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Ukraine Latest: US Approves $8.4 Billion Arms Sale to Germany

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(Bloomberg) -- The US State Department approved the sale of as much as $8.4 billion in weapons to Germany, including F-35 fighter planes and munitions, emphasizing the ally’s role as “an important force for political and economic stability in Europe.”

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Britain’s grid operator warned of “knock-on impacts” if Russia cuts off gas flows to Europe, even though the nation receives only 6% of its gas imports from Russia, far less than much of Europe. Austria said a Russian gas embargo “isn’t possible.”

Presidents Joe Biden and Xi Jinping spoke on Thursday amid rising US-China tensions. Xi’s declaration of a “no limits” friendship with President Vladimir Putin just before the Russian invasion of Ukraine remains a core point of concern for Washington. The Chinese Foreign Ministry’s statement after Thursday’s call, which included sharp exchanges over Taiwan, pointedly didn’t describe the conversation as “constructive,” a term used after previous calls between the men.

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Key Developments

  • Biden, Xi Plan In-Person Meeting as Taiwan Tensions Intensify

  • A New Bench of Traders Muscle In to Supply Russian Oil to India

  • UEFA Starts Probe Over ‘Putin’ Chants at Ukraine Football Match

On the Ground

Russia launched missile strikes on northern Ukraine from neighboring Belarus and the Black Sea early Thursday, Oleksiy Hromov, a spokesman for the Ukrainian armed forces, said at a briefing. Six Russian “Kalibr” cruise missiles hit a military base north of Kyiv, while more than 20 rockets struck the Chernihiv region in northern Ukraine, causing some casualties, Hromov said. Fifteen people were wounded in the Kyiv region. Local authorities also reported rocket attacks in Ukraine’s second-largest city of Kharkiv in the northeast overnight, and explosions were heard again in the southern port of Mykolaiv and Kropyvnytskyi in the center of the country. The attacks in northern Ukraine occurred as the nation’s armed forces step up efforts to liberate Russian-held areas in the south.

(All times CET)

US Approves $8.4 Billion in Arms Sales to Germany (9:25 p.m.)

F-35 fighter planes built by Lockheed Martin Corp., the newest extended-range air-launched cruise missiles and dual laser-GPS-guided smart bombs are among $8.4 billion in American-built arms sought by Germany and approved by the US State Department.

Although the department’s announcement Thursday made no direct mention of the war in Ukraine, it said that “this proposed sale will support the foreign policy and national security of the United States by improving the security of a NATO ally that is an important force for political and economic stability in Europe.”

It also said the weapons would bolster the “capability to meet current and future threats by providing a suitable replacement for Germany’s retiring Tornado aircraft fleet in support of NATO’s nuclear sharing mission, the centerpiece for deterrence in Europe.”

Ukraine Says It Can More Than Double Electricity to the EU (7:03 p.m.)

The European Network of Transmission System Operators for Electricity is allowing Ukraine to more than double electricity exports to the European Union, according to Volodymyr Kudrytskyi, chief executive officer of the Ukrainian state-run power company Ukrenergo.

Ukraine will be permitted to export 250 megawatt in the period starting July 30, compared with 100 megawatts in the month starting June 30, Kudrytskyi said on Facebook.

The country -- where domestic electricity consumption shrank because Russia’s invasion shattered the economy and forced millions to flee their homes -- could export 1.5 gigawatts to the EU if permitted, Energy Minister Herman Halushchenko said Wednesday in Brussels.

Sakhalin-2 LNG Buyers Told to Pay Through a Russian Bank (6:15 p.m.)

Russia is asking customers of the Sakhalin-2 liquefied natural gas plant in the country’s far east to make payments through a Russian bank as part of Putin’s decree to create a new company for the project.

Project operator Sakhalin Energy Investment Company Ltd. has informed LNG buyers on required changes to their agreements, including the move to a Russian bank, according to people with direct knowledge of information. The terms of the contracts -- the currency, volumes, prices and delivery locations -- will remain intact, they said.

The red tape of switching could delay vital deliveries of the fuel just as the world is grappling with fuel shortages and soaring energy prices. Changing to a Russian bank may complicate the process as buyers seek to ensure they aren’t overstepping any sanctions, the people said.

Zelenskiy Repeats Call for Russia’s SWIFT Banishment (4:30 pm.)

Ukrainian President Volodymyr Zelenskiy called for fresh sanctions against Moscow, including disconnecting Russia from the SWIFT global payments system -- a plea he’s made since the Kremlin’s invasion in February.

In that time, the European Union and US have cut off Russia’s major banks from the international payments system but several lenders are still able to use it.

