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Ukraine Latest: EU Leaders Talk to Putin; New Bid for Sanctions

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·9 min read
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(Bloomberg) --

Most Read from Bloomberg

President Vladimir Putin spoke with the leaders of Germany and France, who urged a cease-fire and for Moscow to free captured fighters. The French president’s office said the two leaders told Putin to lift the blockade of the Black Sea port of Odesa, which is hampering the world’s grain supplies.

A revised European Union proposal to wean EU countries off Russian oil imports would spare a pipeline that Hungary depends on for crude.

Moscow announced its latest test launch of a hypersonic Zircon missile in the Arctic. Russian forces are likely to attempt to advance on key Ukrainian-held cities in the next stage of an offensive in the the Donbas region, according to a UK Defense Ministry assessment.

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

Key Developments

  • EU Spares Pipeline Oil From Russian Embargo Plan to Break Logjam

  • Europe’s Push to Punish Putin Is Falling Short of the Rhetoric

  • Russia’s Whipsaw Week Ends With Default Clock Ticking

  • Russian Wins in Eastern Ukraine Spark Debate Over Course of War

  • EU Leans Toward Delaying a Pipeline Ban to Clinch Oil Deal

  • Johnson Urges More Missiles for Ukraine to Hit ‘Crocodile’ Putin

All times CET:

Lithuanians Raise $5.4 Million to Buy Combat Drone for Ukraine (12 a.m.)

Lithuanians donated more than 5 million euros ($5.4 million) over three and a half days to buy a Bayraktar unmanned aerial combat drone for Ukraine.

The private crowdfunding initiative, which received a green light from both the Lithuanian and Turkish defense ministries, aimed to raise the amount within three weeks to buy the Turkish-made drone and ammunition. Lithuanian defense ministry officials plan to head to Turkey next week to complete the deal.

EU Embargo Plan Exempts Russian Pipeline Oil (11:25 p.m.)

The European Union proposed banning seaborne oil from Russia while delaying restrictions on imports from a key pipeline, seeking to satisfy Hungarian objections and unlock its next set of sanctions on Russia.

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

Macron, Scholz Urge Putin to Lift Grain Blockade (7:50 p.m.)

French President Emmanuel Macron and German Chancellor Olaf Scholz urged Russian President Vladimir Putin to lift the blockade of Odesa to allow Ukrainian grain to be exported via the Black Sea and avoid a global food crisis, according to a statement by the French presidency. The three leaders spoke by phone for 80 minutes, according to a German government statement earlier Saturday.

Russia’s Whipsaw Week Ends With Default Clock Ticking (6:05 p.m.)

Russia is back in default countdown, with another bond payment in question and the Kremlin fighting to find an escape route. As of Friday evening, coupon payments in euros and dollars worth about $100 million hadn’t landed in investors’ accounts, kicking off a 30-day grace period.

But late in the day, the main central securities depository in Moscow issued a statement that its account was debited in favor of depositor’s accounts for the funds. Russia’s government last week said payments to the NSD mean it’s made good on its obligations.

Ukraine Rejects Putin’s Link of Food Blockade, Sanctions (3:02 p.m.)

Dmytro Kuleba rejected President Vladimir Putin’s linkage this week of global grain shortages to Western sanctions on Russia. “The sole reason” for the unfolding food crisis is the Russian military’s blockade of Ukraine’s Black Sea ports, which has prevented millions of tons of exports, he said.

Scholz, Macron Talk to Putin for 80 Minutes (2:40 p.m.)

President Vladimir Putin discussed the Ukraine war with German Chancellor Olaf Scholz and French President Emmanuel Macron on Saturday. The three last spoke in the same format in early March.

Putin warned of “further destabilization of the situation and aggravation of the humanitarian crisis” if Western weapons continue to flow to Ukraine, according to a Kremlin readout. He also reiterated interest in resuming peace talks, which Ukraine has rejected while Russia continue to fight.

Scholz and Macron “urged an immediate cease fire and a withdrawal of Russian troops,” according to a German government readout that said the call lasted for 80 minutes. The pair called on Putin to engage in serious direct negotiations with Zelenskiy to find a diplomatic solution to the conflict, which is heading toward its 100th day.

Ukraine Central Bank Interventions Jump (2:16 p.m.)

The Ukrainian central bank sold $1.43 billion May 23-27 to support the hryvnia, according to its website. It was the highest level of weekly interventions this year and up from $650.4 million in the preceding week.

So far in 2022 ,the central bank sold $8.57 billion and bought $1.82 billion. The central bank from May 21 cancelled hryvnia exchange rate limits imposed on the first day of the war and halved monthly limit of cash withdrawals by Ukrainian bank card holders abroad.

Johnson, Zelenskiy Discuss Donbas, Ports Situation (1:30 p.m.)

Ukraine’s president and UK Prime Minister Boris Johnson spoke by phone on Saturday about the latest developments in the Donbas, and Russia’s ongoing blockade of Black Sea ports that’s preventing grain exports.

