(Bloomberg) — U.S. intelligence agencies have determined that Russian President Vladimir Putin feels misled by military officials over the preparation for and conduct of the war in Ukraine, the White House says.
Russia has said it’s regrouping its forces in Ukraine in a push to complete the takeover of the eastern Donbas region, a sign that Moscow isn’t slowing all military activity despite a pledge to cut operations near Kyiv and Chernihiv.
“The goal of the redeployment of the Russian armed forces is to activate operations in the priority directions, first of all, the completion of the full liberation of Donbas,” Defense Ministry spokesman Igor Konashenkov said in a statement. He said that forces near Kyiv and Chernihiv had fulfilled their main goals of tying down Ukrainian forces.
Russia Tuesday announced it was cutting operations in those areas in what it called an effort to build confidence amid talks on a possible cease-fire. Ukraine and its Western allies said the move appeared to be merely an attempt to buy time since Russia had failed to gain ground against Ukraine’s military.
President Joe Biden promised $500 million in direct U.S. aid to Ukraine in a call Wednesday with President Volodymyr Zelenskiy.
(See RSAN on the Bloomberg Terminal for the Russian Sanctions Dashboard.)
Key Developments
- Russian Pullback From Kyiv Is Likely to Be Limited and Tactical
- Why Half of Russia’s 20 Richest Billionaires Are Not Sanctioned
- U.S. Eyes $500 Million More for Ukraine Despite Peace Talks
- Putin’s Old Ally in EU Faces Tough Vote as War Rages Next Door
- Some Hedge Funds See Putin’s War as the Opportunity of Lifetime
All times CET:
White House Weighs More Russian Sanctions (9:48 p.m.)
The Biden administration is weighing new sanctions on Russia, the White House said hours after a phone call between Biden and Zelenskiy.
“We are continuing to look at options to expand and deepen our sanctions and I anticipate that we would probably have more for you on that in the coming days,” White House Communications Director Kate Bedingfield told reporters.
U.S. Says Putin Feels Misled by Russian Military (9:01 p.m.)
White House officials said U.S. intelligence suggests Putin has felt misled by his military’s leadership about the war in Ukraine, including in the lead-up to the conflict last month. Tensions over the military’s setbacks have strained ties between the Russian leader and his military, White House Communications Director Kate Bedingfield told reporters.
“We believe that Putin is being misinformed by his advisers about how badly the Russian military is performing, and how the Russian economy is being crippled by sanctions because his senior advisers are too afraid to tell him the truth,” Bedingfield said, without providing details on the evidence behind the assessment. “It is increasingly clear that Putin’s war has been a strategic blunder that has left Russia weaker over the long-term, and increasingly isolated on the world stage.”
The White House characterized the release of information as in line with its pre-war efforts to declassify intelligence saying Putin was preparing for war, not just military exercises, as his top aides claimed at the time.
New U.S. Aid to Ukraine to Pay for Government Operations (7:38 p.m.)
The $500 million Biden pledged Zelenskiy in Wednesday’s phone call can be used to bolster Ukraine’s economy and pay its budgetary expenses, such as paying government salaries and maintaining government services, a White House official said after the two leaders spoke by phone earlier Wednesday.
The White House has not yet said from which U.S. account it is drawing the $500 million.
Germany Says Putin Agrees to Keep Taking Euros for Gas (7:20 p.m.)
Germany said Russian President Vladimir Putin has indicated that European nations can continue paying for Russian gas in euros, despite a previous demand for ruble payments.
After German Chancellor Olaf Scholz spoke with Putin on Wednesday, a German government spokesman said that Putin told Scholz that “the payments would continue to be made exclusively in euros” to Russia’s Gazprom bank and would then be converted into rubles. Scholz asked for “written information in order to understand the procedure more precisely.” The Kremlin said only that Scholz and Putin agreed that their experts would discuss the issue.
Italian Prime Minister Mario Draghi also spoke with Putin Wednesday on the issue, as French President Emmanuel Macron did a day earlier. The countries are among the European Union’s largest consumers of Russian gas, and the calls may signal a sense of alarm in Europe about a potential cut-off. Energy ministers from the Group of Seven nations this week rejected the demand to pay in rubles, which officials say violates contract terms.
South Ossetia Say It’s Seeking to Join Russia (6:45 p.m.)
The breakaway Georgian region of South Ossetia will take legal steps to join the Russian Federation, its President Anatoly Bibilov said in an address posted on the Russian ruling party’s website.
Only a handful of countries, including Russia, Syria and Nauru, have recognized South Ossetia since it declared independence after Russia’s 2008 war with Georgia. Russia last annexed a territory in 2014, when it seized Crimea from Ukraine.
