Before talks with Ukrainian Foreign Minister Dmytro Kuleba, European Union foreign policy chief Josep Borrell said member states “deeply and thoroughly” regretted Saturday’s decision by US legislators to pass a spending Bill without $6-billion in additional funding for Ukraine, part of an effort to avoid a government shutdown in Washington. Kuleba dismissed the move by the US Congress as an “incident” rather than a lasting shift in policy, while Borrell said he was certain it would be “reconsidered”.

“We don’t feel that the US support has been shattered because the United States understands that what is at stake in Ukraine is much bigger than just Ukraine,” Kuleba told reporters. “It’s about the stability and predictability of the world and therefore I believe that we will be able to find the necessary solutions.” 

Latest developments

• Ukraine’s allies fret over coalition after US jettisons Kyiv aid
• Ukraine unfreezes hryvnia exchange rate to help economy
• EBRD seeks capital for annual $1.6bn investment in Ukraine 
• Pro-Russia election-winner gets nod to form Slovak Cabinet
• Ukraine defies Russia threat by trying to revive Black Sea trade

Ukraine’s allies fret over coalition after US drops aid

The decision by US legislators to drop a $6-billion aid package for Ukraine is fuelling anxiety among some of Kyiv’s allies that US support for the war effort is starting to waver.

Congress abandoned the funding for Kyiv to help avoid a government shutdown just as Ukraine intensified efforts to repel Russia’s invasion, stoking concerns that the US may be drifting toward isolationism and an increased focus on domestic politics. Less than two weeks ago, Ukrainian President Volodymyr Zelensky visited the US capital to plead for new weapons systems and continued financial and military support.

The development is concerning and needs to be resolved quickly, according to one senior European official, who asked not to be identified. There’s a broader shift in US sentiment on Ukraine, and Putin and other aggressors may be emboldened in the absence of unwavering Western support, the official added. One European Union leader predicted that the situation was likely to get more difficult as US elections approach.

“It took most of us by surprise, those who are supporting Ukraine,” Lithuanian Foreign Minister Gabrielius Landsbergis told Bloomberg Monday by telephone from Kyiv, where he was taking part in a meeting of EU foreign ministers.

“It could have raised some cheers in those countries who do not support Ukraine or wish them anything else but victory,” Landsbergis added. “It can be rectified, obviously, but it shows the difficulty of the discussion.” 

Some allies pointed to comments from President Joe Biden, who urged House Speaker Kevin McCarthy to follow up quickly with funding, as evidence that broad international backing for Ukraine’s war effort is intact, and the holdup in aid for Kyiv only temporary.

“President Biden’s actually made it clear that it doesn’t change his view about the continuing gifting and financing,” UK Defence Secretary Grant Shapps said on Monday during a panel discussion at the Tory Party conference in Manchester. “But of course domestic politics will play into it.”

Congress on Saturday passed a bipartisan measure that would keep the US government funded until mid-November, but the absence of aid to Ukraine was a blow to Biden’s administration. 

European backing for Ukraine is facing an additional new challenge after a candidate sympathetic to Russia won Slovakia’s election on Saturday. Robert Fico has criticised EU sanctions against the Kremlin and pledged to end military aid to Ukraine. 

The EU’s foreign-policy chief, Josep Borrell, said the bloc “deeply and thoroughly” regrets the decision by Congress, while insisting that he’s certain it will be reconsidered.

Borrell spoke to reporters in Kyiv on Monday before hosting what he said was the first-ever gathering of all 27 member nations outside EU territory.

“We have to continue supporting Ukraine and discussing with our American allies and friends for them too to continue.”

Ukraine defies Russia by trying to revive Black Sea trade

Ten ships have completed journeys to major Ukrainian ports on the Black Sea without incident in the past few weeks, defying Russia’s threats to target vessels in the area.

The ships’ passage signals that Ukraine’s daring bet to set up its own trade route after the collapse of a safe corridor agreed with Russia has paid off. So far the success is mostly symbolic, with ship traffic still requiring cautious manoeuvres close to the coast of Bulgaria and Romania as vessels head to Ukraine. 

