Zelensky visits the troops; Russia eyes bond debt

Economy / May 30, 2022 / DRPhillF / 0

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Ukrainian President Volodymyr Zelensky visited front-line forces in the Kharkiv region on his first trip outside Kyiv since the Russian invasion. He also dismissed the head of the security apparatus in the region for what he considered a dereliction of duty.

Russia is developing a way to repay its debt in euros that would bypass Western financial infrastructure, which is now mostly blocked due to the Ukraine war, Finance Minister Anton Siluanov was quoted in an interview with Vedomosti.

European Union countries failed to agree on Sunday on a revised package of sanctions over the Moscow invasion ahead of a leaders’ summit in Brussels, but talks will continue. Serbia obtained confirmation from Russia of uninterrupted gas supplies.

(See RSAN on Bloomberg for the Russian sanctions dashboard.)

KEY DEVELOPMENTS

EU countries fail to break deadlock over Russian oil embargo
Putin pledges to supply gas to Balkan ally Serbia for three years
Europe’s attempt to punish Putin does not amount to rhetoric
Zelensky visits troops and inspects shelled dwellings in Kharkiv
Russia’s victories in eastern Ukraine stir controversy over the course of the war
EU leaning toward delaying pipeline bans for oil deal

All times are CET:

Russia settles Eurobond debt against EU gas payments (1:12 am)

Foreign investors can open accounts in Russian banks in rubles and hard currency to receive payments, the finance minister told the Moscow business newspaper. In short, it is a mirror image of the way European countries are now paying for Russian gas while avoiding the hurdles imposed by sanctions.

“This is how gas payments are made: we get foreign currencies, and then they are converted into rubles” on behalf of the gas buyer, Siluanov said. “The international bond settlement mechanism will work in the same way, but in the opposite direction.”

Read more: Russia settles Eurobond debt in the mirror of EU gas payments

Zelenskiy Fires Kharkiv Security Head (9:30 pm)

Zelensky said he had fired the head of Ukraine’s security service in the Kharkiv region, where he handed out medals earlier on Sunday to troops battling Russian forces.

“I dismissed the head of the security service of the Kharkiv region because, from the beginning of the war, he did not try to protect the city and was only thinking of himself,” Zelensky said via Telegram. He did not go into details or name the official.

EU has not broken deadlock on Russian oil (7:11 pm)

European Union countries failed to agree on Sunday on a revised package of sanctions over Moscow’s invasion of Ukraine ahead of a leaders’ summit in Brussels, but talks will continue through the week.

Hungary has so far refused to support a compromise despite proposals aimed at ensuring Russian oil supplies, according to people familiar with the talks. EU ambassadors are due to meet again on Monday morning, but the lack of agreement means sanctions could be a major topic at the bloc’s two-day meeting that begins on Monday. An EU official said a deal was still possible in the coming days.

Borrell and Koleba speak before the EU meeting (6:36 pm)

The EU foreign policy chief spoke with Ukraine’s Foreign Minister Dmytro Kuleba on Sunday ahead of the two-day EU summit starting Monday in Brussels.

The next EU sanctions package, more arms shipments to Kyiv, and the breaking of the Russian blockade on Ukraine’s grain exports are expected to be on the agenda.

Zelensky visits troops near Kharkiv in a rare foray outside the capital (2:10 p.m.)

Volodymyr Zelensky traveled to the Kharkiv region to visit the front-line positions of the Ukrainian army. He handed over medals to service personnel and was briefed on the operational status.

“I would like to thank each of you for your service. You are risking your life for all of us and our country. Thank you for standing up for Ukraine’s independence. Take care!” Zelensky said.

This was the first publicly known invasion of troop positions outside the immediate Kyiv region of a Ukrainian president since before the Russian invasion on February 24. Wearing a flak jacket, he observed the bombing of Russian military vehicles and saw severely damaged apartment buildings.

