(Bloomberg) — Russia faces yet another bond payment test this week, with just days remaining before it potentially slides into its first foreign default in a century. Interest transfers totaling almost $400 million are due Thursday and Friday.
European Union leaders plan to grant candidate status to Ukraine after intense lobbying by President Volodymyr Zelenskiy. The formal move will come at the bloc’s summit in Brussels starting Thursday.
German Economy Minister Robert Habeck will make a statement Thursday on “energy and supply security” amid expectations the government is poised to trigger the second stage of the country’s gas-emergency plan.
(See RSAN on the Bloomberg Terminal for the Russian Sanctions Dashboard.)
Key Developments
- Spain’s Big Defense Push Hinges on Creating a National Champion
- Russia Faces Fresh Bond Deadline With Possible Default Days Away
- Megayachts Running Low on Safe Harbors as Russia Sanctions Bite
- Biden to Urge Gasoline Tax Pause as Prices Drag on Democrats (1)
- Europe Industries Cut Gas Use as Continent Saves Fuel for Winter
- Cold Winter Could Push Europe Toward Gas Supply Shortages
On the Ground
Fighting continued in the eastern city of Sievierodonetsk, and the vicinity of the Azot chemical plant, where more than 550 civilians are sheltering, was hit by shelling, according to Serhiy Haiday, the governor of the Luhansk region. Zelenskiy said the situation in Luhansk was “the toughest” in the country. In neighboring Donetsk, fighting raged along the entire front line. Residential buildings, a school, railway tracks and other facilities were damaged, with one person killed and 15 injured, according to Ukraine’s military, which also reported heavy fighting in the southern region of Kherson.
(All times CET)
Germany to Make Statement on Energy (7:08 a.m.)
Habeck warned Wednesday that Europe’s biggest economy should brace for a further cut in Russian gas flows after Moscow last week slashed deliveries on its main pipeline to Europe. An official familiar with the government’s plans, who asked not to be identified, said the second phase of the three-stage crisis plan could come as early as this week.
Enacting stage two — the “alarm” phase — could mean a change in the law to allow energy companies to pass on cost increases to homes and businesses. It may also involve firing up more coal-fired power plants to minimize gas consumption.
Read more: Germany to Make Statement on Energy Amid Russian Gas Standoff
Russia Faces Fresh Bond Deadline (6:00 a.m.)
Another pressing deadline looms Sunday night on previously missed payments from late May. Those funds — about $100 million of bond coupons — are stuck due to international sanctions and the grace period to find a solution expires at the end of June 26. At that point, Russia will effectively be in default, unless it somehow gets payments through to sufficient holders of the debt.
Billions of dollars of energy revenue pour into Kremlin coffers each week but the country has failed to meet the deadlines because mounting sanctions are cutting off avenues to transfer the cash.
Read more: Russia Faces Fresh Bond Deadline With Possible Default Days Away
Megayachts Running Low on Safe Harbors (1:00 a.m.)
Russian tycoons are running out of places to park their floating palaces, four months after their country’s invasion of Ukraine. The US and Europe are going after their superyachts, villas and other assets because of their ties to Russian President Vladimir Putin. Already, more than a dozen boats worth more than $2.25 billion have been seized by the US, EU nations and willing allies — such as Fiji.
Fearful of having their yachts seized, owners have sent them to a small number of locales still considered friendly — allowing the vessels to dock or hang around unbothered — including Dubai in the United Arab Emirates, Turkey and the Maldives, according to Spire Global Inc., a data and analytics firm that uses satellite technology to track maritime activity.
Read more: Megayachts Running Low on Safe Harbors as Russia Sanctions Bite
Zelenskiy to Speak at G-7, NATO (11:43 p.m.)
A senior US administration official said the Ukrainian president would deliver remarks to leaders at the summits, which would help firm the resolve of the groups to stand by Kyiv as it battles the Kremlin’s forces.
Germany Should Brace for Further Gas Cuts, Official Says (6:06 P.M.)
