Saturday, May 28

Ukraine Update: Zelenskiy Says Russia Still Aims for Occupation

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(Bloomberg) — President Volodymyr Zelenskiy warned that Russian leader Vladimir Putin’s ambition to occupy all of Ukraine remains undiminished as his forces continue to strike fuel storage sites and grain silos. 

NATO foreign ministers are meeting in Brussels as the U.S. and its allies coordinate a new round of sanctions to punish the Kremlin for the alleged murder of civilians by its troops in Ukraine. Mariupol remains under siege and the humanitarian situation has deteriorated, with most of the 160,000 residents still in the city lacking access to electricity or food, the U.K. Ministry of Defense warned. 

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The Biden administration is sending another $100 million in military equipment to Ukraine, which is expected to include Javelin anti-tank missiles. China’s envoy to the United Nations expressed dismay at the killing of unarmed civilians without condemning Putin, with whom President Xi Jinping has close ties, for the violence. Russia has repeatedly denied killing civilians, dismissing the documentation of the deaths. 

(See RSAN on the Bloomberg Terminal for the Russian Sanctions Dashboard.) 

Key Developments

NATO Scours the Skies for Incursions Amid Rising Russia TensionsNATO Scours the Skies for Incursions Amid Rising Russia TensionsG-20 Wrestles With Response If Putin Shows Up at Bali SummitRussia to Face Fresh U.S., EU, G-7 Sanctions Amid Rising OutrageUkraine War Spurs Pacifist Japan to Consider Stronger MilitaryWhat Secondary Sanctions Mean, for Russia and World: QuickTake

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All times CET:

Ukraine Says Invasion Hits Energy Production Sites (12:38 p.m.)

The Russian invasion has damaged Ukraine’s ability to produce natural gas and coal after fighting damaged deposits and mines, Energy Minister Herman Halushchenko told told in an interview to Ukraine’s RBK. Gas production fell about 15%, while state-run coal mines cut their output by 30% due to the war, he said.

While Russian troops are deliberately targeting Ukraine’s fuel storages the ministry will replenish reserves with foreign assistance, Halushchenko said. Earlier, the head of Ukraine’s natural gas network said it had suffered damages totaling “hundreds of millions of euros.”

Hungary Tells EU Leaders Must Back Moves on Oil, Gas (12:35 p.m.)

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Hungary has told other European Union member states that any action on Russian energy beyond coal would need approval from the bloc’s leaders, according to two people familiar with the discussions.

EU ambassadors are meeting in Brussels on Wednesday to agree a new package of sanctions, including a ban on coal imports. The European Commission has said it will work on options to target oil next, with possibilities including tariffs and withholding some of Russia’s revenues in an escrow account.

Hungary is among a small group of European nations, including Germany, that had so far resisted any measures to sanction Russian energy imports.

Russian Art Worth $46 Million Seized in Finland Under Sanctions

Finland siezed more than $46 million worth of art, including paintings, statues and antiques that were en route to Russia under EU sanctions.

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The art was being returned from museums in Italy and Japan where the works had been on loan, the Finnish Customs told reporters in Helsinki on Wednesday. Three shipments of artworks were taken into custody at the Finnish-Russian border on April 2 and 3.

EU to Build Stockpile to Shield Against WMD Threats (12:12 p.m.)

The European Union will build up a 540.5 million euro strategic stockpile of equipment, medicine and vaccines to help boost its response to public health risks such as chemical, biological, radiological and nuclear threats. 

In the first step, the bloc is procuring potassium iodine tablets used to protect people from the effects of radiation, with almost 3 million delivered to Ukraine, the European Commission said on Wednesday.

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Zelenskiy Says Russia Ambitions Undimmed (11:31 a.m.)

Russia hasn’t yet abandoned its plans to “subdue and occupy all of the Ukrainian people,” Zelenskiy said in an address to the Irish parliament on Wednesday. Some Russian forces have pulled back from near Kyiv to focus on the eastern part of the country.

Ten million Ukrainians have been left without shelter and at least 167 children killed in Ukraine as a result of the war, he said, with educational institutions, hospitals, ambulances, churches and shelters targeted. “The country which is doing this is not, doesn’t deserve to be in the circle of the civilized countries. It should be held responsible for everything they have done in the Ukrainian soil,” he said.

