Ukraine Conflict Update – April 5

Ukraine Conflict Update – April 5

Military and hard security developments

• Russian forces have continued to withdraw from northern Ukraine, with Ukrainian forces claiming to have re-established control over numerous border posts in Chernihiv oblast. The Russian 2nd Combined Arms Army that had been previously operating east of Kyiv have almost completely withdrawn eastwards towards Kursk inside Russia, though they still retain a foothold in the far northeast of Sumy oblast. These forces are likely now being rapidly reconstituted for redeployment to the Donbas, where Russian forces continue to make slow but steady progress, particularly around Izyum and Rubizhne, northwest of Severodonetsk.
• On 4 April, the Ukrainian Ministry of Defence stated that it believes that some of the withdrawn forces will nevertheless be positioned with the aim of taking Kharkiv – Ukraine’s second city that has orchestrated a concerted defence since the very opening phases of the invasion. While this could remain a key operational objective of Russian forces, concentration of Russian forces is most likely to see new offensives launched further south around Izyum in the coming weeks.
• On 4 April, Russian forces, namely Chechen leader Ramzan Kadyrov, claimed that over 250 marines from Ukraine’s 503rd Naval Infantry Battalion had surrendered in Mariupol, which would make it the first major surrender of Ukrainian forces in the city since the beginning of the invasion. However, some sources have disputed this, and so the situation remains unclear. Nevertheless, Russian now retains control over much of the centre of the besieged city. Russian forces have furthermore sought to consolidate their nominal control over the city by staging a mayoral election on 4 April. A local councillor of the pro-Russian Opposition Platform – For Life party (now banned in Ukraine) was elected “mayor” of Mariupol during a meeting of party members. This follows the pattern in other occupied regions, and underlines that Russian forces are able to rely upon local pro-Russian politicians to prop-up new administrations, with reports of locals switching sides to support the Russians elsewhere across Eastern Ukraine reflecting a core minority of support for the invaders.
• The weather is still hampering the ability of Russia troops to manoeuvre off-road due to mud and floods; this will remain a problem until mid-April at the earliest. Given that the tans and armoured vehicles will have to stick to the roads, this raises the spectre of another 40 mile convoy as happened East of Ukraine at the start of the campaign which were picked off at will by NLAW and Javelin missiles in particular. The troops in the Izyum salient have a target to reach the railway junction at Slovainsk.
• Russian forces have this morning, 5 April, reportedly struck a Dominican Republic flagged vessel near Mariupol, with the ship sunk after catching on fire. The unconfirmed incident is the latest in a number of international merchant vessels being directly impacted by the war, with Russian naval control of the Black and Azov seas and the blockade of Ukrainian ports underscoring the enduring threat posed to any and all shipping in the area.

Diplomatic and strategic developments

• The revelations of war crimes in Bucha have led to further expulsions of Russian diplomats from several European countries including France, Germany, Italy, Denmark, Latvia, and Lithuania. The announcement prompted an emotional response from Deputy Chairman of the Security Council Dmitry Medvedev, who said that Russia’s response would be “symmetrical and destructive to bilateral relations”. Furthermore, the events in Bucha could undermine the ongoing peace negotiations, with President Zelensky reportedly stating that it is possible that there will be no meeting between him and President Putin, though he did acknowledge that Ukraine has no choice but to continue negotiating with the Russian delegation. At the time of writing, Ukraine has yet to receive a formal response from Russia to its proposals put forward last week.

