Putin says Russia facing ‘colossal’ tech hurdles

The European Union, which boosted military financing for Ukraine on Monday, is also set to approve some additional sanctions measures, including a ban on Russian gold. 
Image: Bloomberg

President Vladimir Putin said that Russia is facing “colossal challenges” in the high-tech sector, an unusually frank admission of the difficulties the Kremlin is experiencing as sanctions begin to bite.

The European Union, which boosted military financing for Ukraine on Monday, is also set to approve some additional sanctions measures, including a ban on Russian gold.

The EU’s foreign policy chief, Josep Borrell, said he was hopeful Russia and Ukraine could clinch a deal this week to help export grain from the war-torn country and avert a global food crisis. The comments come a day before Turkish President Recep Tayyip Erdogan meets Putin to discuss efforts to facilitate shipments of Ukrainian grain through the Black Sea.

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

Key Developments

  • Russia Turns the Screws on Gas Market, Snubbing Transit Bookings
  • Coal-Rich Poland Rushes to Imports as Russian Sanctions Bite
  • Zelenskiy Bids to Oust Ukraine’s Security Chief, Top Prosecutor
  • G-20 Finance Chiefs Blame Russia as Path to Soft Landing Narrows
  • Russia Orders Forces to Strike Ukraine’s Long-Range Weapons
  • Russian Assets Barely Touched Across EU With $14 Billion Seized

On the Ground

Russia ordered its troops to step up combat in all areas and target Ukraine’s long-range weapons. Ukraine has used advanced US-supplied HIMARS systems to strike Russian logistics centers, supply routes and ammunition depots behind the front lines in recent weeks. A Russian missile ruined an elevator with more than 5,000 tons of grain in the Dnipropetrovsk region, local governor Valentyn Reznichenko said on Telegram. Russian missiles also hit a military facility and a bridge across the Dniester estuary west of Odesa, Natalia Humeniuk, a spokeswoman for the Ukrainian military’s southern command said.

(All times CET)

Putin Says Sanctions Causing Russia ‘Colossal’ Tech Woes (2:25 p.m.)

Russia faces “colossal challenges” in high technology from international sanctions, but won’t simply give up or allow its economy to fall back by decades, Putin told officials during a videoconference on strategic development goals.

Instead, Moscow will “intensively” seek solutions by relying on the country’s own technological resources and the work of domestic innovative companies, the Russian president said, even as he chided the state-run Rostec corporation for failing to meet previous targets for development of internet technology.

Russia Fines Google $382 Million, Tass Says (2:15 p.m.)

A Moscow court ordered the local unit of Alphabet Inc.’s Google to pay a 21.77 billion ruble ($382 million) fine not removing content banned in Russia, Tass reported from the courtroom.

The fines, for repeated violations of orders to take down content deemed illegal, could be used as a pretext to block various Google services in Russia as the Kremlin cracks down on foreign tech companies.

Google’s local subsidiary filed for bankruptcy in June after authorities froze its local bank account amid escalating fines related to YouTube. However, it continues to offer free services, including search functions, YouTube, Gmail and Google Play.

Read more: Google to File to Bankrupt Russian Unit Amid Mounting Fines

EU Approves More Ukraine Arms Financing (1:15 p.m.)

EU foreign ministers approved another 500 million euros ($507 million) in military aid to Ukraine, boosting the total arms financing to 2.5 billion euros. It’s the fifth round of financing under the so-called European Peace Facility, which reimburses governments for military deliveries to Ukraine.

Charles Michel

@CharlesMichel

Europe continues delivering for peace and defence of our values.

I welcome @EUCouncil political agreement on the fifth tranche to #Ukraine under #EPF

#EU support in military equipment to Ukraine Armed Forces now at 2,5 billion €.

Europe stands with Ukraine @ZelenskyyUa

Sent via Twitter for iPhone.

View original tweet.

Russia Keeps Gas Buyers Guessing (11:08 a.m.)

Moscow again rejected additional gas-pipeline space offered by Ukraine, keeping European buyers guessing as future flows on the key Nord Stream route also remain uncertain.

At a monthly auction on Monday, Russia’s Gazprom PJSC opted not to book extra capacity to ship gas to Europe via Ukrainian pipelines in August. That keeps deliveries to the continent tight, just as concern grows that the Nord Stream link may not fully return when maintenance ends later this week.

Russia’s squeeze on gas supplies has unsettled the market, with European benchmark futures more than doubling in value this year. Last week, Germany started to withdraw gas from stockpiles that it had been building up for winter, while Hungary declared an “energy state of emergency.”

Russia Eyes Cooperation Pact With Iran (10:37 a.m.)

Russia handed a draft comprehensive strategic cooperation treaty to Iran in mid-June and expects to sign it in the near future, Interfax quoted Russian presidential spokesman Dmitry Peskov as saying.

It said some amendments were required taking into account Iranian opinion.

Russia Former State-TV Staffer Released (10:07 a.m.)

