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Ukraine Latest: US to Send More Arms; EU Backs Kyiv’s Candidacy

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·12 min read
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(Bloomberg) -- The US plans to provide Ukraine with an additional $450 million in aid and advanced weaponry that includes rocket systems. European Union leaders granted the country candidate status, which moves the war-torn nation closer to its long-sought goal of joining the Western bloc.

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The Kremlin said a peace deal with Ukraine isn’t possible until Kyiv accepts all its demands -- leaving conditions at a stalemate as Russia’s invasion nears the four-month mark.

German Economy Minister Robert Habeck triggered the second stage of the country’s three-phase gas-emergency plan and warned of the potential for Lehman-like contagion.

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

Key Developments

  • How One Woman’s Hardball Tactics Opened the EU Door for Ukraine

  • Biden Limps to G-7 as Allies Fret Over His Troubles at Home

  • US Sends Cannon Shells, Patrol Boats in $450 Million Ukraine Aid

  • Russia Faces Fresh Bond Deadline With Possible Default Days Away

  • Cold Winter Could Push Europe Toward Gas Supply Shortages

  • Ukraine Wins Symbolic Step on Long Path to EU Membership

On the Ground

Ukrainian air defense downed two cruise missiles targeting Odesa on Thursday, the city council said on Telegram. Three cruise missiles launched from occupied Kherson targeted the city of Mykolayiv, hitting industrial and social infrastructure and injuring one person.“Heavy explosions” were heard in the southern seaport, its mayor said. A day earlier Mykolayiv faced a large-scale rocket attack. “A threat of artillery shelling has been announced in the city,” the mayor wrote on his Telegram account, urging residents to go to shelters “immediately.” Russian troops seized two more villages south of Lysychansk, in Luhansk, a stronghold Kyiv relies on in its defense in that area.

(All times CET)

US Adds Another $450 Million in Weapons, Aid (10:06 p.m.)

The US announcement of another $450 million in advanced weaponry and aid to Ukraine is the latest tranche in what has become a multibillion-dollar effort to push back Russia’s invasion.

The new package includes patrol boats, rocket systems and additional ammunition, National Security Council spokesman John Kirby said.

The move comes just weeks after President Joe Biden announced $1 billion in new weapons and support, including high-technology rocket systems meant to allow Ukraine to hit Russian targets from as far as 80 kilometers (50 miles) away. After required training for Ukraine’s military, some of those weapons are now flowing into the country.

Zelenskiy Looking to Replace Top Spy, Politico Says (9:51 p.m.)

President Volodymyr Zelenskiy is looking to replace top intelligence official Ivan Bakanov over perceived failures on the job, Politico reported citing four unidentified officials close to the Ukrainian leader and a Western diplomat who has advised Kyiv. Zelenskiy is looking for someone more suitable to serve as the wartime chief of the Security Service of Ukraine, Politico reported them as saying.

Politico said Zelenskiy’s office and Bakanov didn’t respond to its requests for comment. Bakanov has been close to Zelenskiy since his days as an entertainer.

Leaders Hail Move on Ukraine’s EU Candidacy as Historic (9:40 p.m.)

Leaders including Zelenskiy and France’s Emmanuel Macron applauded the decision by EU heads to grant Kyiv candidate status on the path to membership of the bloc.

Zelenskiy hailed the move as “a unique and historical moment.” Macron said the decision mirrors the EU’s response since Russia invaded Ukraine, “which means reacting in a fast, historic and united way through sanctions, macroeconomic, military and financial support.”

Ursula von der Leyen, head of the European Commission, said she was convinced Ukraine would move ahead as swiftly as possible with reform needed to join the EU. Kyiv, which applied for membership shortly after the Russian invasion in February, will have to meet conditions in the future on issues related to the rule of law, justice and anti-corruption.

Lithuania Says EU to Clarify Kaliningrad Advice (9:30 p.m.)

The EU is “is working on a document” that will clarify the bloc’s guidance on how to handle Russian goods transiting to the exclave of Kaliningrad without violating sanctions, according to Lithuania’s leader.

“I don’t know if they’ll publish it tonight, but this may also happen sometime early next week,” Lithuanian President Gitanas Nauseda told reporters. “This will answer all the questions that may occur to people today.”

EU Grants Ukraine Candidate Status for Membership (8:26 p.m.)