German Economy Minister Robert Habeck said his country should brace for Putin to further squeeze gas imports, a decision that may trigger the next stage of the country’s gas-emergency plan.
“Given the current situation, we must assume that Putin is ready to reduce the gas flow further,” Habeck said on the sidelines of an air show outside Berlin.
Von der Leyen Praises Ukraine Before Council Decision (5:15 p.m.)
Ukraine implemented about 70% of EU rules, norms and standards, European Commission Ursula von der Leyen said in a speech in the European Parliament. She praised the “immense progress that Ukraine’s democracy has achieved,” but emphasized that more work is needed to fight corruption and loosen the grip of oligarchs on the Ukrainian economy.
Expressing her support for Kyiv’s EU candidacy status, von der Leyen said that “it is now up to the European Council to decide, and live up to the historic responsibility we are confronted with.”
EU Leaders Plan to Grant Ukraine Candidate Status (4:45 p.m.)
The bloc’s leaders have drafted a joint statement, seen by Bloomberg, that says the EU is granting candidacy status to Ukraine and Moldova, which will then be expected to meet a set of conditions related to the rule of law, justice and anti-corruption. The leaders will also tell Georgia it can achieve the same status after meeting certain conditions.
“The future of these countries and their citizens lies within the European Union,” the leaders plan to say. The draft statement needs to be formally approved by leaders and could still change. The membership process is expected to take years.
Germany Plans Donors Conference to Set Up Marshall Plan for Ukraine (4:20 p.m.)
Chancellor Olaf Scholz said Germany and the EU will jointly host an international conference with donors and experts later this year to discuss a multibillion-euro reconstruction plan for Ukraine.
“We have to agree on this — also with the advice of experts and scientists — how such a Marshall Plan for Ukraine can look like, how we coordinate it internationally, how we will decide together on which investments help Ukraine to move forward the most quickly on its European path,” Scholz told lawmakers in Berlin.
Ukraine in Talks for Turkey Meeting on Grain Exports (4:05 p.m.)
Ukraine is taking part in organizing a meeting in Turkey to release its grain exports through ports that have been blocked by Russia’s forces since the invasion, according to Serhiy Nykyforov, a spokesman for Zelenskiy. He declined to provide any details.
Turkey’s Defense Ministry on Wednesday said talks with Russian military officials held in Moscow on Tuesday were constructive toward starting export of grains stuck in Ukrainian ports and that an understanding for the solution of the problem through talks with Ukraine and the UN was reached.
“A four-way meeting is expected in Turkey in the coming weeks following talks with Ukraine and the UN,” Turkey’s Defense Ministry said in a statement without elaborating.
Ukraine Posts Video of Drone Attack on Russian Refinery (3:30 p.m.)
Video footage of a drone crashing into the Novoshakhtinsk oil refinery in Russia’s Rostov region appeared on the YouTube channel of Ukraine’s land forces, which labeled it “holy fire,” as well as on social media. While the authorities in Kyiv haven’t commented, Russia’s state-run Tass news service cited local officials in Rostov as saying the drone was Ukrainian.
The refinery blast is the latest in a series of explosions and fires at sites in Russia that potentially are linked to military supply since Putin ordered the invasion. That has prompted speculation about a sabotage campaign behind enemy lines by people linked to Ukraine, which hasn’t claimed or denied responsibility for the incidents.
Read more: Russia Blames Oil Refinery Blaze on Ukrainian Drone Strike
Russian Strike Damages Grain Terminal in Ukraine (3:15 p.m.)
Rocket attacks on the Ukrainian port city of Mykolayiv have damaged a terminal owned by agricultural trader Viterra. The terminal can export as much as 1.5 million tons of vegetable oil a year.
Ukraine Refugees in Switzerland Get Chance to Swap Banknotes (1:35 p.m.)
Refugees from Ukraine in Switzerland will soon be able to swap some of their banknotes into francs, echoing a similar policy in the EU.
Qualifying individuals will be allowed to make a one-off exchange of up to 10,000 hryvnia ($338) at selected UBS and Credit Suisse branches as of June 27, the Swiss government said.