Russia has previously threatened to treat any ships sailing to Ukraine as potentially carrying weapons, and in August opened fire on one to force it to stop for checks. In July, Russian President Vladimir Putin let lapse an agreement — brokered by Turkey and the UN — that allowed the safe passage of vessels exporting Ukrainian grains and other foodstuffs from three key Black Sea ports. 

Two ships reached Odesa on Sunday and two more ships reached Chornomorsk, while ship-tracking data shows that the New Legacy arrived at Pivdennyi the same day. That’s in addition to a further five vessels that already transited the corridor, loaded cargoes and left since September 16, and means vessels have now reached all three deep-sea ports using Ukraine’s temporary corridor.  

Ukraine unfreezes hryvnia exchange rate to boost economy

Ukraine moved to a more flexible hryvnia exchange rate, dropping a peg it adopted after Russia’s invasion in February 2022 while remaining ready to intervene to avoid excess volatility. 

The country last year imposed restrictions and hiked its key policy rate to 25% to prevent capital outflows and help import vital goods during wartime. Initially pegged at around 29 to the dollar, the central bank was forced to devalue the national currency in July last year to about 36.  

After signalling a move toward liberalisation in recent months, the National Bank of Ukraine said on Monday it was now ready to shift to a “managed flexible exchange rate” in effect from the next day.

“The new regime will strengthen the resilience of the Ukrainian economy and FX market, and promote their better adaptation to domestic and external shocks,” the Kyiv-based central bank said in a statement. 

Latvia warns Russia may use friendly countries to detain critics

Latvia said Russia may try to persuade some nearby countries to detain current and former officials visiting from states that supported punishing Moscow over its invasion of Ukraine. 

Russian authorities made a “politically motivated request” to detain a Latvian citizen last week in an unidentified member of the Commonwealth of Independent States, a group of some of the countries that previously were part of the Soviet Union, the Foreign Ministry said in a statement on Monday. The unidentified citizen was returned to Latvia, the ministry said. 

Read more: Latvia gets new prime minister as Silina pledges more on defence

The Baltic country, a member of the European Union and Nato, is one of the bloc’s most hawkish critics of Russia’s attack on Ukraine and biggest supporters of supplying arms to Kyiv. 

EBRD seeks capital for annual €1.5bn investment in Ukraine 

The European Bank for Reconstruction and Development (EBRD) is working on a plan to boost its capital to be able to invest about €1.5-billion in Ukraine annually, its president said.

The EBRD has emerged as an important financial backer of Ukraine’s war-hit economy. The London-based development bank said in May it planned to ask shareholders for as much as €5-billion in capital increase by the end of this year.

“We’re now moving toward a conclusion to convince them that it’ll be better to have a capital increase,” EBRD President Odile Renaud-Basso said in an interview in Kyiv. “Financially, it makes more sense because for one euro of capital we can extend five euros of financing.” 

Norway joins EU’s latest sanctions package against Russia

Norway will introduce the latest round of sanctions against Russia, joining similar measures by the European Union, its foreign ministry said.

The Nordic nation is still considering how to best implement a ban on access to ports for vessels participating in ship-to-ship transfers suspected of being in breach of the oil import ban or oil price cap, or that don’t notify of such transfers or disable navigational tracking systems when transporting Russian oil, it said in a statement on Monday.

The ministry said on Friday that Norway will join the EU ban on entry of Russian passenger cars with nine or fewer seats since 2 October. It was the last of European nations bordering on Russia to do so. 

Biden vows fix after US drops Ukraine aid to avert shutdown

President Joe Biden urged House Speaker Kevin McCarthy to follow up quickly with funding for Ukraine hours after Congress passed a spending bill without it to avoid a US government shutdown. 

“I fully expect the Speaker to keep his commitment to secure passage and support needed to help Ukraine as they defend themselves against aggression and brutality,” Biden said on Sunday at the White House. “There’s an overwhelming number of Republicans and Democrats in both the House and the Senate who support Ukraine. Let’s vote on it.”

On Saturday, Congress passed a bipartisan measure that would keep the US government funded until 17 November with $16-billion in disaster funding. However, the lack of $6-billion in Ukraine aid is a blow to Biden. 

Asked what he would say to Zelensky and other allies of Ukraine, Biden said, “I can reassure them. Look at me: We are going to get it done.”

But fresh assistance isn’t certain and becoming more difficult to achieve particularly as issues like US border security come to the forefront. DM