European Union government leaders holding a two-day summit in Brussels approved a recommendation from the European Commission to grant candidate status to Ukraine, according to Luxembourg Prime Minister Xavier Bettel. Kyiv, which applied for membership shortly after the Russian invasion in February, will have to meet conditions on issues related to the rule of law, justice and anti-corruption.

Zelenskiy has spent the past few months pressing for recognition that the country is on a path to a closer relationship with Europe as he seeks moral support in countering Russian aggression. But the membership process can last more than a decade.

US Senate Panel Backs Measure Calling Russia Terror Sponsor (7:04 p.m)

The US Senate’s Foreign Relations Committee advanced a measure that would direct the secretary of state to designate Russia as a state sponsor of terrorism for its invasion of Ukraine, putting it in the same category as Iran, Syria, North Korea and Cuba. Both chambers of Congress would have to pass the measure for it to be sent to President Joe Biden’s desk to be signed into law.

Earlier in the day, Senator Jim Risch, the top Republican on the committee, told an audience that included Ukrainian Ambassador to the US Oksana Markarova that Russia’s actions make it a “bully” and a state sponsor of terrorism because it invaded a country that was smaller in size, population and military capability.

Ukraine Takes Russia to Human Rights Court Over War Crimes (6:58 p.m.)

Ukraine is seeking $80 billion in compensation from Russia over alleged war crimes inflicted during its invasion, kick-starting its legal battle at Europe’s human rights court.

The country’s justice ministry filed the first round of submissions against Russia at the European Court of Human Rights in Strasbourg, according to a Thursday statement from its lawyers, Quinn Emanuel Urquhart & Sullivan.

Envoy Presses Canada to Hold on to Gazprom Turbine (6:51 p.m.)

Ukraine’s ambassador to Canada encouraged Prime Minister Justin Trudeau’s government to keep a gas turbine sent to the country for repairs and not return it to Europe where it would be used on the Nord Stream pipeline. The turbine was sent to Canada, where it was manufactured, for repairs just before sanctions were imposed on Russia over its invasion of Ukraine.

Ambassador Yulia Kovaliv said Russian energy giant Gazprom is holding Europe hostage by blaming the missing turbine for a reduction in gas flows. She argued that the company could deliver additional gas to Europe through Ukrainian infrastructure.

“Instead of blackmailing, instead of threatening European consumers, there is a way to deliver this gas to the market,” Kovaliv said in an interview.

Germany Warns of Lehman-Like Contagion From Russian Gas Cuts (5:37 a.m.)

Germany warned that Russia’s moves to slash Europe’s natural gas supplies risked sparking a collapse in energy markets, drawing a parallel to the role of Lehman Brothers in triggering the global financial crisis.

With energy suppliers piling up losses by being forced to cover volumes at high prices, there’s a danger of a spillover effect for local utilities and their customers, including consumers and businesses, Economy Minister Robert Habeck said after raising the country’s gas risk level to the second-highest “alarm” phase.

Europe’s largest economy faces the unprecedented prospect of businesses and consumers running out of power.

Lithuania Accuses Moscow of Propaganda Battle (3:55 p.m.)

Lithuania accused Moscow of waging a propaganda battle and taking a threatening stance in a standoff over Vilnius restricting the transit of sanctioned goods to the Russia’s exclave of Kaliningrad.

Food Crisis Could Last Two Years, Western Officials Say (4:08 p.m.)

Even if Russia’s war on Ukraine ended tomorrow, the current food crisis could last another two years or more, Western officials said in a briefing. It’s possible an agreement on shipping grain from Ukraine’s ports could be reached within the next month, though if that happens, it will still take time to de-mine ports and get them back up and running.

Officials are working with the UN Food and Agriculture Organization and the International Grains Council to look at having an investigation into allegations that Russia is stealing grain from occupied areas of Ukraine, though they said it’s hard to track because reports are coming from the country’s east, where there’s no international presence.

Italy Won’t Trigger Emergency Gas Alert Yet (3:29 p.m.)

Italy is “much better off than other countries” on gas reserves and sees no need to copy Germany’s move to increase the alert on supplies, Energy Minister Roberto Cingolani told reporters in remarks quoted by Radiocor.