Economic/business environment developments

• On 4 April, the US Treasury halted dollar debt payments from Russian government accounts through US banks. The move will force Russia to find alternative sources to pay bond investors, which the Treasury says is designed to force Moscow into choosing between draining its remaining dollar reserves, using new revenues, or defaulting on its debt. Up until now an exception in US sanctions has allowed overseas and US investors to receive payments on Russian foreign currency debt, though this exception is due to expire on 25 May. So far, Moscow has met its foreign debt obligations, but as the economic crisis continues to bite, renewed scrutiny will be placed on Russia’s ability to continue meeting these obligations, with the next major milestone for Russian sovereign debt a payment due on 27 May for interest on its sovereign dollar and euro notes due in 2026 and 2036.
• Gas as a weapon? As the weather warms up the gas weapon deployed by Russia will weaken. The EU is very concerned about Huan Rights abuses in particular and may prefer a 20 year insurgency, rather than a quick fix,  which will bled Russia dry.
• The revelation of atrocities in Bucha sparked international outrage, strongly increasing the likelihood of further sanctions against Russia. Washington stated that more measures are already being worked on with European allies, and that a new set of measures will be announced this week. Notably, “options that relate” to Russia’s energy sector are also being considered, with the EU now expected to propose a mandatory phase out of Russian coal imports, as well as certain chemicals and woods. Indeed, the EU has specified that it is proposing an import ban on coal worth EUR 4 billion per year, such a move would be a relatively easier burden to bear given the EU’s push to phase out coal in any case due to climate change concerns. This stands in contrast to a Russian oil and gas ban, which remains much less likely given Europe’s strong reliance on such imports. Nevertheless, pressure to do so will continue to build especially following the announcement by the Baltics that they had ceased all imports of Russian gas as of 1 April.
• The Yale School of Management have updated their list of companies that have withdrawn from Russia on 5 April, confirming that over 600 companies have now done so. 128 companies have been listed as “defying demands for exit or reduction of activities” in Russia, with the website adding a new feature for visitors to see companies that retain operations in Russia by their country of origin. Given the increasing evidence of war crimes and atrocities in Bucha and elsewhere in Kyiv oblast, scrutiny over companies retaining operations in Russia is likely to still further increase in the days and weeks ahead, underlining the mounting risk of activists targeting European companies in particular.
• On 4 April, German Economy Minister Robert Habeck announced that Gazprom’s German subsidiary Gazprom Germania is being put under state control with immediate effect until 30 September due to legal uncertainty. The decision came after Gazprom announced on 1 April that it no longer owns its German subsidiary, which operates one of Germany’s biggest gas storage facilities that is critical to the country’s energy security. Following the decision, the German energy regulator Federal Network Agency became the trustee of Gazprom Germania in order to ensure public safety and to safeguard supplies. It is likely that other Gazprom subsidiaries across Europe, including in the United Kingdom and Switzerland, will be nationalised or put under state control in the coming months as legal uncertainties threaten energy disruptions. However, this will likely be met by corresponding nationalisations of European firms inside Russia in retaliation, as the government has already empowered various state organs to do so.

Humanitarian/evacuation developments

• Considering the withdrawal of Russian troops from around Kyiv, the security situation in and around the city is likely to see a moderate improvement as of 5 April. The H01/P01 remains the safest routes out of Kyiv, while demining operations are taking place along the E373 and E40 by Ukrainian forces, therefore, security threats along these routes remain higher than along southbound routes. The south-west E95 and the P04 remain unsafe as well following missile strikes in the vicinity of Fastiv and air raid warnings in Vinnytsia.
• It is highly likely that ad-hoc checkpoints and stop-and-search checks by Ukrainian units continue to take place routes northwest and east of Kyiv. These are likely conducted in order to identify potential Russian fifth columnists/saboteurs and remaining Russian units. Ukrainian units conducting these checks are believed to be operating on capture/kill orders. As such, those seeking to leave/enter Kyiv should treat such checks with due caution.
• Air raid warnings across western Ukraine – notably in Khmelnytskyi, Ivano-Frankivsk and Lviv – highlights the spread of the conflict into western Ukraine as Russian ground forces withdraw from around Kyiv, therefore, safety cannot be guaranteed on any westbound evacuation routes at present.

