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UKRAINE UPDATE: 7 SEPTEMBER 2023

New US arms package includes depleted uranium munitions; Russia strikes key Danube port infrastructure

New US arms package includes depleted uranium munitions; Russia strikes key Danube port infrastructure
Firefighters extinguish a blaze at a market on 6 September 2023 in Kostiantynivka, Ukraine. At least 16 people were killed and 31 injured after a rocket hit the market in in Ukraine's eastern Donetsk region. (Photo: Andriy Reznikov / Suspilne Ukraine / JSC ‘UA:PBC’ / Global Images Ukraine via Getty Images)

As US Secretary of State Antony Blinken visited Kyiv, the Pentagon announced its latest package of weapons aid drawn from stockpiles. The $175m in equipment for the first time includes depleted uranium ammunition for Abrams tanks. Depleted uranium munitions use the metal’s high density to penetrate armour, although some arms control groups say the uranium may pose health risks.

A Russian drone attack on Izmail, a key Danube port, killed at least one person, the local governor said on Telegram early on Wednesday. It marked the latest such assault on the city, which is crucial to Ukrainian grain exports.

The Danube River has become Ukraine’s primary shipping route for agricultural goods since Russia exited the Black Sea grain deal in July, making it essential to clear this year’s better-than-expected harvest. Kyiv also came under attack from Russian missiles overnight, but the city’s military administration said they had all been shot down.

European Investment Bank Vice-President Kris Peeters said that the EU’s lending arm will resist pressure to invest in the defence industry, though he suggested “dual-use” technology that aids civilian security remained worthwhile.

Speaking on the sidelines of a regional summit in Jakarta on Tuesday, Peeters said that there was evidence that institutional investors were starting to turn away from the defence industry. He instead remained confident in the bank’s strategy to back systems that helped Europe’s technology industry and civilian security infrastructure.

Latest developments

Russian shelling kills 16 in eastern Ukrainian town

Ukrainian President Volodymyr Zelensky said Russia shelled a market in an eastern town, killing at least 16 people in one of the deadliest attacks against civilians in the past few months.

The shelling injured at least 31 in Kostyantynivka, a town situated about 50km north of Russian-occupied Donetsk, according to the country’s Prosecutor-General’s office on Wednesday. At least 30 shopping booths were damaged while rescue teams continued to search for more wounded in the debris.

“Whenever there are successful offensive steps, Russians hit those areas,” Zelensky told reporters in Kyiv, calling the attack a “deliberate act of terrorism”.

The attack took place in the Donetsk region, where Russian and Ukrainian forces are vying for incremental territorial gains along the frontline near Bakhmut. Kyiv’s troops also continued their counteroffensive in the south, aimed at cutting off Moscow’s land bridge to Crimea.

Last month, a missile strike in the city of Chernihiv in northern Ukraine killed seven and wounded more than 100 people.

Russia rushes to sell $1.5bn as Eurobond payment nears

Russia’s central bank will offload 150 billion roubles ($1.5-billion) of foreign exchange in the domestic market, in what it said is a temporary acceleration of previously planned sales that should take some pressure off the rouble after one of the biggest depreciations among emerging economies.

The Bank of Russia said it may need to meet demand for hard currency from a repayment of Eurobonds this month and now plans to boost almost 10-fold its daily “mirroring operations” linked to investments from the government’s wealth fund. It will sell 21.4 billion roubles worth of foreign currency per day during 14-22 September, according to a statement on Wednesday.

The announcement briefly helped the rouble, which has been depreciating since an emergency meeting on interest rates in August, extend gains versus the dollar. The Russian currency was down 0.2% versus the greenback as of 2.57pm in Moscow.

Russia’s $3-billion Eurobond is coming due on 16 September, according to the central bank. Although most holders will receive a payment in roubles, it said some of them may then seek out hard currency.

Russia’s fuel exports hit 11-month low amid refining slowdown

Russia’s oil product exports dropped to an 11-month low in August as refineries wound down operations for planned autumn maintenance.

Shipments of petroleum products including diesel and fuel oil totalled 2.28 million barrels a day last month, according to data compiled by Bloomberg from analytics firm Vortexa Ltd. That’s down by 9% from July and the lowest amount since September 2022.

Russian oil flows are being closely monitored by the market to gauge crude production amid Moscow’s pledged cuts and after the government started withholding official output data. The country’s seaborne crude exports jumped to an eight-week high in late August, and Russia this week joined Saudi Arabia in extending supply curbs until year-end.

Refined fuel exports also eased last month as some products breached Group-of-Seven price caps, complicating traders’ access to Western shipping services and insurance. Plus, Russian subsidies to local refiners — designed to aid domestic supplies of road fuels like gasoline and diesel — climbed in August. The payments are set to halve from September.