His comments follow Germany’s decision to raise the country’s gas risk level to the second-highest “alarm” phase. Still, Italy’s approach could shift, Cingolani said, adding, “The impact of the war is unpredictable, what Russia is doing is unpredictable.”

Italy’s gas storage is 55% full, he said. Italy has mandates from energy companies including Snam Spa to stock up as soon as possible to reach a 85% to 90% level by the end of the year. Most EU members have more gas in storage now than is normal at this time of year, Josep Borrell, the EU’s foreign policy chief, said in Brussels.

US Long-Range Rocket Launchers Arrive in Ukraine (2:47 p.m.)

US high mobility artillery rocket systems, or HIMARS, have arrived in Ukraine, Defense Minister Oleksii Reznikov said in a tweet.

The delivery is part of an effort to provide heavy weapons to Ukraine to counter Russia’s firepower. President Joe Biden promised the HIMARS as part of an announcement of new military aid this month.

HIMARS have a “recognized and proven range up to 300 kilometers” (186 miles) according to their manufacturer, Lockheed Martin.

Zelenskiy Calls on Israel to Do More (13:30 p.m.)

The Ukrainian president said he regretted Israel’s reluctance to join sanctions against Russia in a video address to The Hebrew University of Jerusalem community. While thanking Israel for medical aid, Zelenskiy said there was a lack of support to help Ukraine defend itself. Israel has significant ties with both Russia and Ukraine, and its government has been adopting a neutral stance since Putin’s invasion.

Kremlin Says Peace Possible if Kyiv Accepts Demands (12:40 p.m.)

Russia is ready to agree to a peace deal with Ukraine if it accepts all of Moscow’s demands, President Vladimir Putin’s spokesman said. “As far as the peace plan is concerned, it’s only possible after Ukraine fulfills all the conditions of the Russian side,” Dmitry Peskov told reporters on a conference call on Thursday, Interfax reported.

Negotiations between Russia and Ukraine on a cease-fire and peace deal have been effectively frozen since April. In addition to demanding that Kyiv give up its ambitions to join NATO and declare its neutrality, Russia wants to keep territory it’s captured since its February invasion of the neighboring state.

Europe’s Offshore Wind Industry in Major Ramp-Up (9:44 a.m.)

Dutch power grid operator TenneT Holding BV has launched a tender to build the infrastructure that will speed the construction of North Sea wind farms as Europe looks to cut its dependence on Russian energy imports.

The company plans to enter agreements worth as much as 30 billion euros ($31.7 billion), a sign that Europe is following through on plans to rapidly ramp up renewable power.

Europe’s Top Economies Slow Significantly (9:40 a.m.)

Growth in Germany and France slowed sharply as manufacturers suffered from a dearth of demand, increasingly strained supply chains and surging prices.

Reports on Thursday signaled that, for now, economic activity is still being supported to some extent by workloads built up earlier in the year. But the range of challenges confronting the world economy has led to worries that a recession is on the horizon.

European stocks fell on Thursday, with miners and energy firms leading the decliners in the Stoxx Europe 600 Index.

Germany’s a Step Closer to Gas Rationing (9:35 a.m.)

German Economy Minister Robert Habeck will trigger the second stage of the country’s three-phase gas-emergency plan later on Thursday, moving Europe’s biggest economy to the “alarm” level following steep cuts in supplies from Russia, according to a person familiar with the plan.

The heightened alert gives the government the option of enacting legislation to allow energy companies to pass on cost increases to homes and businesses, while some coal-fired power plants could also be reactivated to help minimize gas consumption. The third and highest “emergency” level would involve state control over distribution.

Ukraine’s EU Membership Timeline Depends on War, Reform (9:00 a.m.)

Kyiv sees “positive trends” for Ukraine to get EU candidate status, Zelenskiy’s deputy chief of staff, Ihor Zhovkva, said in an interview on Bloomberg Television as the bloc’s summit kicks off.

“Ukraine should become a candidate country for EU membership and then move further on the path to the integration with the European Union,” Zhovkva said. He warned that negotiations might be tough and difficult. While much depends on the course of the war, the pace of reforms will also be critical, he said.

Zhovkva said Moscow would need to withdraw its troops to the lines of Feb. 23 to resume diplomatic talks. There are no talks planned between Ukraine’s Zelenskiy and Russian President Vladimir Putin.

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