Sievierodonetsk risks reduced to ‘rubbish’: US analysts (1:13 am)

In an attempt to control Sievierodonetsk, Kyiv forces face the most serious challenge since the isolation of the Azovstal plant in Mariupol, according to the Institute for the Study of War, which described Moscow’s efforts to control the city of Luhansk as a “desperate and bloody attack…”

US-based military analysts said in a daily update that Ukraine “may suffer a major tactical defeat in the coming days if Severodonetsk falls, although this outcome is by no means certain”.

They said Russia is paying a price for its tactical success out of proportion to any potential strategic advantage, saying the town would not give Moscow any particular military or economic benefit. “This is especially true because the Russian forces are destroying the city as they attack it and will take control of its ruins if they capture it,” ISW said.

Russia to investigate British MP’s son, TASS reports (11:40 am)

Russia will investigate the son of a member of the British Parliament for his role in the hostilities there, the Russian news agency TASS reported. Ben Grant’s mother is Helen Grant, former Minister of Sports and Tourism.

Citing the Russian Investigative Committee, TASS reported that the former British Royal Navy will be investigated over the alleged mercenary activity. The Guardian reports that Grant helped rescue fellow volunteers after a Russian ambush north of Kharkiv this month.

Race against food inflation begins on rusty Soviet railway tracks (9:00 AM)

European leaders are desperately trying to figure out how to get grain out of Ukraine, whose exports are usually greater than those of the entire European Union.

Russia, accused by the United Nations of waging a war on global food security, said last week it would open sea lanes to open ports such as Odessa on the Black Sea if sanctions against it were lifted.

But Ukraine said it was skeptical due to security concerns if it removed the defensive mines it has laid in places like Odessa. Clearing its ports would leave Ukraine vulnerable to amphibious attacks.

Zelensky says defenses hold Donbass campaign (8:10 a.m.)

Zelensky reiterated that Russia was “trying to squeeze at least some results for itself” as the 100th day of its June 3 invasion approaches. The Ukrainian president plans to speak at the European Council meeting scheduled to start on Monday.

On Saturday, Zelensky said in his nightly video address that the main fighting areas remain around Severodonetsk, Lysichanssk, Pakhmut and Popasna, where “indescribably difficult” but the Ukrainian defense is resilient. The district governor reported street fighting between Russian and Ukrainian forces in Severodonetsk.

Zelensky said Russian forces launched an “open barbaric strike” with rockets and mortars on the Sumy region in northern Ukraine, far from the main Donbass front. He also said that “good news” was likely to come from Ukraine’s allies about the new military aid.

Russian Corridor Show Shows Sanctions Are Severe, UK Says (7:30am)

Britain’s Ministry of Defense said on Twitter that Moscow’s attempt to allow humanitarian corridors for Ukrainian grain shipments in exchange for lifting Western economic measures “highlights the pressures imposed by sanctions on the regime”.

Lithuanians raise $5.4 million to buy combat drone for Ukraine (12 a.m.)

Lithuanians have donated more than five million euros ($5.4 million) over three and a half days to purchase the Bayraktar combat drone for Ukraine.

The private crowdfunding initiative, which has received the green light from the Lithuanian and Turkish defense ministries, aims to increase the amount within three weeks for the purchase of a Turkish-made drone and ammunition. Lithuanian Defense Ministry officials plan to travel to Turkey next week to complete the deal.

EU ban plan exempts Russian pipeline (11:25 pm)

The European Union has proposed banning seaborne oil from Russia while delaying restrictions on imports from a major pipeline, seeking to satisfy Hungary’s objections and opening the next set of sanctions on Russia.

The European Commission sent a revised proposal to national governments in the European Union on Saturday to avoid oil shipments through the Druzhba pipeline, the main source of Hungary’s imports of crude oil, according to people familiar with the matter.

Even as Europe looks to end its purchases of Russian oil, Asia is ahead.

Read more: Russian oil is heading more than ever to China and India