FORECAST

Despite President Zelensky underlining that negotiations with Russia are becoming increasingly more difficult following the revelations of atrocities in Bucha, Zelensky nevertheless confirmed today that negotiations should continue. However, Zelensky has simultaneously also agreed that with each “new Bucha” Ukrainian society would find it increasingly hard to accept any agreement with Putin. Indeed, it is almost certain that similar incidents have also taken place in other Ukrainian cities that are behind the Russian frontlines, with Mariupol in particular highlighted as a site of a humanitarian disaster. As such, further potential revelations of such atrocities may well harden Kyiv’s stance, though the desire to prevent more deaths will equally continue to push Kyiv towards finding a compromise. The main challenge will remain the status of the Donbas, which Zelensky reiterated today must remain Ukrainian territory, stating also that the withdrawal of the Russian forces to the borders before the invasion on 24 February will be “Ukraine’s victory in today’s war”. However, Zelensky has further stated today, 5 April, that a “denazification and demilitarisation” of Ukraine, the official goals of the Russian invasion, is not on the cards for a peace settlement, underlining a hardening of Zelensky’s position and the fact that both sides remain far apart in terms of a negotiated settlement to end the war.

• The battlefield continued to be dominated by the withdrawal of Russian forces in the northeast and continued offensives in the Donbas, coupled with precision strikes on Ukrainian food and fuel storage sites across the country.
• In the north, Russia’s 35th, 36th, and 41st Combined Arms Armies have largely withdrawn into Belarus where they are rapidly reconstituting and entraining for commitment in Donbas, although some forces seem still to be present north of Chernihiv. 2nd Combined Arms Army is 80% complete on its withdrawal towards Kursk, in Russia, although it still holds a foothold in the far northeast. Ukrainian forces from 1st Tank Brigade, 10th Mountain Brigade, 58th Motor Brigade, and 72nd Mech Brigade are following up slowly east of Kyiv.
• Around Kharkiv, the Russian 1st Guards Tank Army and 6th Combined Arms Army continue to face around six Ukrainian brigades. The Ukrainian General Staff consider that redeployed Russian forces will make an assault on the city later this week, although we assess an offensive action is perhaps more likely to come in the area of 20th Combined Arms Army in the south of Kharkiv Oblast. An assault here would help enable the original Russian objective of a push on Dnipro, deep in the rear of Ukrainian forces in Donbas.
• Russian and separatist forces continue to make slow progress between Izyum and the area north of Donetsk city, attempting to push on Kramatorsk and isolate five Ukrainian brigades in the salient around Severodonetsk. Pressure is being maintained on these forces from all sides, which is slowing Russian offensive capability on main axes, albeit ensuring that Ukraine cannot easily withdraw. Many of these troops are in substantial defensive lines established following the 2015 fighting in Donbas, making displacement difficult and costly for Russian forces. Poor weather and flooding continues to limit the Russian potential to manoeuvre off roads, a situation that will likely continue for the next two weeks.
• Fighting particularly continues around Rubizhne, just north-west of Severodonetsk, where Luhansk militia forces are seeking to enter the city. A chemical incident has been declared this morning following damage to a nitric acid storage facility, emphasising the ongoing risk of toxic industrial hazards, particularly in the industrial areas of Donbas. It remains unclear if this was deliberately targeted or accidentally damaged.
• In Mariupol, operations to clear the city continue. Russia has appointed a new council and video reports of over 250 Ukrainian forces surrendering have been promulgated. Ukraine sources have said this surrender is authentic, although this remains heavily contested. Nonetheless, indications are that resistance is gradually lessening as surrounded forces increasingly run low on ammunition and food. The eventual fall of the city will likely see Russian BTGs moved north as quickly as possible to maintain the momentum of advances in Donbas.
• Elsewhere in the south, both sides lack the power to make effective advances between Donetsk and Zaporizhzhia. Fighting between Kherson and Mykolaiv has continued, with Russian using Smerch/Uragan longer range rockets to attack targets in Mykolaiv from comparative safety. This included targeting of food storage sites yesterday, which remain a priority target, along with fuel facilities and infrastructure.
• Air power continues to be used in strategic operations overnight, and tactical operations mostly at extreme low altitudes in Donbas. Helicopter tactics have continued to evolve, partly based on the experience of encountering advanced Starstreak missiles, with most engagements now at almost ground level. This shows that Russia continues to pass on lessons more effectively in the south, in comparison to the poor performance around Kyiv. Losses continue, but at a much lower rate than earlier in the conflict. More air defence successes against drones are also being noted, with Russian forces having now had time to set up better integrated air defence. In the west, however, Ukrainian air defence also remains highly effective, and this has limited the impact of overnight raids with cruise missiles.
• It remains highly challenging for the remaining Ukrainian air capability to operate over Donbas, given its main base of operations in the far west, and its impact is negligible. However, the raid by Ukrainian Hind helicopters on Belgorod shows that Ukraine maintains the capability to inspire and surprise through selective actions in the air. Tochka-U missiles are also likely to be used selectively against high value targets, including fuel depots, rail yards, and identified troop concentrations.
• As expected, further evidence of killings of civilians by Russian forces has come to light in previously occupied areas, including Konotop in the northeast. Full revelations will likely show much worse cases than the killings in Bucha, which have already aroused international condemnation. Early reports suggest that Borodyanka, the next town northwest of Bucha, saw a particularly large number of incidents.
• Russia continues to use misinformation and active disinformation to blur and obscure the discovery of systematic war crimes, alleging that they are fake, and spreading counternarratives. These messages continue to gain traction outside of western Europe. The core “markets” for Russian activity in the information sphere include countries in the Middle East, Africa, Latin America, and Asia. Meanwhile, Russian state sources continue to call for the elimination of Ukraine, despite the ostensibly changed war aims. This indicates how Russia is likely to use talks as a continued smokescreen for continued military action, designed to erode Ukrainian conventional military capability.
• The Ukrainian fuel situation is certainly increasingly dire, and this will limit opportunities to move forces to where they are now required. The Russian assessment is that large amounts of people defending their homes and local areas are hard to beat, but this manpower-intensive/equipment-limited approach can be overcome by application of conventional military power in the south, where the advantages are reversed. While this will not allow a renewed advance on Kyiv, Moscow is almost certainly hoping to gain a very strong position in the south where it can dictate terms in due course. The destruction of Ukraine’s conventional military capability is a vital part of this.
• Extreme repression will continue to be used to limit the possibilities of an insurgency being formed. In the Donbas, this will also be accompanied by efforts to win over Ukrainians to the separatist side, with some limited success being achieved in the last two weeks. This remains more likely here than in any other part of Ukraine, with few signs of discontent in occupied northern Luhansk oblast, for example.

