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UKRAINE UPDATE: 4 OCTOBER 2023

Biden reassures allies amid Congress chaos; Kremlin-friendly Hungary government wants to hold back some aid

Biden reassures allies amid Congress chaos; Kremlin-friendly Hungary government wants to hold back some aid
Ukraine’s President Volodymyr Zelensky (right) rewards Ukrainian servicemen during his visit to military positions on the front line between Lyman and Kupiansk on 3 October 2023. (Photo: EPA-EFE / Office of President of Ukraine Handout)

Despite broad consensus in the EU for providing support to Ukraine, Hungary’s Kremlin-friendly government has become a difficult partner as it has sought to block aid.

US President Joe Biden reassured allies that US support for Ukraine would continue, seeking to ease worries after a government funding Bill omitted $6-billion in aid.

Biden told nearly a dozen foreign leaders in a Tuesday telephone call that the US would stand by Ukraine “as long as it takes as it defends its sovereignty and territorial integrity, with fellow leaders echoing their commitments”, the White House said in a statement. 

Biden was joined on the call by UK Prime Minister Rishi Sunak, President Andrzej Duda of Poland, German Chancellor Olaf Scholz, Prime Minister Giorgia Meloni of Italy and Canadian Prime Minister Justin Trudeau, the White House said in a statement.

Nato Secretary-General Jens Stoltenberg, European Commission President Ursula von der Leyen, European Council President Charles Michel, Japanese Prime Minister Fumio Kishida, Romanian President Klaus Iohannis and French Foreign Minister Catherine Colonna also participated in the call, according to the White House.

National Security Council spokesperson John Kirby told reporters that Biden requested the call with foreign leaders and was not “pressured” to have a conversation. The president told his counterparts that US resolve for providing more aid remains “strong,” Kirby added.

“None of the foreign leaders expressed concerns about continued US support. They understand what’s going on up on Capitol Hill. They understand that this is a small minority of extreme Republicans that are holding this up, and that they understand that the bulk of Republican leadership — House and the Senate — all support Ukraine,” Kirby said.

Hungary proposes splitting a €50bn EU package for Ukraine

This added to concern that economic support for Kyiv may falter after the US dropped fresh money for the war-torn nation in a stop-gap spending package.

Hungary told member states last week that €25-billion would be sufficient for Ukraine at this stage, people familiar with the matter said. The EU should evaluate the contribution halfway through the 2024-2027 disbursement period, when another €25-billion could be provided, depending on Ukraine’s needs, the people added.

Despite broad consensus in the EU for providing support to Ukraine, Hungary’s Kremlin-friendly government has become a difficult partner as it has sought to block aid. Prime Minister Viktor Orbán’s government has cited a range of issues, including its own inability to access crucial EU funds due to rule of law and corruption concerns, and what it says is its neighbour’s mistreatment of its ethnic-Hungarian minority population.

Coinciding with efforts aimed at pushing Orban to relent, the EU may unblock nearly €13-billion of funding for Hungary this year, according to a person familiar with the discussions. Ukraine is also putting Orban on the spot after removing Hungary’s OTP Bank from its list of “war sponsors”, meeting another key demand of Budapest.

The Ukraine Facility is part of the review of the EU’s long-term budget, which also includes additional funding for migration and cutting-edge technologies totalling €66-billion. The European Commission, the EU’s executive arm, hoped for an agreement by year-end. But the diverging positions on the overall EU budget review — which may undermine the required unanimity it needs to pass — has snarled efforts to reach a timely decision.

Biden speaks to allies and assures them of Ukraine support

President Joe Biden held a call with allies to reassure them of continued US support for Ukraine, seeking to ease worries after a government funding bill omitted $6-billion in aid.

Biden was joined on the call by UK Prime Minister Rishi Sunak, President Andrzej Duda of Poland, German Chancellor Olaf Scholz, Prime Minister Giorgia Meloni of Italy and Canadian Prime Minister Justin Trudeau, the White House said in a statement.

