Post-war reconstruction may cost Ukraine €1.1trn

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Ukraine may need as much as 1 trillion euros ($1.1 trillion) in outside assistance to rebuild after the war given the level of destruction in the country, according to the head of the European Investment Bank.

Russia’s Security Council Secretary Nikolai Patrushev held a meeting on national security issues in the Kaliningrad exclave, RIA Novosti reported, after Lithuania barred transit of sanctioned goods such as coal and construction materials to the territory.

Russian President Vladimir Putin’s spokesman said two US veterans captured in Ukraine could face the death penalty, adding that the Geneva Conventions likely don’t apply as Moscow doesn’t consider the men part of Kyiv’s national army.

Key Developments
The Latest on the Ground

Fighting continues in Sievierodonetsk and Russia is bombarding the city of Lysychansk, as it attempts to seize the last pocket of the Luhansk region controlled by Ukrainian forces, regional governor Serhiy Haiday said. The Russian offensive continued in neighboring Donetsk as troops advanced toward the town of Bakhmut, according to Ukraine’s military.

Donbas, which consists of the two regions, has become the focal point of the Kremlin’s attack after it failed to take Kyiv in the early days of fighting.

(All times CET)

Scholz Pledges Unlimited Weapons Supplies (12:18 p.m.)
Germany will supply Ukraine with weapons for as long as necessary to help it defend itself against Russia’s invasion, Chancellor Olaf Scholz said.

“We will continue to support Ukraine, also with weapons, and for as long as Ukraine needs our support,” Scholz said in a speech in Berlin. The German leader, who has been criticized for not doing enough to help the government in Kyiv, also reiterated his support for Ukraine’s bid to be granted candidate status to join the European Union.

Rebuilding Ukraine May Cost $1.1 Trillion, EIB Head Says (12:06 p.m.)
Europe “will have to play the biggest role” in rebuilding Ukraine in an effort that could require 1 trillion euros in outside assistance, European Investment Bank chief Werner Hoyer said at a briefing in Frankfurt.

The estimate comes as EU leaders are scheduled to meet Thursday and Friday in Brussels to discuss Ukraine’s reconstruction plan and its bid for membership of the bloc. The EIB could play a central role in funneling money from the EU to the country.

Luxembourg Premier Visits Ukraine (11:45 a.m.)
Luxembourg Prime Minister Xavier Bettel arrived in Kyiv Tuesday, the latest in a string of European officials to visit Ukraine.

Germany’s Scholz, French President Emmanuel Macron and Italian Prime Minister Mario Draghi made a joint visit to Ukraine last week.

Patrushev Sees Russia as Main Factor Behind US Policy, RIA Says (11:24 a.m.)
Russian Security Council Secretary Nikolai Patrushev said the US and its allies’ policies were driven primarily by their fight with Moscow at the start of a meeting on national security issues in Kaliningrad, RIA Novosti reported.

He visited the region after the Foreign Ministry summoned Lithuania’s envoy in Moscow on Monday to protest a rail transit ban of some goods to Kaliningrad, which is wedged between Poland and the Baltic country. The trip is a planned event and not directly connected to the measures, according to RIA.

Ukraine Reinstalls Import Taxes To Shore Up Finances (10:48 a.m.)
Ukraine’s parliament approved a law to reimpose duties from July 1 on imported goods, including a value-added tax, after it scrapped them at the start of the war to tame inflation.

The move is intended to bolster the budget as Ukraine faces a growing deficit due to elevated military spending and revenues hobbled by the war and Russia’s blockade of Ukrainian exports.

Gas Row Could Embolden ECB Hawks (9:48 a.m.)
New restrictions on Russian gas supplies, targeting the biggest pipeline to Europe, have sent natural gas prices soaring and markets are now pricing delivery rates to remain close to 120 euros per megawatt-hour until next spring. This would deal a new upside shock to euro-area prices and may increase the probability that the European Central Bank will hike rates by 50 basis points in September.

Russian Sovereign Debt Swaps Payout in Turmoil (9:42 a.m.)
Sanctions over the Kremlin’s invasion of Ukraine have turned the payout mechanism for insurance on Russia’s sovereign debt into a painful legal conundrum.