US: Launch of cyber security bureau amid persistent threat of Russian-linked cyber attacks.  On 4 April, US Secretary of State Anthony Blinken inaugurated the Bureau of Cyberspace and Digital Policy (CDP), a division of the State Department covering international cyber space security, international information, and digital policies. The launch comes amid growing concern of cyber attacks on US entities, particularly the targeting of domestic infrastructure capabilities. On 1 April, the FBI released a Private Industry Notification (PIN) alerting local government offices of a likely uptick in ransomware attacks within the government facilities sector over the coming months, driven by increased activity amongst Russian-linked threat actors following Russia’s invasion of Ukraine. Despite such concerns, pro-Russian hackers will likely remain hesitant to launch highly disruptive or destructive cyber attacks against Western-based organisations to avoid heightening regional tensions. Nevertheless, US government agencies and private sector partners will remain targets for Russia-linked cyber espionage and more limited campaigns in the near future.

Persistent threat of pro-Russian operations against Western public and private sector entities    

On 4 April, Cloudflare reported a surge in Russia-originating Distributed Denial of Service (DDoS) attacks targeting sites outside of the country from relatively low levels throughout February to a peak in mid-March, declining again by early April. However, Cloudflare clarified that the identification of the origin of the cyber attack does not correspond with the location of the attacker themselves, as cyber attackers typically launch attacks from remote global locations.

