Shippers Halts Cargo; U.S. Expels Diplomats: Ukraine Update


(Bloomberg) — Russia banned its residents from transferring hard currency abroad, as President Vladimir Putin sought countermeasures against countries imposing sanctions over the invasion of Ukraine.

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The drumbeat of penalties against Russia continued, as the European Union approved sanctions on some of Russia’s wealthiest tycoons, and Britain told ports not to service Russian-flagged vessels.

The U.S. said it was expelling 12 Russian diplomats at the United Nations. And the mayor of Kharkiv, Ukraine’s second-largest city, said residential areas were being shelled and “this a war to destroy the Ukrainian people.”

A Ukrainian delegation led by the defense minister agreed to further talks after meeting with Russian officials on the border with Belarus. In Kyiv, Ukrainian President Volodymyr Zelenskiy repeated a request for his country to be fast-tracked into the EU. Russia’s currency and bonds plunged.

Key Developments

Ukraine Fighting Intensifies as Prospects for Russia Talks Dim

Ukraine Wants EU Membership But Accession Often Takes Years

Bank of Russia Reassures on Debt After Putin’s Sanctions Gambit

Putin’s Nuclear Threat Has West Wondering Again If He’s Bluffing

China’s Muddled Ukraine Response Feeds Rare Domestic Debate

All times CET:

Manchin Urges Biden to Bolster Domestic Energy (2:30 a.m.)

On the eve of President Joe Biden’s State of the Union address, Senator Joe Manchin, a West Virginia Democrat, said he wanted the administration to encourage more domestic energy production and that he was planning weeks of hearings on energy independence, both for the U.S. and to support NATO allies.

“We produce energy cleaner than anybody in the world,” Manchin said at the Capitol on Monday evening. “We’re buying 650,000 barrels a day from Russia. It’s ridiculous. Totally ridiculous.”

Senator Lindsey Graham, a South Carolina Republican, said that Ukraine’s ambassador to the U.S., Oksana Markarova, had asked that Russian oil and gas be sanctioned. “We’re not using the energy sector as a weapon,” Graham said. “We’re not hitting Putin where it hurts most.”

Harley-Davidson, GM Halt Shipments to Russia (1:40 a.m.)

Harley-Davidson, Inc. and General Motors Co. say they’ll halt shipments to Russia, a sign economic sanctions against the country are having an impact.

Harley suspended its business in Russia, according to a statement from the Milwaukee, Wisconsin-based motorcycle manufacturer. Harley relied on Europe and the Middle East for 31% of sales last year. It doesn’t break out sales to Russia.

GM cited “a number of external factors, including supply chain issues and other matters beyond the company’s control.”

“Our thoughts are with the people of Ukraine at this time,” the automaker said Monday in an emailed statement. Earlier Monday, Boeing Co. closed its office in Kyiv, and “paused” operations at its Moscow training campus, a spokeswoman for the Chicago-based planemaker said in an email.

Stocks Close Well Off Day’s Lows While Bonds Climb (10:13 p.m.)

Stocks almost wiped out their losses, with energy producers joining a rally in oil.

Bonds and gold advanced as sanctions on Russia for its invasion of Ukraine heightened fears of a hit to global economic growth.

Netflix, Disney Feel Side Effects of Russia Conflict (10:34 p.m.)

Netflix Inc. said it won’t be adding Russian channels to its service under regulations that were to take effect March 1.

“Given the current situation, we have no plans to add these channels,” a spokesperson for the streaming giant said in an emailed statement.

The Moscow Times reported last year that Netflix has more than 100,000 local subscribers and thus is supposed to air some 20 local channels including state-run Channel One, entertainment-focused NTV and the Russian Orthodox Church’s in-house channel.

Separately, a Walt Disney Co. music executive said banking sanctions against Russia will cut into revenue from its popular “Encanto” soundtrack. Songs from the film, which were translated into Russian and Ukrainian, are frequently downloaded on YouTube in both countries, according to a letter from the manager that was posted by a third party on Twitter.

Musk Satellite Dishes Arrives in Ukraine, Drawing Thanks (10:30 p.m.)

Elon Musk fulfilled a promise to get additional SpaceX satellite dishes into Ukraine, drawing thanks from the deputy prime minister who had pleaded for the tools to keep internet communications working amid Russia’s invasion.

Mykhailo Fedorov, who is also Ukraine’s minister of digital transformation, tweeted a photograph of the additional Starlink dishes and said they had arrived. “You are most welcome,” Musk, who is chief executive officer of SpaceX as well as Tesla Inc., tweeted in response.

U.S. Orders 12 Russian Diplomats at UN to Leave (9:28 p.m.)

The U.S. has ordered 12 Russian diplomats to the United Nations to leave, UN envoy Vassily Nebenzia said during a UN Security Council meeting, calling it a “gross violation by the host country.”

