyond cannot be outlasted and that Ukraine’s incredible spirit will prevail.”

Ukrainian President Volodymyr Zelensky spoke to the conference immediately after Sunak via video link and said, “The world is watching whether we will restore normal life in such a way that our transformation will land an ideological defeat on the aggressor.

“By building Ukraine we are building much more than one country,” he said. “We are building the world that will be in the lifetime of our generation and after us. Whether it will be free and democratic depends on each of us.”

The World Bank has estimated that the cost of reversing the damage inflicted by Kremlin forces will be about $411-billion over the next decade, with $14-billion needed for critical spending this year alone. That figure is likely to climb as fighting intensifies and costs related to this month’s dam breach rise.

US Secretary of State Antony Blinken also attended Wednesday’s conference and pledged an additional $1.3-billion in assistance to help Ukraine rebuild. Most of the funds will be directed to restoring the country’s energy grid and critical infrastructure ranging from ports to rail lines and border crossings.

Russia says its military downed three drones outside Moscow

Russia’s Defence Ministry said three drones were brought down outside Moscow in what it described as an attempted attack by Ukraine.

The drones were intercepted using electronic jamming that caused them to lose control and crash in the Moscow region, the ministry said on Wednesday in a statement on its Telegram channel. Nobody was hurt and there was no damage, it said. DM