• On 1 April, US Deputy National Security Advisor Anne Neuberger told National Public Radio (NPR) media outlet that Western intelligence services remain alert for a Russian cyber campaign targeting private sector Western organisations. Neuberger acknowledged that intelligence currently does not indicate that a cyber attack is imminent, but nevertheless urged private sector firms to strengthen their cyber resilience through implementing more stringent cybersecurity measures. This advice comes in a bid to mitigate the risk and severity of attacks amid repeated warnings by US federal agencies in recent weeks that Russian hackers are scanning US organisations’ networks for vulnerabilities, “exploring options for potential cyber attacks on critical infrastructure in the United States”, indicating a potential plot to launch retaliatory attacks against the US in connection to the Ukraine conflict.

Pro-Ukraine hackers’ tactics expand further; Russia-linked state and military entities vulnerable

• On 4 April, a Twitter account allegedly linked to the Anonymous hacktivist collective claimed that the group had leaked a list of Russian military servicemen serving in the 64 Motor Rifle Brigade. The division reportedly occupied the Ukrainian town Bucha, northwest of Kyiv, prior to 31 March. Following Moscow’s withdrawal from the town, reports emerged of apparent war crimes and summary executions committed by Russian soldiers against Ukrainian civilians, drawing widespread condemnation from the international community (see Sibylline Alert – Ukraine Update – 1500 BST 4 April 2022).
• Also on 4 April, a Twitter account allegedly linked to the Anonymous group reported that the collective hacked Russian military manufacturer Korolevskiy. Further details on the extent and content of the data breach are yet to be released, though the reported action comes after Anonymous threatened to launch “unprecedented attacks” on government and government-linked websites. As such, the targeting of the military manufacturer is likely directly related to its role in supporting Russia’s war effort in Ukraine.
• On 4 April, Distributed Denial of Secrets (DDoSecrets) reportedly leaked more than 900,000 emails comprising more than 20 years of communications from Russia’s largest state-owned media corporation, the All-Russia State Television and Radio Broadcasting Company (VGTRK). Hacking group Network Battalion 65′ (NB65) allegedly breached VGTRK systems to collect these emails as part of efforts to disrupt and damage “companies connected to the [Russian] government” as long as it continues its “aggression” in Ukraine, with DDosSecrets having purportedly made the 786.2 GB email cache available via torrent file to netizens.
• On 3 April, a Twitter account allegedly linked to the Anonymous group claimed that the group was responsible for the leak of personal information of 120,0000 Russian soldiers allegedly fighting in Ukraine. Ukrainian media outlet Pravda initially reported the leak on 1 March, though did not disclose the source, only stating that Ukraine’s “Centre for Defence Strategies acquired this data from reliable sources”. This data reportedly included names, addresses, dates of birth, unit membership and passport numbers of Russian soldiers.
• Meanwhile, on 2 April, a Twitter account purportedly linked to the Anonymous hacktivist group claimed to have released major leaks the day prior, including approximately “200,000 emails hacked from the Russian law firm Capital Legal Services”, available for view via the DDosSecrets website. In a follow-up Twitter post, the group reportedly claimed that “the hacking will continue until Russia stops their aggression” in Ukraine.
• An associated Twitter account claimed on 1 April that Anonymous hacked the server and leaked over 25GB of email data from Russian “anti-aircraft and tank manufacturer” Lipetsk Mechanical Plant. The plant produces and sells arms and military equipment to Russian troops, as well as providing maintenance, installation and repair services. In addition, the group claimed to have stolen 15GB of “data stolen from the Russian Orthodox Church’s charitable wing”, leaking approximately 57,500 emails to DDosSecrets, which is reportedly releasing the information solely to journalists and researchers at present. Meanwhile, Anonymous affiliates also claimed to have hacked 62,000 emails of Russian investment firm the Marathon Group, due to its ties to Russian government, with Russian Foreign Minister Sergey Lavrov being the father-in-law of company owner Alexander Vinokurov.
• On 31 March, hacktivist and self-professed “vigilante” group Ghost Security (GhostSec) reportedly targeted Russia’s Shambala hotel, which owns the Poker Club and Joker Club casinos. The leak allegedly included all data from the 27 machines, with GhostSec reportedly locking and erasing all system files. The rationale for targeting the hotel and its casinos is likely linked to their revenue contributions to the Russian government, including in foreign currencies besides the ruble.