Biden Pledged More Aid in Call With Zelenskiy (6:32 p.m.)
President Joe Biden spoke to Ukraine’s President Volodymyr Zelenskiy for about an hour Wednesday, and pledged “$500 million in direct budgetary aid” from the U.S., according to a White House statement.
They discussed how the United States is “working around the clock to fulfill the main security assistance requests by Ukraine” and “continued efforts by the United States with allies and partners to identify additional capabilities to help the Ukrainian military defend its country, according to the statement.
Zelenskiy said on twitter that they shared an “assessment of the situation and at the negotiating table” as well as “specific defensive support, a new package of enhanced sanctions, macro-financial and humanitarian aid.”
Biden on Monday cast doubt on the prospects for a Russian pullback in Ukraine, despite the Kremlin signaling it planned to scale down military operations around Kyiv.
Blinken Says Putin Is Being Given Bad Intelligence on the War (6:10 p.m.)
U.S. Secretary of State Antony Blinken said Russian President Vladimir Putin is being given bad intelligence because those around him are afraid to deliver bad news.
“One of the Achilles’ heels of autocracy is that you don’t have people in those systems who speak truth to power or who have the ability to speak truth to power,” Blinken told reporters during a visit to Algiers. “And I think that is something that we’re seeing.”
U.S. intelligence officials have come to the same conclusion, according to an unidentified official cited by the Associated Press. The official said a recently declassified intelligence finding concluded that Putin has felt misled by the Russian military and that there’s now persistent tension between him and senior Russian defense officials. It found that Putin wasn’t aware that conscripts were being sent to Ukraine or the extent of damage to the Russian economy from sanctions imposed by the U.S. and allies, according to the AP.
Johnson Questions Macron’s Talks with Putin (4:44 p.m.)
British Prime Minister Boris Johnson questioned the value of French President Emmanuel Macron’s efforts to persuade Vladimir Putin to engage in a ceasefire.
“The question of negotiations with Vladimir Putin — the value of those negotiations — is an open one,” Johnson told a panel of members of Parliament in London. “My view is that plainly Putin is not to be trusted.”
Johnson also said the U.K. is examining supplying armored land rover vehicles to Ukraine as the it is “looking at going up a gear” with its support. Asked about when sanctions against Russia could be lifted, he replied, “I certainly don’t think you could expect the G-7 to lift sanctions simply because we had a ceasefire in Ukraine” but refused to be drawn on whether Russia would have to withdraw from Crimea, which it annexed in 2014.
EU May Tighten Sanctions Next Week (4:32 p.m.)
The European Union may agree as early as next week on a new set of measures to tighten existing sanctions against Russia and strengthen their enforcement.
The measures could include sanctioning banks that the EU has cut off from the international payments system SWIFT, including state-controlled VTB, but hadn’t yet applied other restrictions to, according to people familiar with the preparations who asked not to be identified because the talks are private.
The bloc is also looking to add more people to its listings as it continues to go after Russian tycoons and their associates. The Wall Street Journal reported earlier on the timing of the possible sanctions.
Russia’s Internet Giant Risks Running Out of Key Tech (4:09 p.m.)
Russia’s omnipresent tech company, which created products ranging from the country’s dominant search engine to its biggest ride-hail service, is facing a shortage of hardware due to U.S. sanctions.
Yandex NV may run short of semiconductors needed for its servers within a year to 18 months because of import restrictions, two people with direct knowledge of the issue said. Sanctions on dual-use technology, which have both military and commercial uses, have hit its self-driving vehicle unit particularly hard, they said.
Yandex has plunged into crisis since Putin began the war, caught between the Kremlin’s increasingly harsh internet censorship and a backlash in its key foreign markets.
Russian Negotiator Says Ukraine Agreeing to Key Demands (3:57 p.m. CET)
Vladimir Medinsky, Russia’s chief negotiator, struck an upbeat tone on the results of Tuesday’s talks, saying that the written offer Ukraine presented “for the first time showed readiness to fulfill a whole range of the most important conditions” set by Moscow, state-run Tass news service reported.
Medinsky specifically cited Kyiv’s willingness to agree to give up its ambition to join the North Atlantic Treaty Organization, as well as declare its neutrality and commit not to obtain nuclear weapons. But he reiterated that Moscow refuses to discuss the status of Crimea, which Moscow annexed from Ukraine in 2014. Kyiv had sought talks on the issue as part of the peace deal.
Earlier Wednesday, Kremlin spokesman Dmitry Peskov said this weeks talks had yielded no breakthroughs and that much work remains to be done before a deal could be possible.
Germany Is Talking About Giving Ukraine a Security Guarantee (3:54 p.m.)