Blinken vows to give Ukraine what it needs for counteroffensive

The US will ensure Ukraine is equipped to defeat Russia and rebuild its economy, US Secretary of State Antony Blinken said, during a visit to Kyiv to show support as its forces press ahead with a grinding counteroffensive.

The top US diplomat met Ukraine’s foreign minister before speaking to Zelensky and other officials as the country’s military tries to expand gains in its months-long campaign over the course of the summer.

Blinken stopped in Kyiv en route to the Group of 20 summit in India, where Russia’s invasion of its neighbour will be a major topic, though President Vladimir Putin won’t be attending. It also gives the US an opportunity to consult before this month’s United Nations General Assembly in New York, where Ukraine will press its case to its allies for continued economic and military backing.

“We want to make sure that Ukraine has what it needs, not only to succeed in the counteroffensive, but has what it needs for the long term,” Blinken said in Kyiv after meeting Foreign Minister Dmytro Kuleba. “We’re also determined to continue to work with our partners as they build and rebuild a strong economy, strong democracy.”

The secretary was expected to announce more than $1-billion in new US funding for Ukraine and focused his trip on hearing from Ukrainian officials about the ongoing counteroffensive and what they need to reinvigorate their economy, according to a senior State Department official.

Putin, Saudi crown prince laud Opec+ cooperation, says Kremlin

Putin and Saudi Crown Prince Mohammed bin Salman praised joint efforts to stabilise the global oil market as they discussed bilateral and Opec+ cooperation.

The two key oil producers, crucial members of the alliance between the Organisation of Petroleum Exporting Countries and its allies, have recently been moving in lockstep when determining their oil supplies to the global market.

On Tuesday, Saudi Arabia and Russia prolonged their unilateral oil supply curbs to year-end, a more aggressive move than traders had expected. The Gulf kingdom will continue its production cutback of one million barrels a day until December, while Russia’s oil-export export reduction of 300,000 barrels a day will be extended for the same duration.

“The cooperation between the two countries in the Opec+ format was highly assessed,” the Kremlin said in a statement after Putin and the Saudi Crown Prince spoke by phone on Wednesday. Both “agreed to continue personal contacts”, it said.

India plays down Xi and Putin’s absence at G20 summit

India’s top diplomat S Jaishankar said the absence of Chinese President Xi Jinping and Putin at the Group of Twenty summit would not detract from its importance.

The two world leaders skipping the gathering of the world’s biggest economies has been seen by commentators and critics as a setback for Prime Minister Narendra Modi, who is using India’s G20 presidency to showcase its geopolitical clout.

“There have been presidents to prime ministers, who for whatever reason, have chosen not to come themselves,” Jaishankar, who is the foreign minister, said in an interview on Wednesday with Asian News International. “That country and that country’s position is obviously reflected by whoever is the representative on that occasion.”

Xi will send Premier Li Qiang to the 9-10 September meeting in New Delhi. This is the first time Xi has skipped a G20 summit since taking power in 2012 and the snub is likely to aggravate tensions with India as the two nuclear-armed neighbours are locked in a border dispute.

The Kremlin earlier said Putin was too “busy” to attend the G20 summit and his main focus for now was overseeing Russia’s war in Ukraine. Putin last month touted Russia’s close ties with India in a phone call with Modi and said Foreign Minister Sergey Lavrov was attending the meeting instead.

Since Russia’s invasion of Ukraine, India has become one of the biggest swing nations. It maintained close ties with the US but abstained from votes at the United Nations to condemn the war and avoided joining US-led sanctions against Russia, which remains a major supplier of weapons and cheap energy.

At the same time, India has positioned itself as a bulwark against China’s rising geopolitical and economic dominance and sought to get more military technology transfers from the US and its allies.

The language over Russia’s war in Ukraine will again be a hot topic at the G20 summit. Modi and his diplomats have their work cut out to broker a compromise similar to the one forged by Indonesia last November, particularly as tensions remain high between India and China — one of Russia’s biggest diplomatic backers.

Ukraine Danube crop ports struck again by drones

A drone strike damaged Ukraine’s grain infrastructure on the Danube River overnight, the latest in a raft of attacks on the country’s key crop-export channel.

Russian drones hit grain elevators near the port of Izmail in the three-hour attack, and one worker from an agriculture company was killed, according to Odesa regional governor Oleh Kiper. Fifteen drones were shot down in the region, the city council said on Telegram.

The Danube River has become Ukraine’s primary shipping route for agricultural goods since Russia exited the Black Sea grain deal in July, making it essential to clear this year’s better-than-expected harvest.

Although the area has been repeatedly attacked in recent weeks, crop exports are still flowing. The Ukrainian Grain Association last week said there are aims to increase volumes shipped via the river.

Wheat futures in Chicago traded little changed, holding near a three-month low. Large harvests in some other key producers, including major producer Russia, have tempered price gains. DM

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