Richard Mills, deputy head of the U.S. mission to the UN, confirmed the expulsion of the diplomats, adding it was a step taken “in full accordance with” U.S. obligations as the host country to the UN. The U.S. mission said in a statement that “this action has been in development for several months.”

White House Press Secretary Jen Psaki added that the expelled Russians “had abused their privileges of residency in the United States by engaging in espionage activities that are adverse to our national security.”

Pentagon Seeks ‘Deconfliction Mechanism’ With Russia (9:25 p.m.)

The Pentagon is exploring options for a “deconfliction mechanism” with Russia, Pentagon spokesman John Kirby said. Kirby indicated there isn’t such a plan in place as Russian forces invading Ukraine focus on encircling major cities.

A plan to avoid unintended conflicts will be important as Ukraine’s air space is contested, Kirby said, because “some of that air space butts right up against NATO territory.”

“We don’t have any indications right now from the Russians that they would also be interested in exploring those options,” Kirby told reporters at the Pentagon. “It’s got to be a two-way street.”

Prosecutor Says He’ll Probe Possible War Crimes in Ukraine (9:18 p.m.)

Karim AA Kham QC, the prosecutor for the International Criminal Court, said he’s decided to open an investigation into “the situation in Ukraine.”

“There is a reasonable basis to believe that both alleged war crimes and crimes against humanity have been committed in Ukraine,” he said in a statement. He said he is asking his team to explore how to preserve evidence and then would seek authorization “from the Pre-Trial Chamber of the Court to open an investigation.”

White House Press Secretary Jen Psaki told reporters Monday that some of Russia’s alleged actions in Ukraine, if true, “would potentially be a war crime.”

JPMorgan’s Dimon Cites ‘Workarounds’ to SWIFT Sanctions (9:01 p.m.)

Jamie Dimon, chief executive officer of JPMorgan Chase & Co., said there are ways around sanctions against Russia involving the SWIFT bank messaging system.

“There are a lot of workarounds for SWIFT, so there are different tools we use for different reasons,” Dimon said Monday in an interview on Bloomberg Television. “The banks are talking with the government so everyone understands the issues, not because they’re for or against any particular thing.”

Kyiv Mayor Calls Situation ‘Difficult and Tense’ (8:49 p.m.)

The situation in Kyiv is “difficult and tense,” according to mayor Vitali Klitschko, who announced a ban on the sale of alcoholic beverages in Ukraine’s capital city from March 1. Air raid sirens were going off about every half hour in Kyiv.

Kharkiv’s mayor, Ihor Terekhov, said residential areas were being shelled. “This is not a military operation,” he said. “This is a war to destroy the Ukrainian people.”

A military unit in Brovary, east of Kyiv, was shelled, resulting in 1 killed and 5 wounded, according to Brovary’s mayor.

Turkey to Restrict Transit of Russian Warships Through Straits (8:31 p.m.)

Turkey has decided to restrict Russian warships from using waterways it controls to transit into the Black Sea due to Putin’s invasion of Ukraine, according to two Turkish officials familiar with the matter.

The officials, who asked not to be named due to the sensitivity of the matter, fleshed out President Recep Tayyip Erdogan’s pledge earlier on Monday to “exercise” the authority over the straits granted to Turkey by the 1936 Montreux Convention to prevent an escalation of fighting.

The Turkish straits give Russia’s Black Sea fleet entry to the Mediterranean. The Montreux agreement allows Ankara to regulate maritime traffic through the waterways during peace and wartime alike. So far, there had been no transit requests from the government in Moscow since the measures came into force, the officials said.

EU Adopts Sanctions on Some of Russia’s Wealthiest Tycoons (8:26 p.m.)

The European Union adopted sanctions on some of Russia’s wealthiest tycoons as the bloc ratchets up penalties on Moscow for its invasion of Ukraine.

The list includes a handful of billionaires who haven’t yet been hit by sanctions in the U.S.: metals tycoon Alisher Usmanov, Alfa Group owners Mikhail Fridman and Petr Aven, plus Alexei Mordashov, who controls a major steel company. Bloomberg first reported the names on Sunday.

The EU is already working on further measures to penalize more oligarchs, according to two people familiar with the plans, who asked not to be identified because the work is private.

U.S. Prods Crypto Exchanges to Thwart Sanctions Dodgers (7:46 p.m.)

The Biden administration is asking crypto exchanges to help ensure that Russian individuals and organizations aren’t using virtual currencies to avoid sanctions leveled on them by Washington, according to people with direct knowledge of the matter.

The White House’s National Security Council and the Treasury Department have sought help from operators of some of the world’s largest trading platforms to thwart any attempts to sidestep the restrictions levied by the U.S. and its allies after Russia invaded Ukraine last week, said the people. The effort comes as the Biden administration grapples with how to police the asset class amid concerns that tokens can be used to avoid the heavily-regulated traditional financial system.