Forecast

In recent weeks, Russia’s cyber activity has been moderate-substantial, marking a contrast to the early stages of the Ukraine conflict. These cyber campaigns appear to be a mixture of both intelligence-gathering operations and vulnerability scanning, with US federal agencies in particular continuing to warn Western organisations to strengthen resilience against the latter, as highlighted by US Deputy National Security Advisor Anne Neuberger during the monitoring period. These cautions indicate a potential plan by Moscow to launch retaliatory cyber attacks against the US in connection to the Ukraine conflict in the coming weeks.

The Russian government’s pledge to reduce military operations around Kyiv and to open humanitarian corridors around Mariupol slightly lowers the likelihood of these attacks occurring in the coming days. However, there is a sustained risk that disruptive or destructive cyber attacks, such as distributed denial-of-service (DDoS) or data wipers, could accompany any renewal in hostilities in the coming weeks, possibly driven by heightened tensions over revelations of apparent war crimes in Bucha hindering further negotiations.

These cyber attacks remain most likely to target organisations directly supporting the Ukrainian government and military operations, though there is an increased risk of cyber “spill over” activity affecting entities in the West. Nevertheless, US federal agencies maintain that there is no indication of an imminent Russian threat towards US critical infrastructure and Western organisations. However, Washington’s support of Ukraine and sanctioning of Russia will sustain elevated risks of UPS devices being utilised in a multi-step cyber attack against critical US organisations, including the energy sector, in the coming weeks.

Similar to the previous monitoring period, pro-Ukraine hacking groups continue to escalate their cyber targeting tactics. Hackers such as the Network Battalion 65′ and Anonymous launched cyber operations targeting the Russian government, armed forces, defence sector and state-linked private sector firms. Anonymous has remained the most active and effective pro-Ukraine hacking group during the monitoring period, with the majority of its attacks remaining aimed at expressing political grievances against or disrupting Russia’s military “aggression” in Ukraine.

Nevertheless, the group continues to call for a boycott of companies included in its “comprehensive list” of firms that continue to operate in Russia despite its military offensive in Ukraine, sustaining risks that Anonymous will target Western firms still operating in the country in the coming weeks. Meanwhile, condemnation from the international community following revelations of Moscow’s reported war crimes against Bucha residents is likely to contribute to an intensification in cyber attacks targeting Russian military entities in the coming week, exemplified by the Anonymous group’s purported leak of data of 64 Motor Rifle Brigade members, Russian forces occupying Bucha prior to 31 March.

Germany: Gazprom subsidiary put under state control in an attempt to improve energy security. On 4 April, German Economy Minister Robert Habeck announced that Gazprom’s German subsidiary Gazprom Germania is being put under state control with immediate effect until 30 September due to legal uncertainty. The decision came after Gazprom announced on 1 April that it no longer owns its German subsidiary Gazprom Germania which operates one of Germany’s biggest gas storage facilities that is critical to the country’s energy security. With the decision, German energy regulator Federal Network Agency became the trustee of Gazprom Germania in order to ensure public safety and to safeguard supplies, according to Habeck. It is likely that other Gazprom subsidiaries across Europe, including in the United Kingdom and Switzerland, will be nationalised or put under state control in the coming months as legal uncertainties threaten energy disruptions.