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Hungary Questions Need for EU Unity on Russian Ruble Demand (11:21 a.m.)

Hungary is preparing “technical details” to make a payment for Russian gas that’s due at the end of May, Foreign Minister Peter Szijjarto said.

The nation doesn’t think that the EU’s aim to have a common response from countries on such payments is necessary, he said. Russia has told “unfriendly” nations that they would need to settle such payments in rubles, a demand that other EU states reject.

Russian-Owned Villa Burned Near Lake Como (11:19 a.m.)

A villa on Lake Como owned by prominent Putin supporter Vladimir Solovyev has been set on fire this morning, the Italian news agency Ansa reports.

The villa was already seized by the Italian government as part of sanctions following Russia’s invasion of Ukraine, Ansa said. Tires were used to set the fire, which was immediately extinguished by the fire brigade.

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EU Mulls Sanctions on Deripaska, Gref, Kerimov (10:10 a.m.)

The European Union is discussing Wednesday whether to sanction Oleg Deripaska, a wealthy Russian aluminum tycoon, in its next round of penalties, along with several other key business figures, according to people familiar with the discussions.

Said Kerimov, who controls Polyus Gold, Russia’s largest gold producer, is being considered for sanctions as well. Deripaska, who has been under U.S. sanctions since 2018, owns an industrial conglomerate that includes a major army and military equipment provider to Russia’s military. Another expected target: Herman Gref, the CEO of Sberbank and an adviser to Putin, who is already sanctioned by the U.S. and the U.K. 

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The proposed list, which still needs to be approved by European governments and could change before that happens, also includes Putin’s daughters and some spouses and former spouses of already sanctioned Russians.

Yellen to Warn of ‘Enormous’ Economic Effects From War (9:58 a.m.)

U.S. Treasury Secretary Janet Yellen will warn on Wednesday that the war in Ukraine threatens to inflict “enormous economic repercussions” globally, just as governments impose fresh sanctions on Russia and economists cut growth forecasts. She’s appearing before the House Financial Services Committee.

EU Sanctions Should Be Stronger, Lithuania Says (9:51 a.m.)

Lithuanian Foreign Minister Gabrielius Landsbergis said he’s disappointed the EU’s latest package of sanctions against Russia doesn’t include oil. The EU is moving too slowly by sanctioning only coal, “which is not a big blow” on Russia’s budget revenue, and why not “add candles and firewood if you wanted to make it stronger,” Landsbergis said in an interview on CNN.

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EU May Need to Sanction Russian Oil, Gas, Michel Says (9:17 a.m.)

The European Union will likely need to consider measures to restrict Russian oil or gas at some point, European Council President Charles Michel told the European Parliament.

“I think that measures on oil and even gas will also be needed sooner or later,” he said, condemning reports of atrocities by retreating Russian forces in Ukraine. He also said that the bloc should consider granting asylum to deserting Russian soldiers.

Dutch Probing Ownership of 12 Yachts Under Construction (9:15 a.m.)

The Netherlands has frozen 516 million euros ($562 million) of Russian assets through financial institutions and trust offices, according to a letter by Foreign Minister Wopke Hoekstra.

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A total of 12 yachts are under construction at five shipyards for Russian owners and those vessels are not allowed to be delivered at the moment due to current export restrictions. The ownership structures of the yachts are under investigation, while the government is investigating one yacht’s link to a person on the EU sanctions list, he said.

Hungary Unhappy With Ukraine’s Reaction to Orban Win (8:18 a.m.)

Hungarian Foreign Minister Peter Szijjarto has summoned Ukraine’s ambassador in Budapest, deepening the diplomatic rift between the two countries. Szijjarto intends “to make it clear” that Hungary’s government finds it unacceptable that Ukrainian politicians express regret about “the democratic decision of the Hungarian people,” the minister wrote on Facebook.

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The moves comes days after Viktor Orban’s resounding re-election victory, where he positioned himself as the candidate for peace. Hungary’s government has long been cultivated close ties to Putin’s Russia.

Ukraine Says Russia Hits Agricultural, Economic Targets (7:10 a.m.)

