Ukraine Latest: Reconstruction Plan; Fight against food disinformation


(Bloomberg) – Ukraine plans to unveil a blueprint for the country’s reconstruction that could mobilize hundreds of billions of euros as the nation continues to grapple with the Russian invasion. European officials fear Russian disinformation about the cause of Africa’s food shortages is gaining traction.

Russian forces make a full-scale attempt to capture Lysychansk, Kiev’s last major stronghold in eastern Luhansk province.

Global oil prices could reach a ‘stratospheric’ $380 a barrel if US and European sanctions prompt Russia to cut crude oil production in retaliation, analysts at JPMorgan Chase have warned. Russia has reduced gas exports to Italy by 15% from normal levels, an Italian official said.

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

Important Developments

  • Ukraine to unveil massive reconstruction plan even as war stalls
  • Putin’s media blitz over the food crisis in Africa triggers alarms in Europe
  • Germany risks a cascade of supply outages, says economic chief
  • JPMorgan Sees $380 in “Stratospheric” Oil at Worst-Case Russian Cut
  • The big rescue operation for the European energy market has only just begun

On the ground

Russia remains focused on Lysychansk, gathering troops and equipment to capture the last major city in the Luhansk region still under Kiev’s control. Pro-Russian separatist officials said on Saturday that Ukrainian forces had been surrounded in the city; Ukrainian officials said the city was not encircled and fighting continued. In the Kharkiv region, Russian troops are attempting to regain positions near Ukraine’s second-largest city, which military staff in Kyiv said were lost during a counter-offensive earlier in the war.

(All times CET)

Zelenskyy Says Recovery Plan Should ‘Create New Foundation for Our Lives’ (9:12 a.m.)

President Volodymyr Zelenskyy said the recovery plan that Ukraine plans to present in Lugano starting Monday will be “reconstruction in the broadest sense of the word.”

“It is necessary not only to restore everything that the occupiers destroyed, but to create a new livelihood for Ukraine – safe, modern, comfortable, barrier-free,” Zelenskyy said in his nightly address to the nation on Saturday.

“The nationwide implementation of such a large-scale project that offers new safety standards and a new quality of life is only possible if international opportunities are attracted,” he said.

EU officials discuss new sanctioning body : FT (8:30am)

Senior officials in Brussels are in talks to create an EU-wide sanctions body with enforcement powers similar to the US Treasury Department’s Office of Foreign Assets Control, the Financial Times reported.

Another option would be to give the proposed EU money laundering agency more powers, the newspaper said. The aim would be to address uneven enforcement of sanctions across the bloc’s 27 member states.

Europe alarmed by Putin media blitz over Africa food crisis (8am)

European governments are alarmed by a Russian disinformation campaign trying to stave off criticism that President Vladimir Putin’s war on Ukraine risks starving millions of people in Africa.

Moscow’s diplomats have persistently pushed the narrative that Western sanctions, not Russian blockades, have led to food shortages in Africa – and EU and UK officials say the message is gaining traction.

Ukraine Unveils Massive Reconstruction Plan (7am)

Ukraine plans to unveil a plan to rebuild the country this week that could mobilize hundreds of billions of euros even as the nation grapples with a Russian invasion that has razed cities, shredded economies and displaced millions.

The plan, around 2,000 pages, will be unveiled at a conference in Lugano, Switzerland, starting Monday, people familiar with the outline said. It will outline a broad list of infrastructure and security projects, climate and digital economy investments, and energy resource diversification.

European Union officials have said the 27-strong bloc will contribute the bulk of the total financial aid, a volume that could exceed 500 billion euros ($523 billion). The Ukrainian government has been working on the draft with donors, including the EU, who will provide feedback in the coming months, the people said on condition of anonymity as the discussions were not public.

Japan to Consult Local Firms on Putin’s Move to Sakhalin (3:15 am)

Japanese Prime Minister Fumio Kishida said he would consult with local companies to better assess the impact of a decree by President Vladimir Putin transferring rights to the Sakhalin-2 gas project to a new Russian company.

Kishida reiterated that the move will not stop LNG shipments to Japan immediately.

Germany could see deeper cuts in Russian gas, says economy chief (10 p.m.)

Germany should prepare for deeper cuts in Russian gas supplies because Putin is pursuing a deliberate strategy of raising prices to undermine European unity, Economics Minister Robert Habeck said.

German leaders are increasingly warning of impending turbulence and natural gas shortages in Europe’s largest economy, which relies on Russia for about a third of its energy. German utilities are at risk of cascading outages that may require the activation of a legal clause that would allow them to pass on price increases outside of contractual obligations, Habeck said.

Kuleba, Borrell to address G-20 Ministerial (5:30 p.m.)

Ukraine’s foreign minister said he had spoken with EU foreign minister Josep Borrell to coordinate positions ahead of the G-20 foreign ministers’ meeting that begins in Bali on Thursday. The couple are “working” on a seventh package of EU sanctions against Russia, said Dmytro Kuleba.

Borrell said officials at the G-20 meeting would “address the impact of the global food crisis” caused by Russia’s invasion of Ukraine.

Russia tries hard, but Lysychansk holds (1:30 p.m.)

Russian-backed Separatist officials said Lysychansk in eastern Ukraine’s Luhansk province was completely encircled, according to Interfax. Ukraine denies that the city was surrounded.

“Fighting is raging around Lysychansk,” said Ruslan Muzytchuk, a spokesman for Ukraine’s National Guard. “The city has not been encircled and is under the control of the Ukrainian army.”

Lugansk Governor Serhiy Haidai said Moscow’s troops are making every effort to take control of the strategic city. “On the last day, the occupiers opened fire with all available types of weapons,” he said on Telegram.

Ukraine urges Turkey to take action against grain ship (2:15 p.m.)

The Kyiv ambassador asked Turkey to detain a Russian-flagged ship believed to be transporting Ukrainian grain from the occupied city of Berdyansk. “I am convinced that the decisions taken will precede attempts to violate the sovereignty of Ukraine!” Vasyl Bodnar wrote on Facebook.

The Kazakh-owned Zhibek Zholy is believed to be transporting 7,000 tons of grain, which was loaded after the Russian-held port reopened following a demining operation.

Yevgeny Balitsky, head of the occupation authorities in the Zaporizhia region, was quoted by TASS this week as saying the cargo was headed for “friendly countries” under the protection of Russia’s Black Sea Fleet.

Russia cuts gas flows to Italy by 15%: minister (11:05)

Russia has reduced gas exports to Italy by 15% from normal levels, Italy’s Environment Minister Roberto Cingolani told SkyTg24. Cingolani said he expected prices to continue to rise after a planned shutdown for maintenance on the Nord Stream pipeline, but added that filling gas storage facilities to 90% by winter remains a “doable” target.

The Italian government on Thursday approved a €4 billion loan to energy market operator GSE to help companies buy gas on the open market. The energy crisis is being exacerbated by a drought that will reduce Italy’s hydropower output by 60% by the end of the year, the head of the Association of Hydropower Producers said in an interview with Il Sole 24 Ore.

Moscow Likely to Return to Soviet-Era Missiles, Says Britain (7:59am)

Russia continues to use air-launched anti-ship missiles in a secondary role for land attacks, likely because of dwindling stocks of more accurate modern weapons, the UK MoD said on Twitter.

Moscow’s troops are likely to have reverted to Soviet-era “kitchen” missiles, which are “less accurate and unsuitable for precision strikes and have almost certainly caused repeated civilian casualties in recent weeks.”

The comment came a day after Russia announced it was drafting a new law to increase munitions production.

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