Lithuania: Expulsion of Russian ambassador heightens regional tensions and risk of tit-for-tat expulsions. On 4 April, Lithuania’s Foreign Ministry announced that the Russian ambassador has been asked to leave the country, downgrading Lithuania’s diplomatic relations with Russia over the ongoing war in Ukraine. The move follows the discovery of atrocities in Bucha and several other Ukrainian villages, towns, and cities perpetrated by Russian forces. The Foreign Ministry further noted that the Lithuanian ambassador in Moscow will be recalled imminently, with the Lithuanian embassy in Kyiv set to be reconstituted in due course. After Russia expelled four Lithuanian diplomats in a tit-for-tat expulsion in late March, the expelling of the Russian ambassador is highly likely to provoke further departures. Furthermore, there is a high likelihood that the other Baltic states will follow in Lithuania’s footsteps, heightening regional tensions and exposing diplomatic missions and private enterprises in Russia with Baltic nationals to the risk of summary expulsion.

Kyrgyzstan: Deal to complete nationalisation of gold mine underlines deterioration of business environment. On 4 April, Kyrgyz President Sadyr Japarov announced that the government had struck a deal with Canadian-owned Centerra Gold that is set to end a years-long dispute over the Kumtor gold mine, completing its nationalisation. Japarov swept to power in 2021 and had long pledged to nationalise the mine, which will now see Centerra cede its control in exchange for the state-owned Kyrgyzaltyn company ceding its 26 percent stake in Centerra itself. Following the announcement of the deal, Japarov stated that Kyrgyzstan remains “open for business” and welcomed foreign investment. However, the fact that the government has succeeded in what was in effect a hostile takeover of the largest multinational interest in the country has severely undermined the country’s business environment, with the populist policies of the Japarov government and the ban on foreign investment in the extractives sector set to further discourage FDI.

The Russian invasion of Ukraine risks becoming a rallying point for far-right and neo-Nazi movements in Europe, creating a fertile environment for the radicalisation and training of far-right extremists capable of exporting violence across Europe. Several national intelligence agencies have warned that the militarisation of large quantities of the Ukrainian population, an influx in foreign fighters flocking to the Ukrainian cause, and significant quantities of NATO and captured Russian armaments will facilitate an uptick in far-right militarism across Europe after the conflict.

 The Covid-19 pandemic continues to serve as a central rallying point for anti-government sentiment in North America and Western Europe entering Q2 2022, enabling fringe groups to gain further traction by capitalising on economic hardship and an increasingly polarised political environment. Most recently, Canada’s “Freedom Convoy”, a truck-driver led demonstration in opposition to federal Covid-19 vaccine mandates, has attracted notable attention from right-wing groups, triggering a surge of engagement across online networks and support for physical protests. Furthermore, the “Freedom Convoy” movement’s ability to galvanise follow-on rallies across several continents underscores the threat of a more coordinated global right-wing presence driven in part by shared grievances relating to the pandemic. (Source: Sibylline)

 

05 Apr 22. UK Parliament’s Treasury Committee Publishes Reporting on Russian Sanctions. The U.K. Parliament’s Treasury Committee has published a report, Defeating Putin: The Development, Implementation and Impact of Economic Sanctions on Russia; https://committees.parliament.uk/committee/158/treasury-committee/news/165030/treasury-committee-publishes-report-on-defeating-putin-the-development-implementation-and-impact-of-economic-sanctions-on-russia/.  The cross-party Committee of MPs deplores the illegal and unprovoked invasion of Ukraine and supports the imposition of severe economic sanctions against Russia, but cautions that the UK is likely to feel economic consequences and calls on the Government to provide additional financial assistance for those on the lowest incomes. The Committee also calls for guidance issued to businesses involved in implementing sanctions to be clearer, and resource for the Office of Financial Sanctions Implementation to be boosted. The report considers the effectiveness of current measures, the scope for further action and the enforcement regime required to enact sanctions. The impact of the Government’s action on the UK economy, Russia and the wider world is also considered, as is the role of the financial services industry in implementing sanctions. See also UK House of Commons Library Research Briefing: Sanctions Against Russia. https://researchbriefings.files.parliament.uk/documents/CBP-9481/CBP-9481.pdf (Source: glstrade.com)