Johnson said the UK would work with its Group of Seven partners to push for urgent progress to avert a global food crisis. The call came a day after the UK leader urged the supply of heavy weapons to Kyiv as it attempts to repeal Russian progress in the east.

Zelenskiy Says Can’t Fight ‘To the Last Man Standing’ (12:20 p.m.)

Ukraine can’t fight “to the last man standing,” President Volodymyr Zelenskiy said Saturday in an interview on Dutch television, warning that to restore its territories militarily “hundreds of thousands of lives will be lost.”

“There are risks and challenges in east of Ukraine. There are steps indicating a desire to surround our army. There is a large increase in military machinery and personnel by the Russian federation,” Zelenskiy said of Moscow’s intensified campaign in the Donbas.

A return to pre-Feb. 24 positions is key for negotiations, he said, adding, “we are not ready to give away neither Crimea nor Donbas.” Zelenskiy’s comments come after some pundits, including former US Secretary of State Henry Kissinger, have called on Kyiv to consider trading territory for a cease-fire.

Russian Cargo Ship in Mariupol to Load Metal (12 p.m.)

An empty Russian cargo ship arrived in Mariupol for the first time since Moscow’s troops gained control of the Black Sea port city, and will transport 2,700 tonnes of metal to Russia’s Rostov-on-Don about 180 kilometers (112 miles) to the east, the Russian news agency TASS reported, citing a port official.

The television network Zvezda, an arm of Russia’s ministry of defence, said the cargo was “part of the agreements that had been established” before Russia’s invasion of Ukraine. On Friday, Ukraine’s Metinvest warned that Russia planned to take export-ready products from Mariupol for transshipment to Asia and Africa.

Ukraine has decried the action as looting. “After the theft of Ukrainian grain, the occupiers resorted to exporting metal products from Mariupol,” Lyudmyla Denisova, Ukraine’s human rights ombudsman, wrote on her Telegram channel.

Ukraine Defense Chief Says Heavy Weapons Arriving (11:38 a.m.)

The heavy weaponry Ukraine has urgently requested has started to arrive, Defense Minister Oleksii Reznikov said in comments posted to the ministry’s website, adding that Russia’s forces “are receiving a rebuff that they did not expect.”

Three types of 155-mm artillery are already working on the front lines, he said, including M777 and FH70 howitzers, and French CAESAR self-propelled howitzers. More than 100 US drones have also arrived, he said.

Ukraine has received Harpoon missiles from Danish partners with participation of the UK, Reznikov said. Those missiles “will help us liberate and make our Black Sea safe again, as well as reliably protect Odesa.”

Russia Test-Fires Hypersonic Missile in Arctic (11:05 a.m.)

Russia’s navy successfully tested its Zircon hypersonic missile in the Arctic region, hitting a target at a range of about 1,000 kilometers (620 miles), the Ministry of Defense said on its website, where it posted a video of the launch.

The Northern Fleet frigate Admiral Gorshkov launched the cruise missile from the Barents Sea at a target in Russia’s White Sea, Tass said.

Russia has been testing the Zircon for several years. In December Russian President Vladimir Putin announced a successful test firing, calling it a “big event.” In April Moscow test-launched the new Sarmat intercontinental missile, which Putin said would make the West “think twice” before harboring any aggressive intentions against Russia.

Moscow Tightens Grip on Black Sea Port Kherson (10:05 a.m.)

Russia closed the Kherson region’s border with Ukrainian-controlled territory, including for trade in agricultural goods, for “security reasons,” the deputy head of the region’s military and civil administration told Russia’s state news agency RIA Novosti. Travel and trade will be possible to Crimea and other parts of Ukraine held by Russia.

Moscow continues to expand its authority over the Black Sea port city seized early in the war. Kherson and nearby Zaporizhia are being switched to Russian telephone codes, and residents will soon be able to apply for Russian passports -- a move Kyiv has denounced.

Sergei Aksyonov, head of Russian-occupied Crimea, said on Telegram that teachers from the Kherson and Zaporizhzhia regions would undergo retraining and start the new school year under the Russian education system. Hennadiy Lahuta, governor of Kherson Oblast, said Friday that teachers had resisted the plan and praised their “courage” in doing so.

Russia Looks to Advance Into Donbas, UK Says (9:35 a.m.)

Russia’s capture this week of the town of Lyman -- a major rail link to the east, south and west that also gives access to important road and railway bridges over the Siversky Donets River -- was “likely a preliminary operation for the next stage” of Moscow’s Donbas offensive, the UK Defense Ministry said on Twitter.

“A bridgehead near Lyman would give Russia an advantage in the potential next phase of the Donbas offensive, when it will likely seek to advance on key Ukrainian-held cities deeper in Donetsk Oblast, Sloviansk and Kramatorsk,” the UK said.

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