Putin says still open to ‘diplomatic solutions’: Ukraine update

As long as Russia’s interests and security are guaranteed, after the US and its allies agreed on a ‘first tranche’ of sanctions against Moscow for its actions over separatist-held Ukrainian territory.
Image: Drew Angerer/Getty Images

President Vladimir Putin said he remains ready to pursue “diplomatic solutions” as long as Russia’s interests and security are guaranteed, after the US and its allies agreed on a “first tranche” of sanctions against Moscow for its actions over separatist-held Ukrainian territory.

European stocks and US equity futures gained, suggesting investors view the initial measures as limited. The most significant move Tuesday came from Germany, which said it was halting certification of the Nord Stream 2 gas pipeline that critics have said would strengthen Russia’s grip on Europe’s energy sector.

Putin this week triggered a dramatic escalation of tensions by formally recognizing two self-proclaimed republics in eastern Ukraine. The US issued a series of warnings, citing intelligence, that Russia could invade, incite an event as a pretext to take military action, or launch cyberattacks. The Kremlin insists it has no plans for a wider invasion.

Key Developments

  • Biden’s First Round of Russian Sanctions Lands With a Thud
  • Villeroy Emphasizes ECB Flexibility as Ukraine Crisis Deepens
  • European Stocks Rebound With Eyes Still Fixed on Ukraine Risks
  • Is Putin Playing Macron? French Voters Back Their Leader for Now
  • Russia’s Richest Lose $32 Billion as Ukraine Crisis Deepens
    • Summary of Tuesday’s Rolling Coverage

All times CET:

Truss Says UK Believes Putin Still Plans an Attack (9:45 a.m.)

Foreign Secretary Liz Truss said British intelligence still shows that Putin could be headed for an invasion of Ukraine, including the capital, Kyiv.

“We think it’s highly likely that he will follow through on his plan for a full-scale invasion of Ukraine,” Truss told Sky News in London, without providing details on the intelligence underpinning that calculation. She later told LBC radio that Britain was ready to impose sanctions on more Russian individuals, banks and companies in the event of a full invasion.

The UK has, alongside the US, been the most vocal in warning that Putin plans an attack on Ukraine, even as the Russian president denies he intends to do so and his officials dismiss the Western intelligence as propaganda. Putin is still maintaining a large military buildup on the border and drills in Belarus have been extended.

EU Finalises Russia Sanctions Package (9:30 a.m.)

EU ministers are meeting Wednesday morning to approve the legal documents outlining the new package of Russia sanctions the bloc announced Tuesday.

Member nations will then need to sign off and adopt the measures, but that’s mostly a formality. The package will become effective as soon as it’s published, which could come as early as Wednesday afternoon.

Stocks Rise, Haven Demand Eases (9:10 a.m.)

European stocks and US equity futures rose as investors assessed the limited initial Western sanctions against Russia. Crude oil fluctuated, while gold dipped as haven demand eased.

S&P 500, Nasdaq 100 and European contracts climbed along with the Stoxx Europe 600 index. The mood was brighter than Tuesday, when the S&P 500 fell into a technical correction after sliding 10% from a January peak.

Russia’s local markets are closed for a public holiday, but futures on the country’s equity benchmark edged higher. The ruble weakened about 0.4% after jumping more than 1% yesterday, buoyed by higher oil prices.

Putin Says Russia Still Open to Diplomacy (8:30 a.m.)

Putin called the international situation “difficult” in a video address marking the country’s public Defender of the Fatherland holiday. He highlighted NATO’s military activity and said Russia’s calls to develop a system of “equal and indivisible security” were being ignored by the West.

“Our country is always open for direct and honest dialogue, to search for diplomatic solutions to the most difficult problems,” added Putin, who has repeatedly said that solving the crisis via diplomacy remains possible. “But I repeat: The interests of Russia and the security of our citizens are unconditional for us. So we will continue to develop and improve the army and navy, to increase their efficiency.”

IMF Starts Ukraine Mission Over $700M Loan (7:50 a.m.)

The International Monetary Fund announced it would start a virtual mission to Ukraine that, if successful, will pave the way for the country to get more aid to shore up its economy after its standoff with Russia escalated.

IMF officials will start an online-review of their program with Kyiv on Wednesday, the Washington-based lender said in a statement. At stake is $700 million in disbursements the government in Kyiv expects to receive after the mission is completed.

Germany ‘Could Survive Without Russian Gas’ (7:15 a.m.)

Economy Minister Robert Habeck said Germany could do without deliveries of Russian gas, though he warned that could push prices up. Germany relies on Russia for about 55% of its gas deliveries.

Habeck also said that halting the Nord Stream 2 certification process does not mean it will never go into operation. “I say explicitly that this can still happen depending on developments in the war between Russia and Ukraine,” he said in an interview with Deutschlandfunk radio.

© 2022 Bloomberg

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