Spokespeople for the Treasury Department and White House declined to comment on discussions with crypto exchanges. A White House official said that cryptocurrencies aren’t a substitute for the heavily used U.S. dollar in Russia, but that American authorities are aggressively continuing to fight any misuse of digital assets to avoid sanctions.

Putin Retaliates by Banning Foreign Debt Service (6:40 p.m.)

President Vladimir Putin banned all Russian residents from transferring hard currency abroad, including for servicing foreign loan contracts. It wasn’t clear whether the new rules applied to Russia’s sovereign debt and if they constituted default. The central bank put Russia’s total external debt at $478 billion.

The steps, which take effect Tuesday, are part of a package of retaliatory measures for U.S. and European sanctions over his invasion of Ukraine. They also include restrictions on companies buying back their own stock, according to the text of the decree.

Russia Says Ukraine Agreed to Continue Talks (6:15 p.m.)

Russia and Ukraine have agreed to continue talks aimed at ending the war after consulting with their presidents, the Interfax news service reported, citing top officials from the two delegations that met in Gomel, Belarus on Monday.

The Kremlin said Vladimir Medinsky, head of the Russian delegation, may report to President Vladimir Putin later Monday about the talks, according to Interfax. It cited Medinsky as saying the two delegations agreed to meet “in the coming days” on the Polish-Belarusian border.

Mikhail Podolyak, an adviser to Ukrainian President Volodymyr Zelenskiy, also said the two sides had discussed prospects for a second round of talks soon, according to the news service.

U.K. Will Continue to Target Wealthy Russians (6 p.m.)

The U.K. government will continue working through its target list of oligarchs, focusing on their houses, their yachts, and every aspect of their lives, Foreign Secretary Liz Truss told the House of Commons.

More legislation will follow in coming weeks to sanction Russian-occupied territories in the Donbas, extending more sanctions to Belarus, and limiting Russian deposits in U.K. banks, she added.

Northern Cities Kharkiv, Chernihiv Under Fire (5:53 p.m.)

Russian forces moved in on Kharkiv, Ukraine’s second-largest city, where local television footage showed a barrage of missile strikes on a residential neighborhood. At least 11 people were killed and dozens wounded, the regional administration said. Russia has said it doesn’t target civilians.

In the northern city of Chernihiv, civilians were among those killed, according to the state emergency service. Mayor Vitali Klitschko said there were clashes in the city overnight.

Russia Has Yet to Win Air Superiority: U.S. Official (5:45 p.m.)

President Vladimir Putin has now committed almost 75% of his pre-staged forces in Ukraine, according to a senior U.S. defense official. Russia has yet to achieve air superiority, the official said, even as it employs combat power ranging from rockets, missiles and manned aircraft to mechanized forces, artillery and infantry.

Russia’s main advance to encircle the capital, Kyiv, remains slowed because of Ukrainian resistance, and logistics and resupply problems, the official said.

The heaviest assaults were still on Kharkiv as Russia employs siege tactics in its effort to encircle the city, and Ukrainians are using everything from small arms to surface-to-air missiles to resist the invasion, the official said.

Ruble Plunges, Commodities Rise as Sanctions Ramp Up (5:45 p.m.)

Traders struggled to price the ruble as international sanctions shook the country’s financial system. The Russian currency lost a third of its value in offshore trading at one point, its biggest-ever slump. It was down 16% at 98.235 as of 5:59 p.m. in Moscow, compared with 107.0642 on the offshore market — a 22% loss.

The central bank canceled local trading altogether in stocks and bonds as the price of Russian-linked shares and debt tumbled overseas. The latest developments also sent shockwaves through other equity markets, though U.S. and European indexes erased most of their losses through the day. Oil and gas prices pared gains after earlier surges.

U.K. Blocks Russian Ships from Docking at Ports (5:15 p.m.)

U.K. Transport Secretary Grant Shapps has written to all U.K. ports asking them not to provide access to any Russian vessels which are owned, chartered or operated by any Russian citizens or are flying the Russian flag. A spokesman for the Department for Transport could not provide any more details on what the measure would cost the Kremlin or individual Russians.

Ukraine Appeals to EU for Air Defense Systems: Official (4:43 p.m.)

The Ukrainian government has appealed to the EU for military hardware including air defense and anti-missile systems, as well as anti-tank weapons, according to an EU official familiar with the request, who was granted anonymity to talk about confidential discussions.

The requests from Kyiv also include howitzers, cannon, mortars, projectile launchers and automatic weapons, the official said. The request comes as the EU agreed to spend 450 million euros to supply military aid, including lethal weapons, to Ukraine.

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