Moscow Considers Easing Capital Controls

(Bloomberg) — Russia lost the flagship vessel of its Black Sea Fleet, delivering a blow to its pride and military capabilities as it repositions its forces for renewed attacks in eastern and southern parts of Ukraine.

U.S. President Joe Biden said he’s considering sending a senior official to visit Ukraine. European Union leaders plan to discuss common gas purchases at a summit next month, as they seek to avoid competing against each other for alternative energy supplies while reducing imports from Russia. 

U.S. prosecutors charged three Russian government officials with conspiring to shape American policy toward Russia with staged events and propaganda — including efforts to influence members of Congress.

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

Russia’s Energy Ministry and Industry Ministry are working on introducing restrictions on the exports of coking coal, RBC reported, citing an unidentified government official and the Energy Ministry’s press service. The measure may help decrease coal prices on the domestic market.

Oil notched a weekly gain as traders weighed a global supply deficit, a potential ban on Russian oil from the European Union and China’s latest virus lockdowns. West Texas Intermediate settled near $107, rising 8.8% for the week.

Oil rallied Thursday afternoon after a report that the European Union is moving toward adopting a phased-in ban on Russian oil.

Russia’s Moskva cruiser, the flagship of its Black Sea fleet, sank during a storm while it was being towed back to port, the Defense Ministry in Moscow said, according to Tass news agency. 

Ukraine’s military says the ship was hit by “Neptune” anti-ship cruise missiles, resulting in significant damage and a fire. Russia had reported localized fires aboard that caused ammunition to detonate. The Moskva typically has a crew approaching 500. Russian news agencies reported they had been evacuated.

France is relocating diplomatic staff to its embassy in Kyiv after personnel were evacuated to Lviv in early March. Russian troops have largely left the Ukrainian capital as they press their campaign in the country’s east and south. 

The move will allow France to further deepen its support for the country, including humanitarian aid and efforts to investigate allegations of war crimes by Russian forces, the foreign ministry said in a statement on Thursday.

A U.S. indictment against Aleksandr Babakov, deputy chairman of the state Duma in Russia; Aleksandr Vorobev, Babakov’s chief of staff; and Mikhail Plisyuk, a member of Babakov’s staff, was unsealed in federal court in Manhattan. They were accused of seeking meetings with members of Congress, offering one a free trip to Crimea in 2017. 

They were charged with conspiring to affect U.S. policy toward Russia with staged events and propaganda. The Russian government has denied that it engaged in disinformation efforts.

U.S. Senator Chris Coons said Americans will “struggle with maintaining focus and attention” on the war in Ukraine ahead of the November midterm elections. The Democrat from Delaware, a member of the Senate Foreign Relations Committee, said he was “very troubled” by recent polling in which Ukraine “doesn’t make the top five” of most pressing concerns for Americans, who are more worried about inflation, the economy, the pandemic, crime, and the border with Mexico.

Biden got a polling bump in the initial weeks of Russia’s invasion of its neighboring country, but that has faded as voters have faced sharp price increases in groceries and gasoline and the coronavirus persists. Democrats aren’t favored to keep control of Congress in the November contests.

Biden said his administration is deciding whether to send a senior U.S. official to visit Ukraine. “We’re making that decision now,” he told reporters before departing Washington for a trip to North Carolina.

He didn’t say which official might make such a visit. Politico reported e
arlier Wednesday, citing unnamed officials, that the administration is considering sending Secretary of State Antony Blinken or Defense Secretary Lloyd Austin.

It won’t take much time to train Ukrainian troops on using 15mm towed howitzers and radar for locating enemy artillery, a senior U.S. defense official told reporters Thursday. The equipment is part of the $800 million in new weapons being sent to Ukraine.

The official said Ukrainian officers had previously been trained in the U.S. on the use of Switchblade attack drones and unmanned coastal defense vessels that are also in the package announced Wednesday by Biden.

The official also said that Russian ships near its damaged Moskva cruiser have moved farther south in the Black Sea. 

Ukraine needs international financial aid, including from the U.S., to fill its energy reserves ahead of next winter, according to two representatives of the country’s energy industry who were in Washington to lobby the Biden administration and lawmakers. 

With domestic production down because of the war, Ukraine will need to import about 11 billion cubic meters of natural gas for heating and agriculture if the conflict lasts into the fall, according to Svitlana Zalischuk, adviser to the chief executive of Naftogaz, the country’s largest state-owned oil and gas company.

The measure allows EU governments to grant permission for entities in their states to keep receiving payments from Russian companies on so-called financial leases signed before Feb. 26. Ownership of the plane can be transfered once the lease is paid off. It’s not clear how many of the 500 or so foreign-owned planes stuck in Russia are potentially eligible for the exception. Most of the aircraft are under a different kind of lease.

German Chancellor Olaf Scholz faces intense pressure from members of his ruling coalition to step up deliveries of heavy weapons such as tanks and fighter jets to help Ukraine fight Russian troops.

Despite initiating an historic reversal of Germany’s previously frugal defense policy in the early stages of the war, Scholz has since appeared hesitant to go beyond initial supplies of protective equipment, munitions and rockets to take out Russian tanks and aircraft.

An internal Vatican memo seen by Bloomberg said that Ukrainians working within the Vatican were disconcerted by the plan. It also warned of possible protests during the Stations of the Cross celebration at the Coliseum on Friday in Rome, which Pope Francis is scheduled to lead.

Russia is still exporting grain to some of its biggest customers even as shipping costs soar in the Black Sea region. That’s pushing some market observers to raise their estimates for Russia’s shipments this season, despite moves by some traders to avoid Russian commodities. The main buyers remain Egypt, Turkey and Iran, said Dmitry Rylko, general director of the Moscow-based Institute for Agricultural Market Studies. 

The International Monetary Fund said the war risks eroding the world’s recovery from the Covid-19 pandemic and urged central banks to act decisively to curb inflation.

The world’s financial firefighter next week will cut its global growth forecast for this year and next, Managing Director Kristalina Georgieva said ahead of IMF and World Bank Spring Meetings that start on Monday. The war is spurring the fund to lower its 2022 GDP outlook for 143 member nations — a group that accounts for 86% of global output.

The goal will be to avoid competing against each other for alternative energy supplies in the effort to phase out purchases from Russia.

The bloc’s two-day summit starting May 30 is expected to cover a solidarity mechanism to support member states facing gas shortages, energy interconnections in the bloc, the security of energy supplies and possible changes to the EU’s electricity market, according to people familiar with the discussions.

Russia needs to shift its energy exports to markets beyond Europe, Putin said in a televised statement. He added Europe has no immediate alternative to Russian gas, and that attempts to squeeze Russian energy out of global supplies will destabilize markets and push up prices.

Putin said some “unfriendly” countries are already falling behind in payments to Russia, without going into specifics.

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