Zelenskiy and his Lithuanian counterpart Gitanas Nauseda spoke after the Baltic nation delivered 10 armored vehicles and ammunition to Ukraine. Nauseda repeated a call for EU countries to cut their dependence on Russian energy supplies.

Group Says Not Enough Crew to Sail Stranded Ships (3:45 p.m.)

About 450 seafarers are still stuck in Ukraine’s ports, down from 2,000 at the start of the war, and not enough to operate all the vessels that need to leave, according to John Stawpert, manager in the Marine Department at the International Chamber of Shipping.

“We’ll have to find a way to get people on board,” he said in an interview, adding that seafarers need to know “that their safety will be guaranteed.”

The issue with crew is just one of challenges facing the reopening of ports after Ukraine and Russia reached a deal last week on safe passage of vessels brokered by the UN and Turkey. Shipowners need to be sure that channels have been demined and also need to find insurance cover, Stawpert said.

Russia Fines Former State-TV Journalist $822 for Protests (3:35 p.m.)

A Moscow court fined a former state-television employee 50,000 rubles ($822) for publicly criticizing the war in Ukraine, including a protest near the Kremlin in which she held a sign blaming Putin for the deaths of children.

Marina Ovsyannikova, who fled Russia earlier this year after being charged for holding up an anti-war poster during a live evening news broadcast and returned this month, called the judgment “absurd” on her Facebook page and said she would appeal.

She was fined for an administrative violation under a Russian law that prohibits defaming the military. Some opposition members have received jail sentences for spreading what’s been called fake news about Russia’s “special military operation” in Ukraine.

Zelenskiy Says Ukraine ‘Will Exist’ in Statehood Day Video (2:20 p.m.)

“All stages of the history of Ukrainian statehood can be described in one sentence: we existed, exist and will exist,” Volodymyr Zelenskiy said in an eight-minute video recorded to mark Ukrainian Statehood day.

“We do not need fireworks and pomp to show the importance of our own statehood for the Ukrainian people,” Zelenskiy said in the video, which showed images of Ukrainian historical figures. “Today we defend it with weapons in hands.”

UK Warns on Knock-On Impact If Russia Curbs Gas (1:55 p.m.)

Britain faces “knock-on impacts” for the country’s energy supplies, such as rocketing prices, if Russia cuts off natural gas flows to Europe, according to National Grid Plc., even though only about 6% of the nation’s gas imports come from Russia.

The grid operator’s warning is the first time it has openly addressed the threat of Moscow’s decision to throttle fuel supplies.

UK Grid Warns Energy Costs to Skyrocket If Russia Curbs Gas

Austria Says No to a Russian Gas Embargo (1:53 p.m.)

It’s too early to contemplate new sanctions against Moscow because existing measures need time to work, Austrian Chancellor Karl Nehammer said Thursday at press briefing.

“That the war lasts as long as it does shows the sanctions haven’t worked as quickly as hoped,” the Austrian leader said. A gas embargo “isn’t possible,” he added.

Andriy Kostin Appointed Ukraine’s Prosecutor General (1 p.m.)

Zelenskiy signed a decree Thursday appointing Andriy Kostin as Ukraine’s new prosecutor general, a day after the pick was approved by the nation’s parliament.

“The most important task of the prosecutor’s office is to bring to justice all Russian war criminals who came to our land and did everything that, unfortunately, we and our children know in detail,” Zelenskiy said.

Kostin’s predecessor, Iryna Venediktova, was fired this month after the president accused her team of employing Russia-backed people that undermined Ukraine’s war effort.

Trader Keeps Russian Wheat Flowing (12:45 p.m.)

An international trader, backed by Canadian pension funds and Glencore Plc, is still exporting large volumes of Russian grain as Moscow wages war in Ukraine.

Viterra has kept its ranking, behind three Russian traders, as the No. 4 exporter of the country’s wheat, corn and barley in the first few weeks of the new season. It has shipped more than 850,000 tons of Russian grain since the invasion started on Feb. 24, according to shipping lineup data from Logistic OS.

The presence of Viterra highlights the dilemma facing Western governments as they respond to the invasion. There are no sanctions on Russian grain, which policy makers want to keep flowing to avoid exacerbating a global food crisis.

Russia ‘Can Afford to Cut EU Gas,’ Economist Says (11:20 a.m.)

Russia “can afford to cut off gas” to Europe, its main export market, if the current supply crisis drags out, though it would cost about $60 billion in lost revenue, according to Capital Economics.

If flows were halted for 12 months, gas output would fall about 20%, shaving 0.3% off gross domestic product, economist Liam Peach wrote in a report. A cutoff would trim Russia’s huge current account surplus and reduce tax revenues by less than 1% of GDP, he said.

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