UKRAINE UPDATE: 1 NOVEMBER 2023
EU weighs up new Russian trade sanctions; Zelensky discusses Black Sea security with Bulgarian premier
The European Union is weighing up new sanctions that would hit some €5bn in trade with Russia, including export restrictions on welding machines, chemicals and further technologies used for military purposes, according to people familiar with the matter.
In Ukraine, the government published a decree aimed at encouraging businesses to sign up for electricity imports now to ease strains on the grid after last winter saw rolling blackouts amid Russian attacks. The measure would grant priorities during outages to companies that bring in certain volumes of supply.
Ukrainian President Volodymyr Zelensky, who on Monday met three US congressmen and held a video call with Dutch Prime Minister Mark Rutte, said on Tuesday he spoke to Bulgaria’s premier, Nikolai Denkov, on strengthening Black Sea security.
- EU is weighing fresh sanctions on $5.3bn in Russian trade
- Blinken, Austin warn against weapons for Israel but not Ukraine
- Putin’s guards to hold Moscow security drills ahead of Unity Day
- Russia’s oil flows overshoot target even as demand outlook dims
- SolarWinds staff warned about security holes before Russia hack
EU weighs fresh sanctions on $5.3bn in Russian trade
The European Union is weighing a new round of restrictions that would hit some €5-billion in trade with Russia as part of a sanctions package targeting Moscow for its war against Ukraine.
The bloc’s 12th package since Russia launched its invasion last year will tighten restrictions on Moscow’s revenue sources and industry and curtail the Kremlin’s ability to feed its war machine. Vast swathes of Russia’s economy have already been targeted, leaving EU policymakers to plug gaps, use targeted measures and tighten existing sanctions.
The new set of proposed measures includes export restrictions on welding machines, chemicals and further technologies used for military purposes, according to people familiar with the matter. Software licence bans and restrictions on imports of a small number of processed metals and aluminium products, construction items, transportation-related goods and diamonds are also being considered.
EU leaders have sought to reassure President Volodymyr Zelenskiy that the bloc will hold the line in supporting Kyiv against the Russian invasion, despite worries that the Israel-Hamas war will trigger a broader conflict in the Middle East and distract focus.
The newly proposed import and export measures on Russia would add up to about €2.5-billion each, according to the people, who spoke on condition of anonymity to discuss private deliberations. The diamond ban is contingent on a Group of Seven agreement to track and trace the precious stones across borders, which is expected to be finalised soon.
Russian fuel flows hit 17-month low, while oil flows overshoot target
Russian oil-product exports have dropped to a 17-month low after a temporary ban on diesel shipments and as seasonal maintenance crimped refining activity.
Refined fuel shipments fell to 2.2 million barrels a day in the first 28 days of October, according to data compiled by Bloomberg from analytics firm Vortexa. That’s the lowest since May 2022 and down roughly 3% from both September and a year earlier.
Russia’s exports are being closely monitored by the oil market for clues on its production after Moscow stopped releasing official output data. The nation’s crude shipments have exceeded a target set as part of an Opec+ pact, the latest tanker-tracking data monitored by Bloomberg show.
About 3.64 million barrels a day of crude were shipped from Russian ports in the week to 29 October, an increase of 110,000 barrels a day from the previous seven days, tanker-tracking data monitored by Bloomberg show. Despite that gain, the less volatile four-week average edged lower to 3.48 million barrels a day, down by about 20,000 barrels a day from the period to 22 October.
The weekly advance reflected a jump in shipments from Novorossiysk in the Black Sea, which was partly offset by a drop in the number of vessels leaving Russia’s Baltic and Pacific ports.
Deputy Prime Minister Alexander Novak said in early August that Moscow would prolong export restrictions at a reduced level of 300,000 barrels a day below their May-June average until the end of the year. Bloomberg calculations indicate that shipments through ports should be running now at about 3.28 million barrels a day.
Weekly shipments exceeded Moscow’s target by the most in four weeks, overshooting by about 360,000 barrels a day. Despite edging lower, four-week average volumes exceeded it by almost 200,000 barrels a day in the most recent period.