Russian police released a former state-television employee after several hours of detention, charging her under a strict new law against criticizing the Kremlin’s invasion of Ukraine.

Marina Ovsyannikova, who fled Russia earlier this year after being charged for holding up an anti-war sign on the main evening television news, has conducted several public protests since returning earlier this month for a child-custody hearing. On Friday, she stood across the Moscow River from the Kremlin, holding a homemade sign blaming President Vladimir Putin for the deaths of children killed in the war.

Police detained her Sunday for making anti-war statements outside the trial last week of another activist facing jail time for his protests. Ovsyannikova’s lawyer, Dmitry Zakhvatov, said she was charged with an administrative violation, punishable with a fine.

Zelenskiy Pledges Security Clean-Up (10:01 a.m.)

Kyiv pledged to clean up law-enforcement agencies after President Volodymyr Zelenskiy removed the country’s security chief and suspended its top prosecutor over allegations that dozens of staff were collaborating with Moscow.

Ivan Bakanov, a childhood friend of Zelenskiy, was removed from his post as head of the State Security Service amid questions over how Russia managed to capture the southern region of Kherson. Iryna Venediktova, named prosecutor general in 2020, is also a Zelenskiy ally and lawmaker on his party list.

Andriy Smyrnov, deputy chief of Zelenskiy’s staff, said in televised comments on Monday that Ukraine would find anyone working with or leaking information to Russia. The president said last Sunday that 651 people were already facing trial on charges of treason and collaborating with the enemy.

Russia-Backed RT To Get EU Sanctions Ruling (9:45 a.m.)

RT, the Kremlin-backed TV network formerly called Russia Today, will get a July 27 ruling from the European Union General Court on whether its inclusion on the EU’s sanctions list over the Ukraine invasion was justified.

RT’s France unit told the court that the EU’s decision was a curb on press freedom that had no justification in law. The ruling date was announced on the court website.

Russia Orders Strikes on Long-Range Arms (8:43 a.m.)

Russian Defense Minister Sergei Shoigu ordered part of his forces to focus on destroying Ukraine’s long-range missile and artillery systems during a visit to the Vostok army group in the occupied east of the country.

The order comes after Ukraine received advanced US-supplied HIMARS long-range artillery systems in recent weeks capable of striking Russian targets as far as 80 kilometers (50 miles) away. That has allowed it to hit logistics centers, supply lines and ammunition dumps deep behind the front lines and mostly from beyond the range of Russian artillery.

Ukraine sees Russian forces struggling to find safe places to store munitions in occupied areas as they also increasingly lack transport to move them, Natalia Humeniuk, a spokeswoman for the Ukrainian military’s southern command said on television.

EU’s Borrell Hopeful on Ukraine Grain Deal (8:07 a.m.)

The EU’s foreign policy chief said he was hopeful Russia and Ukraine could clinch a deal this week to help export grain from the war-torn country and alleviate a growing global food crisis.

“I have a hope that this week it will be possible to reach an agreement to deblock Odesa and other Ukrainian ports,” Josep Borrell told reporters ahead of a meeting of EU foreign ministers in Brussels. “The lives of tens of thousands of people depend on this agreement. It’s not a diplomatic game.”

Turkish President Recep Tayyip Erdogan has sought to broker a deal that would facilitate shipments of Ukrainian grain through the Black Sea and meets Vladimir Putin on Tuesday.

Dmytro Kuleba

@DmytroKuleba

Today, I addressed EU ministers at the Foreign Affairs Council on @JosepBorrellF’s kind invitation. My key message: weapons to Ukraine, sanctions on Russia, and accountability for Russia are the three ways to restore peace, enhance security, and protect stability in Europe 1/2

Sent via Twitter for iPhone.

View original tweet.

H&M to Exit Russia at $190 Million Cost (7:57 a.m.)

H&M will begin winding down its operations in Russia, having halted all sales in the country in March.

The Swedish fashion retailer expects to book costs of $190 million from the process, it said in a statement Monday. It plans to reopen physical stores in Russia for a limited period of time to sell remaining inventory.

“After careful consideration, we see it as impossible given the current situation to continue our business in Russia,” Chief Executive Officer Helena Helmersson, said.

Russian Gas Flows to Europe Still Limited (6:42 a.m.)

Russian natural gas supplies to Europe remain curbed, with flows sent via Ukraine below capacity and the Nord Stream pipeline shut for annual maintenance until July 21.

Russia Ban Seen Tightening Coal Market (5:15 a.m.)

A looming ban on Russian coal imports by the European Union will add to supply pressure that’s sent prices of the fossil fuel hurtling to a record, according to a key Australian producer.

The European ban that takes effect next month “is expected to tighten further the supply of high quality thermal coal,” Sydney-based Whitehaven said in its statement. “We continue to view thermal coal prices as well supported for 2022 and into 2023.”

© 2022 Bloomberg

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There’s worse to come Vlad…

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