(Bloomberg) — Russian forces closed in on Ukraine’s capital and its embattled leadership as President Vladimir Putin shrugged off a barrage of sanctions imposed by the U.S and Europe and pressed deeper with his invasion.
With the war raging Friday, Chinese President Xi Jinping told Putin in a call that he supported negotiations between Russia and Ukraine, according to China Central Television. It cited Putin as saying that he was ready to conduct high-level talks. There was no immediate confirmation of the call readout from Moscow.
At about the same time, Russian Foreign Minister Sergei Lavrov said that Moscow won’t talk to Kyiv until Ukraine’s army surrenders. “We’re ready for negotiations at any time, as soon as the Ukrainian armed forces respond to our president’s call, stop resistance and lay down their weapons,” Lavrov said in the Russian capital.
The offensive proceeded despite the U.S. and the European Union ratcheting up the pressure on the Kremlin with a coordinated set of sanctions overnight aimed at inflicting a heavy toll on the Russian economy. The goal, said French Finance Minister Bruno Le Maire, is “to financially isolate Russia.”
Still, Russian markets rallied at the open after U.S. President Joe Biden and EU leaders shied away from the most drastic action, stopping short of barring Russia from the Swift international banking network and allowing exemptions for energy exports.
With Russia’s central bank pledging aid for sanctioned lenders, the benchmark MOEX index was up 15% after losing as much as 45% Thursday. The ruble gained 2.1% against the dollar after sinking to a record low the previous day. Stocks in Europe also rebounded and were at session highs, while oil slipped further.
With the war in its second day, sirens warned Kyiv’s residents to take shelter from early in the morning. Ukraine’s armed forces said their units were engaging Russian armor to the north, while Ukrainian President Volodymyr Zelenskiy said that Russian aircraft were attacking residential areas of the capital.
In a morning address, Zelenskiy said that his intelligence services had identified him as Russia’s top target, but that he is staying in Kyiv and his family will remain in the country. “They want to destroy Ukraine politically by destroying the head of state,” he said.
Watch: Biden Says Putin Has ‘Larger Ambitions Than Ukraine’
Putin has said that he wants to replace Ukraine’s leadership, calling it a “junta.”
Russia defended its invasion and brushed off the sanctions, vowing to retaliate. Senate speaker Valentina Matvienko, a Putin ally, said that Russia has prepared counter-sanctions to hit at “weak” spots of the West.
Lavrov, who met with envoys from the so-called Donetsk People’s Republic and Luhansk People’s Republic, said the Russian assault was an unavoidable step to protect the breakaway zones that Putin recognized before ordering the attack.
Ukraine has repeatedly denied that it planned to try and retake the separatist regions.
Taking shelter
In Kyiv, residents took to shelters as the government reported fighting raging. Russian forces continue to advance closer to the capital on the western bank of the Dnieper river, where they are being engaged by Ukrainian forces, presidential spokesman Oleksiy Arestovych said.
Gunfire was heard near the government quarter, AP reported. The Defense Ministry said that “thousands” of volunteers were signing up to fight the invasion, with 18,000 rifles handed out in Kyiv alone on Thursday.
French President Emmanuel Macron said that he’d had a frank, direct – and rapid – conversation with Putin at Zelenskiy’s request. Macron said Zelenskiy, who hasn’t been able to reach the Russian leader, wanted him to ask Putin to stop the fighting and engage in diplomacy.
“It didn’t produce any effect so far as you can see, because the Russian president has chosen war,” Macron said. He is scheduled to join Biden and their NATO counterparts in a virtual summit on Friday.
Biden promised to inflict a “severe cost on the Russian economy” that will hamper its ability to do business in foreign currencies. The 27-nation EU backed a broad sanctions package to limit Russia’s access to Europe’s financial sector and restrict key technologies. The measures will be formally adopted in an emergency meeting of EU foreign ministers later on Friday.
Among the U.S. and EU penalties are export controls designed to cut Russia off from semiconductors and other advanced technology crucial to the military, biotechnology, and aerospace industries. U.S. allies including the U.K., Canada, Taiwan and Japan also announced fresh sanctions.
Chinese state media, meanwhile, left the invasion off their front pages. Putin has previously received diplomatic support from China, which has criticized Western sanctions against Russia and said it understands Moscow’s “reasonable” security concerns.
Still, the world’s second-largest economy has also called for the territorial integrity of nations to be respected, hinting at some degree of discomfort in Beijing with the offensive. In his call with Putin, Xi reiterated that China’s position has always been to respect every country’s sovereignty, CCTV reported.
(Updates with Xi-Putin call starting in second paragraph.)
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