The Credit Derivatives Determinations Committee, a panel of 13 banks and asset managers who regulate the credit derivative swap market, is into its third week of deliberations as the measures complicate traditional settlement routes.

At stake is a potential payment of $1.5 billion after the panel ruled Russia missed interest of just $1.9 million on a sovereign bond — a failure-to-pay event.

Switzerland Imports Russian Gold for First Time Since Invasion (9:35 a.m.)
Switzerland imported gold from Russia for the first time since the invasion of Ukraine, 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.

Georgian Premier Says EU ‘Unfair’ on Candidate Status (8:47 a.m.) 
Georgia considers it “unfair” for the EU not to grant candidacy status to the country after recommending it for Ukraine and Moldova, Prime Minister Irakli Garibashvili said in an interview at the Qatar Economic Forum with Bloomberg Editor-in-Chief John Micklethwait.

The Caucasus nation “would be the first country to be granted the status” on the merits of complying with the EU’s requirements, and the bloc gave it to Ukraine and Moldova because of the situation created by Russia’s war, he said.

While Georgia supports Ukraine politically, it’s in a “very vulnerable” position and can’t impose national sanctions on Russia over the invasion, though it won’t let Russian companies use Georgian territory to bypass the international measures, he said.

Oil Advances as Investors Weigh Outlook for Demand (7:26 a.m.)
Oil ticked higher as traders weighed the odds of a recession in the US amid Federal Reserve tightening, with President Joe Biden pushing back against the notion that the world’s largest economy faces a contraction.

Oil is headed for a quarterly gain, with prices supported by rising demand and supply disruptions spurred by the war in Ukraine, although the Fed’s pivot toward tighter monetary policy has stoked concern of an economic slowdown.

Kremlin Says Captured US Veterans Could Face Death Penalty (5:15 a.m.)
Kremlin spokesman Dmitry Peskov told US broadcaster NBC he couldn’t guarantee the two Americans captured in Ukraine wouldn’t face capital punishment, saying they should be “held responsible for the crimes they have committed.”

In the interview that aired Monday, he said Alexander Drueke and Andy Huynh, whose families reported them missing last week, weren’t likely to be protected by the Geneva Conventions as prisoners of war. That’s because Moscow considers them “soldiers of fortune” not part of the Ukrainian army, he said, adding that there’d be a full investigation into their cases.

Some 20,000 people from around the world have responded to Kyiv’s call to join the International Legion of Ukraine’s effort against Russian forces, the Ukrainian government said in March. A court in the Russian-occupied Donetsk region previously sentenced two British fighters and a Moroccan to death.

Russian Editor’s Nobel Medal Sells for Record $103.5 Million (2:45 a.m.)
Dmitry Muratov, the Russian editor awarded a Nobel Peace Prize for championing freedom of speech, auctioned his medal Monday for $103.5 million, breaking the record for a Nobel.

The previous record was set in 2014, when James Watson sold his medal for discovering the structure of DNA for $4.76 million. Muratov will donate the money to help Ukrainian refugees.

US Says Russian Oil Price-Cap Plan in Progress (2:09 a.m.)
Yellen said the US and its allies are discussing “essentially a price cap” that would act as an exception to the European ban on insurance services needed to ship seaborne Russian oil.

“We are talking about price caps or a price exception that would enhance and strengthen recent and proposed energy restrictions by Europe, the United States, the UK and others,” she said.

Ukraine to Get EU Candidate Status (9:20 p.m.)
The EU’s 27 member states are set to formally grant Ukraine candidate status later this week, according to people familiar with the matter. The European Commission made the recommendation last week and included criteria Kyiv will have to meet on issues related to the rule of law, justice and anti-corruption.

The bloc is also set to back the commission’s opinion in granting candidate status to Moldova, as well as to Georgia if it first meets specific additional conditions, said the people, who asked not to be identified because the discussions are private.

© 2022 Bloomberg L.P.


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Headline correction “Post-war reconstruction may cost Ukraine €1.1trn”

Should read

“Invasion may cost Russia €2.2trn”

Thirty years of 35% discount on Russian oil, coal, gas, aluminium, fertilizer, grains add up quickly. Putin is now China and India’s cheap-resource colony and they didn’t have to lift a finger.

Terrible chess move!

End of comments.



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