Nato Secretary-General Jens Stoltenberg, European Commission President Ursula von der Leyen, European Council President Charles Michel, Japanese Prime Minister Fumio Kishida, Romanian President Klaus Iohannis and French Foreign Minister Catherine Colonna also participated in the call, according to the White House.

Biden on Saturday signed a short-term funding measure from Congress to keep the US government open until 17 November and avoid a shutdown — but the quickly passed bill failed to include additional aid for Kyiv. The move was a blow to both Biden and Ukrainian President Volodymyr Zelensky, who just last month visited Washington to personally plead for continued assistance.

Biden has said he expects Republican House Speaker Kevin McCarthy to keep his word and secure passage of Ukraine aid in separate legislation. But fresh assistance is not certain. McCarthy has suggested linking Ukraine funding to measures on US border security and immigration that are opposed by Democrats.

Carlsberg cuts Russia licences, escalating fight with government

Danish brewer Carlsberg is terminating all licence agreements to sell its beer brands in Russia and said it sees no path to a negotiated exit from the country after its assets were seized by the government.

The Copenhagen-based company said it will stop allowing the Russian Baltika business to produce, market and sell Carlsberg group products. 

“We refuse to be forced into a deal on unacceptable terms,” the company said, calling the takeover of its Russian business illegitimate.

Shortly after Carlsberg said it had struck a deal to sell the assets in July, Russia seized its Baltika business, transferring management to government authorities.

The brewer said there would be a “run-off” period until April 2024 during which existing stock and materials could be used up by Baltika.

Army set to deliver long-range missiles for Ukraine on Biden’s approval

The US Army is poised to send Ukraine some of its long-range ATACMS missiles armed with cluster munitions once Biden approves the transfer, according to the service’s top weapons buyer.

The service “has been postured for this eventuality for a while”, Army Assistant Secretary for Acquisition Doug Bush said in an interview. “We’re ready to go fast.”

US legislators have been calling for months for Biden to send ATACMS, or the Army Tactical Missile System, to Ukraine, and people familiar with the matter said last month that the president finally relented, telling Zelensky during his visit to Washington last month that he was willing to do so.

The ATACMS can be fired from the same launchers Ukraine already uses to fire GPS-guided missiles in batches of as many as six at a time. The difference is only one ATACMS is fired in a volley from the same launcher.  

Russia’s main budget goal is battlefield victory, says finance chief 

Russia’s budget, under which the nation will spend more on its military than social policies next year, is oriented toward one main goal — victory in the war on Ukraine, according to the country’s finance minister.

“Yes, it’s a large amount in the budget expenditures, but we need this money to achieve the most important task today — the task of ensuring victory,” Finance Minister Anton Siluanov said on Tuesday at a budget hearing before the upper house of Russia’s parliament. 

Read more: Russia’s industry surges as Putin seeks to feed war machine 

Under the plan, defence spending will comprise 6% of the country’s gross domestic product in 2024, up from 3.9% in 2023 and 2.7% in 2021, before the Kremlin’s invasion of its neighbour. Expenditure on classified or unspecified items is forecast to nearly double as the war continues to reshape Russia’s finances and economy.

The budget provides first and foremost for the needs of the army to conduct the war and for the defence industry, Siluanov said. “The second priority is technological and infrastructure development. The third is fulfilling obligations to the state and its citizens,” he said. 

Armenia votes to join court that issued Putin’s arrest warrant

Armenia defied outrage from the Kremlin and voted to ratify membership of the International Criminal Court that’s issued an arrest warrant against Russian President Vladimir Putin for alleged war crimes in Ukraine.

Legislators voted 60-22 in Armenia’s parliament on Tuesday to approve the Rome Statute recognising the jurisdiction of the court. Prime Minister Nikol Pashinyan’s government has argued that ICC membership will allow Armenia to bring war crimes cases against Azerbaijan over the conflict in Nagorno-Karabakh and attacks on its own borders. 