Russia’s troops have destroyed six grain silos so far, though overall damage to agriculture infrastructure “isn’t crucial,” Ukraine’s deputy Agriculture Minister Taras Vysotskyi said Tuesday.

Moscow continues targeting Ukraine’s economic infrastructure, including an oil storage in Dnipropetrovsk region and an unidentified plant that were shelled overnight, according to a regional governor, Valentyn Reznichenko.

Russian Car Sales Collapse Amid Supply, Price Shocks (6:58 a.m.)

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Russian car sales plunged last month as sanctions imposed over the invasion of Ukraine battered the ruble and many global auto companies joined a boycott of the country, leaving buyers confronting sparse showrooms.

New vehicle sales fell 60% in March from the previous month at Rolf, Russia’s largest dealership, according to CEO Svetlana Vinogradovan.

Russia to Face New U.S., EU, G-7 Sanctions (5:47 a.m.)

The U.S., European Union and Group of Seven are coordinating on a fresh round of sanctions on Russia, including a U.S. bar on investment in the country and an EU ban on coal imports, following the discovery of civilian murders and other apparent atrocities in Ukrainian towns abandoned by retreating Russian forces.

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The governments plan to increase penalties on Russian financial institutions and state-owned enterprises and will sanction unspecified Russian officials and their family members, said White House Press Secretary Jen Psaki. 

Read the story: Russia to Face Fresh U.S., EU, G-7 Sanctions Amid Rising Outrage

EU Diplomat Says Xi Summit a ‘Deaf Dialog’ (5:18 a.m.)

The European Union’s foreign policy chief described a summit with Chinese President Xi Jinping as a “deaf dialog,” casting doubt on how much cooperation the Asian nation will offer to end the war.

“China wanted to set aside our difference on Ukraine,” said Josep Borrell, who accompanied European leaders in talks with Xi last week. “They didn’t want to talk about Ukraine. They didn’t want to talk about human rights and other issues, and instead focused on the positive things.”

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Read the story: EU’s Top Diplomat Calls Summit With China’s Xi a ‘Deaf Dialog’

China Envoy Calls Violence ‘Disturbing’ (4:38 a.m.)

China’s envoy to the United Nations expressed dismay at the killing of unarmed civilians in Bucha, while calling on all sides to refrain judgment until a probe establishes who is responsible.

Still, Ambassador Zhang Jun stopped short of condemning Putin for the violence. China has come under increased pressure from the Washington and Brussels to take a clear stance on the conflict, as its diplomats and state media play down civilian casualties and cast Putin as a victim of a U.S.-backed eastward expansion of NATO.

Read the story: China’s UN Envoy Calls Violence in Bucha ‘Deeply Disturbing’

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Oil Pares Declines as EU Avoids Sanctions (4:10 a.m.)

Oil erased early losses after the European Union eschewed sanctions on Russian oil, and investors weighed the outlook for the dollar.

West Texas Intermediate traded near $102 a barrel after slipping as much as 1.6%. While the EU will press on with additional penalties against Moscow for the war in Ukraine, including a ban on coal, crude won’t yet be targeted. European Commission President Ursula von der Leyen said the bloc will still push ahead with a debate among members on tackling Russian oil.

Intel Suspends Business Operations in Russia (3:27 a.m.)

Intel said it has suspended all business operations in Russia following its earlier decision to suspend all shipments to customers in Russia and Belarus.

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U.S. to Send More Military Aid (2:51 a.m.)

The U.S. is sending another $100 million in military equipment to Ukraine, the White House announced. The money will go toward purchasing more Javelin anti-tank missiles for the Ukrainian military, according to a White House official who requested anonymity to describe the new shipment.

Javelin missiles have been effective against Russian armored vehicles during the six-week-long invasion and Ukrainian leaders have continued to request them from the U.S. The weapons are being sent after Biden administration warned Russia is repositioning forces from around Kyiv to prepare for a renewed assault on areas in eastern and southern Ukraine.

Combined with $300 million in assistance announced by the Department of Defense on April 1, the new aid brings total U.S. assistance to $1.7 billion since the start of Russia’s invasion in late February, Secretary of State Antony Blinken said in a statement. 

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