Government spokesman Steffen Hebestreit said that Chancellor Olaf Scholz signaled in several phone calls with Ukrainian President Volodymyr Zelenskiy that Germany has a “general willingness” to act, together with other countries, as a security guarantor. He added, though, that this is still at a “very early” stage because there is not even a ceasefire yet.
AerCap Claims Show Scale of Fight Over Stranded Planes (3:33 p.m.)
AerCap Holdings NV, the world’s largest aircraft-leasing firm, filed insurance claims totaling about $3.5 billion tied to jets and engines stuck inside Russia that it hasn’t been able to recover since the invasion of Ukraine.
The size of the claim — greater than Dublin-based AerCap’s exposure to potential asset writedowns — signals a looming battle with insurers including Lloyd’s of London, which dominates the market, over who shoulders financial losses caused by the war.
Zelenskiy Says Russia Is Sending Reinforcements to Ukraine (3:24 p.m.)
Russia is deploying new forces for fighting in Ukraine, President Volodymyr Zelenskiy said in a speech to Norway’s parliament, without specifying the time frame.
“We have to do more to stop this war and first and utmost is weapons,” Zelenskiy said via video link from Ukraine. He added that Russian military has mined the Black Sea to blockade Ukrainian ports, endangering marine traffic.
Ukraine Calls on Marine Insurers to Withdraw Russia Coverage (2:40 p.m.)
Oleg Ustenko, chief economic advisor to Zelenskiy, urged a group of shipping insurance specialists in a letter to withdraw coverage in a bid to reduce cash flowing into Russia from international buyers of its energy.
The letter was sent to the International Group of P&I Clubs, a collection of insurance associations which say they provide marine liability coverage for around 90% of sea-bound cargo. The club’s members have insured 363 vessels carrying oil, gas and coal from Russian ports since the invasion of Ukraine began, the letter said.
Kremlin Downplays Talks, Delays Ruble Gas Payments (12:21 p.m.)
Talks with Ukraine in Istanbul yielded “no breakthrough,” Kremlin spokesman Dmitry Peskov tells journalists a day after peace talks in Istanbul, adding that much work remains to be done. He said Ukrainian negotiators’ willingness to provide specific proposals on paper was “positive.”
Peskov also told reporters that the process of switching to rubles payments for Russian gas export deliveries will take time and won’t begin immediately this week despite a March 31 deadline in a presidential order on the issue. “This process is more drawn out in time technologically,” he said.
Russia’s exports of refined fuels are sliding fast as buyers stay away following the invasion of Ukraine, denting supplies in a market that’s already fretting over stockpiles.
Europe Tallies Up Economic Fallout from War (12:14 p.m.)
The economic damage from the war in Ukraine is worsening across Europe as already-record inflation soars further and Germany faces a danger of recession because of its dependence on Russian energy.
In Spain, inflation surged by almost 10% in March — the most in nearly four decades — while advisers to Chancellor Olaf Scholz slashed Germany’s growth outlook.
Ukraine Refugees Top 4 Million (10:48 a.m.)
More than 4 million refugees from Ukraine have fled after five weeks of fighting, according to the United Nation’s refugee agency. Filippo Grandi, the U.N. high commissioner for refugees, said he’s in Ukraine now to meet with officials in the western city of Lviv.
Overall, some 10 million people in Ukraine have been forced from their homes.
Poland to Shun Russian Energy Supplies This Year (10:14 a.m.)
Poland plans to “do everything” to stop importing Russian oil and gas by the end of 2022, Prime Minister Mateusz Morawiecki said at a news conference. The European Union’s largest economy outside the euro will also halt coal purchases from Russia by April or May, he said.
The premier has called on the EU to tax Russian hydrocarbon imports in order to limit Russia’s ability to build its army and attack neighboring countries.
U.K. Says Sanctions to Stay Until Troops Leave Ukraine (10:00 a.m.)
U.K. Deputy Prime Minister Dominic Raab said sanctions on Russia will remain until the nation withdraws its troops from Ukraine.
“The sanctions are there to tighten the grip on Putin’s war machine and until the invasion is withdrawn — and I think that would need to be entirely or on a verifiable basis — I don’t think the sanctions can or should be lifted,” Raab told BBC radio in London.
Attacks Continue Near Kyiv, Ukraine Says (9:24 a.m.)
Fighting continued north and west of Kyiv, despite Russia’s declaration it would pull its forces back. Russian forces shelled targets in several cities, including Hostomel, Bucha and Makariv and there were skirmishes in villages along the main westbound highway out of the capital, according to Ukraine’s defense ministry.
Russian forces also shelled the northern city of Chernihiv overnight, damaging civilian structures including libraries and shopping centers, according to Vyacheslav Chaus, the region’s governor, who said he was skeptical of Russia’s promise. “Do we believe this? Surely not,” he said in a video statement.