German Howitzers Delivered to Ukraine (1:30 p.m.)
Germany has delivered the seven PzH 2000 self-propelled howitzers it promised to Ukraine and more equipment, including 30 Gepard anti-aircraft guns, the IRIS-T air-defense system and three MARS II rocket launchers, will follow, according to Defense Minister Christine Lambrecht.
Lambrecht told lawmakers in the lower house of parliament in Berlin that Germany was near the limit on what it can supply to Ukraine from stocks held by its own armed forces. It’s therefore partnering with countries including Slovakia, Poland, the Czech Republic and Greece on swap programs under which it will replace Soviet-model equipment they send to Ukraine with modern kit, she added.
Read more: Germany’s Ukraine Support Ranges From Howitzers to Sleeping Bags
Russia Preparing Response to Kaliningrad Measures (12:30 p.m.)
Russia is preparing retaliatory measures in response to Lithuania’s application of an EU ban on the transit of sanctioned goods to the Baltic enclave of Kaliningrad, Kremlin spokesman Dmitry Peskov told reporters.
Different measures are under consideration over the EU’s “unfriendly” behavior, Peskov said. The restrictions that came into force last week affect as much as half of all transit goods transported to Kaliningrad via rail through Lithuania, according to local authorities in the Russian province.
First Foreign Ship Allowed to Leave Mariupol (12:15 p.m.)
A Turkish cargo ship became the first foreign vessel allowed to leave Ukraine’s Mariupol since the port fell under Russian control.
Dry bulk carrier Azov Concord departed Wednesday a few hours after a Turkish military delegation visit to Moscow, Turkey’s Defense Ministry said in a statement.
Switzerland Resumes Imports of Russian Gold (12:00 p.m.)
Switzerland imported gold from Russia for the first time since the invasion, showing the industry’s stance toward the nation’s precious metals may be softening.
More than 3 tons of gold was shipped to Switzerland from Russia in May, according to data from the Swiss Federal Customs Administration. Most refiners swore off accepting new gold from Russia after the London Bullion Market Association removed the country’s own fabricators from its accredited list.
Draghi Faces Coalition Turmoil (11:30 a.m.)
Mario Draghi is facing the biggest coalition turmoil since he became Italy’s prime minister in 2021, just as he sets out for three international summits that will focus on the war in Ukraine.
Foreign Minister Luigi Di Maio acrimoniously quit the Five Star Movement he once led following a clash with current party leader Giuseppe Conte over Italy’s military aid for the government in Kyiv. The move does not threaten Draghi’s support in parliament, but it does change the balance of power in his coalition.
Accor May Reconsider Decision to Stay in Russia (10:15 a.m.)
Accor SA is staying in Russia, where it has about 60 hotels and 4,000 employees, for now, but it may reconsider that decision, according to Chief Executive Officer Sebastien Bazin.
“There is a vast difference between the Kremlin and the Russian population,” he said at the Qatar Economic Forum.
Jokowi to Visit Ukraine, Russia (8:30 a.m.)
Indonesian President Joko Widodo will head to Kyiv and Moscow to push for peace and discuss the global food crisis caused by the war.
Jokowi, as the president is popularly known, will be the first Asian leader to visit the two countries since the war began, according to Foreign Minister Retno Marsudi. The visits will take place after he attends the June 26-28 Group of Seven meeting in Germany. Indonesia, as this year’s Group of 20 president, could host a potential meeting between Putin and Zelenskiy after Jokowi invited both of them to attend a November summit.
Zelenskiy Lobbies European Leaders (8:30 a.m.)
Zelenskiy said he is conducting a “marathon” round of telephone calls with European leaders to try to garner as much support as possible for the country’s EU candidacy. He also urged the EU to compile a seventh package of sanctions against Russia.
“Another Russian threat to Lithuania, another wave of pressure in the energy sector, another batch of lies from Russian officials about the food crisis — these are the arguments for the seventh package of sanctions,” Zelenskiy said late Tuesday in his daily address to the nation.
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