Putin’s spokesman, Dmitry Peskov, last week warned that Russia regarded Armenia’s decision to seek ICC membership as “extremely hostile”. The Foreign Ministry in Moscow also accused Armenia last month of taking “unfriendly steps”, including by moving to join The Hague-based court.

Armenia’s recognition of the ICC effectively bars Putin from visiting the country that’s a member of the Moscow-led Eurasian Economic Union and the Collective Security Treaty Organisation defence alliance. The court issued an arrest warrant for Putin in March over allegations related to the abduction of children from occupied areas of Ukraine.

That obliges member states to detain the Russian president if he enters their jurisdiction, an issue that forced Putin to skip the BRICS summit in South Africa in August.

Traditionally allies, tensions between Moscow and Yerevan have surged in recent weeks after Pashinyan accused Russia of failing to fulfil security obligations toward Armenia in its conflict with Azerbaijan. Armenia is host to Russia’s only foreign military base in the Caucasus region.

The exodus of 100,000 Armenians from Nagorno-Karabakh has also stoked anger in Armenia after Russian troops deployed as peacekeepers in the region failed to intervene to halt last month’s attack by Azerbaijan to take full control of the territory.

Russia’s seaborne crude flows rebound to hit a three-month high

Russia’s seaborne crude exports jumped to the highest in three months in the week to 1 October, lifting four-week average flows to a level broadly in line with the country’s pledge to reduce overseas shipments.

About 3.72 million barrels a day of crude were shipped from Russian ports last week, a 24% increase from the previous seven days and the highest since the week ending 2 July, tanker-tracking data monitored by Bloomberg show. That lifted the less volatile four-week average to about 3.3 million barrels a day.

The jump came after maintenance work disrupted flows from two key ports over the previous weeks, with shipments curtailed first from Kozmino on the Pacific coast and then from Primorsk on the Baltic.

Deputy Prime Minister Alexander Novak said in early August that the Kremlin would prolong export restrictions, while tapering the cut to 300,000 barrels a day from September until the end of the year, down from 500,000 for the previous month. The baseline for the reduction was average exports in May and June — when seaborne volumes hit new highs. Bloomberg calculations indicate that shipments through ports should be running now at about 3.28 million barrels a day.

A combination of soaring exports and rising prices have boosted the Kremlin’s revenues from oil export duties, which set a new year-to-date high last week and rose to the most since mid-January on a four-week average basis.

Largest Dutch shipbuilder sues government over Russia sanction losses

The Netherlands’ largest shipbuilder is suing the Dutch government for losses inflicted on its business by sanctions against Russia, a rare instance of a European company taking its grievances to court over the corporate fallout from the invasion of Ukraine.

Damen Shipyards Group is seeking compensation because it “suffers damages” as a result of sanctions, the company’s spokesperson, Rick van de Weg, told Bloomberg. The case hasn’t been publicly disclosed until now.

“Before the sanctions, Damen had signed contracts with Russian ship buyers, and after the invasion of Ukraine the Dutch government decided that such contracts may not be honoured by the Dutch business community,” he said via email. “The government has not offered Damen compensation for that damage.”

Damen, based in the Dutch city of Gorinchem, filed its lawsuit at the Court of Rotterdam on 10 May, according to the court’s spokesperson. The case has yet to move forward, but is expected to proceed next year.

The Netherlands is currently keeping 23 luxury vessels and several aircraft under surveillance in relation to sanctions against Russia and Belarus, according to Dutch government data.

Damen Shipyards is a family-owned Dutch company founded in 1927 that builds a range of vessels, from warships to dredgers.

It’s also been selling luxury yachts to the ultra-rich, including prominent Russian businessmen like Oleg Tinkov, a one-time billionaire who recently had UK sanctions against him lifted after denouncing the invasion. Damen was repairing a yacht linked to Russian oligarch Roman Abramovich at the start of the war, according to The Guardian newspaper. 

The war was “having a major impact” on the company, according to a statement last year. Within a week of the invasion, Damen said it had suspended the delivery of vessels and the signing of new contracts with Russian and Belarusian clients. DM

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