The increase in volumes raised the Kremlin’s weekly revenues from oil export duties to a new high for the year, while the four-week average rose for a 13th straight week, setting a new high for the period since the start of January.
Macron heads for Putin’s backyard seeking new friends and uranium
After finding itself suddenly unwelcome in its traditional sphere of influence, France is casting itself further afield.
That’s why President Emmanuel Macron will travel to energy-rich Central Asia this week to visit Kazakhstan and Uzbekistan, two suppliers of the uranium that powers the country’s nuclear reactors.
The trip aims to boost France’s energy security, according to two people familiar with the French president’s thinking, who declined to be named when discussing matters of diplomacy. These efforts are in keeping with a wider European effort to diversify away from the Russian fossil fuels on which the bloc was formerly so reliant.
But there is a second motive, the people said, and it involves tempting the former Soviet republics to look beyond their own dependence on Russia. French officials suggest the war in Ukraine has unsettled long-established relationships in the region, and that creates an opportunity.
Central Asia’s vast reserves of oil, gas and minerals put it at the centre of a contest for influence in the region that has habitually been Russia’s stomping ground.
China is extending its reach through President Xi Jinping’s Belt and Road infrastructure project, the US is seeking to bolster its political presence, while the European Union is striving to bind the region into a trade and energy corridor that would run through the Caucasus and on to Europe, bypassing Russia.
France already boasts some large investments in the region; for instance French nuclear company Orano — formerly known as Areva — exploits uranium deposits in Kazakhstan via a joint venture with state-owned Kazatomprom. Deepening Orano’s presence will be on the menu of discussions, according to one delegation insider, who declined to be named discussing details of the trip.
Yet France’s pursuit of uranium is freighted with a greater urgency in the wake of a coup this July in Niger, which last year was second only to Kazakhstan as the EU’s biggest source of the raw material. Orano had to stop processing uranium ore at one of its facilities in the Saharan republic because international sanctions against the military junta were hampering logistics, it said last month.
“Kazakhstan is key to France’s energy security,” said Michael Levystone, a Paris-based researcher at the French Institute of International Relations. “Macron’s visit will act as a reminder that Paris is ready to step up cooperation.”
In addition to being the biggest supplier of uranium to France, last year Kazakhstan was also its second-biggest source of crude oil, down from first place in 2021, according to figures from the French economy ministry. Sparked by the invasion of Ukraine and powered by deeper concerns about the advance of China, Kazakhstan is one of a few countries where earlier this year G7 nations jointly resolved to deepen their partnerships, according to a diplomat familiar with the Group of Seven leaders’ internal deliberations.
That means that in courting the land-locked republics wedged between China and Russia, Macron finds himself part of a broader trend.
Last week the foreign ministers of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan met with the 27 EU member states’ foreign ministers for the first time, according to an EU statement about that meeting, while in September President Joe Biden met their leaders on the sidelines of the United Nations General Assembly. That same month, Germany’s chancellor Olaf Scholz hosted them in Berlin.
In France’s case, the overtures take place as it contends with increasingly limited room for manoeuvre in its usual sphere of influence. Since 2020, coups in nine sub-Saharan countries have variously spooked or sent home French diplomats, and in some cases the threat to French interests has been powered by Russia, in the shape of the mercenary Wagner Group.
Macron’s search for allies in Russia’s own backyard is helped by the Central Asian countries’ ambivalence toward the war in Ukraine. As they adhere faithfully to the West’s sanctions on Russia, at least on paper, his 1-2 November trip arrives just as these nations’ commercial relationships are themselves in flux.
The French president will travel with a delegation of 15 business leaders from the energy, agrifood and mining sectors, according to an Elysee official, including utility Electricite de France SA and engineering company Assystem SA, which provides expertise to build nuclear reactors.
Macron recently became the first French president to visit Mongolia, later signing a deal to source more uranium, while last year he was the first French leader to attend an Asia-Pacific Economic Cooperation summit with the countries of the Pacific Rim. DM