Ruble Recovers as Moscow Stock Rebound (9:16 a.m.)
Russia’s ruble strengthened for a third straight day, edging closer to wiping out the steep losses it incurred in the weeks after Putin sent troops into Ukraine. Stocks in Moscow climbed as much as 3.5% as oil and gas producers rallied. Crude oil rebounded after two days of gains, while stocks in Europe slipped along with U.S. equity futures.
Germany Triggers Emergency Plan for Energy Supplies (8:55 a.m.)
Germany activated an emergency plan to secure supplies of natural gas on concern the war in Ukraine could disrupt shipments from Russia. A task force will be established that will meet on a daily basis to monitor the situation and Economy Minister Robert Habeck urged companies and consumers to help by reducing energy consumption wherever possible.
Ukraine Pushes for More Humanitarian Routes (8:51 a.m.)
Ukraine proposed that Russia should agree to establish humanitarian corridors to 97 areas that have suffered war damage, Deputy Prime Minister Iryna Vereshchuk said in a video statement. As of Wednesday, three such corridors have been agreed, leading from Mariupol, Melitopol and Energodar.
India Eyes New Ruble Payments for Russian Oil (8:45 a.m.)
India is considering a proposal from Russia to use a ruble-based system developed by the Russian central bank for bilateral payments as the Asian nation seeks to buy oil and weapons from the sanctions-hit country. India is keen to continue bilateral trade due to its dependency on Russian weapons and the prospect of buying cheaper oil as global prices surge. Lavrov arrives in India for a two-day visit Thursday.
Russia Proposes SWIFT Alternative to India for Ruble Payments
Apartment Buildings Hit in Russian Attack (7:59 a.m.)
Russia shelled residential buildings in Lysychansk in the Ukraine-controlled part of Luhansk region, and several apartment buildings suffered significant damage, according to the region’s governor. Moscow also targeted the towns of Rubizhne, Kreminna and Zolote in the region overnight.
The shelling in the Luhansk region also caused another 30,000 households to lose electricity and 34,000 households to stop receiving gas supplies.
Some Russian Units Return to Belarus, U.K. Says (7:38 a.m.)
Some Russian units that have experienced heavy losses are returning to Belarus to regroup, the U.K. Defense Ministry said in an update on Twitter. “Such activity is placing further pressure on Russia’s already strained logistics and demonstrates the difficulties Russia is having reorganising its units in forward areas within Ukraine,” the ministry said, warning that Russia is expected to continue launching missile and artillery attacks.
Russian Oil Takes Hit on Exports, Refining (7:21 a.m.)
Three key indicators of Russia’s oil industry declined in the second half of March as appetite for the nation’s barrels dropped at home and abroad, according to data seen by Bloomberg. It indicates how international pressure over the war is affecting Russia’s energy industry, which accounts for some 10% of global crude production.
Only a handful of nations have imposed explicit bans on imports from Russia, but many traditional customers are looking elsewhere amid condemnation of its military aggression.
Russian Foreign Minister in China (4:25 a.m.)
Lavrov is set to participate in a meeting of foreign ministers of countries bordering Afghanistan, Interfax reported last week.
He is also set to visit India on Thursday to discuss the sale of Russian crude to the country and the possibility of a rupee-ruble denominated payment method that could work outside the SWIFT messaging system.
Russian Foreign Minister Lands in China on First Visit Since War
U.S. Warns Citizens of Detentions (4:12 a.m.)
The U.S. State Department warned its citizens that Russian government security forces in Ukraine and Russia may “single out and detain” them — reissuing travel advisories for both countries that called on Americans to depart immediately.
Zelenskiy Sees ‘Positive’ Signals in Peace Talks (10:35 p.m.)
There are some “positive” signals from the latest round of peace talks, though those signals “won’t drown out the explosions of Russian shells,” Ukrainian President Volodymyr Zelenskiy said in his daily video address to the nation.
The Ukrainian president again ruled out any compromise over Ukraine’s sovereignty and territorial integrity in the negotiations, and said the issue of easing sanctions on Russia can’t be raised before the war is over.
Threat to Kyiv Hasn’t Faded, Pentagon Says (9:25 p.m.)
The threat to Kyiv isn’t over despite Russian talk of pulling back, because Putin’s goals continue to stretch well beyond the eastern Donbas region, Pentagon spokesman John Kirby told reporters.
“Nobody should be fooling ourselves by the Kremlin’s now-recent claim that it will suddenly just reduce military attacks near Kyiv or any reports that it is going to withdraw all its forces,” Kirby said. It’s “a repositioning, not a real withdrawal” from positions around the Ukrainian capital.
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