 

05 Apr 22. The flow of “bloody money” to Russia must stop, Kyiv’s mayor said as the West prepared new sanctions on Moscow after dead civilians were found lining the streets of a Ukrainian town seized from Russian invaders. Since Russian forces withdrew from northern Ukraine, turning their assault on the south and east, grim images from the town of Bucha near Kyiv, including a mass grave and bound bodies of people shot at close range, have prompted international outrage. Ukraine said it was bracing for about 60,000 Russian reservists to be called in to reinforce Moscow’s offensive in the east, where Russia’s main targets have included the port of Mariupol and Kharkiv, the country’s second-largest city. Satellite images taken weeks ago of Bucha show bodies of civilians on a street, a private U.S. company said, undercutting the Russian government’s claims that Ukrainian forces caused the deaths or that the scene was staged. Ukrainians who cut their teeth in the 2014 street uprising that ousted then-President Viktor Yanukovich are now in a vanguard of volunteers fighting “Russian propaganda”, which for years had spread inside Ukraine and beyond. Eight years of practice in countering disinformation, they say, prepared them for Russia’s invasion. U.S. President Joe Biden accused Russian President Vladimir Putin of war crimes and called for a trial. Biden’s National Security Advisor Jake Sullivan told reporters that the U.S. would build a case at the International Criminal Court or another venue. (Source: Reuters)

 

05 Apr 22. Europe weighs ban on Russian coal and oil after Bucha killings. A European ban on Russian coal and oil imports is on the table as part of a new raft of sanctions in response to reports of atrocities carried out by Russian troops in Ukraine. Footage emerged over the weekend of civilian killings and mass graves in the city of Bucha, just outside Kyiv. The US and EU said they would respond by intensifying sanctions. French president Emmanuel Macron yesterday said there were “very clear indications” war crimes had been committed and that coal and oil should be included in any new sanctions. EU environment commissioner Virginijus Sinkevičius echoed the call. Commissioners are expected to formally endorse a fifth package of sanctions on Russia today, which will be voted on by member states tomorrow. Any intensification is likely to exclude gas, given member states’ reliance on Russian imports. Macron said French authorities were co-ordinating with other EU member states over the next steps — in particular Germany, which is wary of cutting off Russian energy imports. The finger pointing over the state of European energy policy continued, meanwhile, with the head of Enel, the world’s second-largest utility, saying the bloc should have “aggressively” addressed its dependence on imported gas long ago. US President Joe Biden said a war-crimes tribunal should be set up over the Bucha killings and said the US would also look to add more sanctions. Washington has already banned Russian coal, oil and gas, and the White House has indicated it is considering widening the net on some existing sanctions to hit third parties. Our Lex columnists argue the unilateral imposition of such so-called “secondary sanctions” by the US could be circumvented. Meanwhile, Beijing, whose response will be key in any efforts to isolate Russia from global markets, remained silent on the alleged war crimes. (Source: FT.com)

 

05 Apr 22. Russia moves closer to default as Washington blocks debt payments through US banks. JPMorgan declined to process two coupon payments due on Monday. Although the US Treasury has apparently left the door open to continuing payment using dollars not frozen by sanctions, investors said it would be ‘technically difficult’ to get the cash to western bondholders. The US Treasury said it would halt Russia’s ability to make debt payments in dollars through American banks, bringing Moscow a step closer to a possible default on its obligations to international investors. The move by US authorities threatens to bring an end to a period since the invasion of Ukraine nearly six weeks ago in which Moscow has kept up payments on its dollar bonds, confounding many investors’ expectations that western sanctions and Russian currency controls would drive the country into its first sovereign default since 1998. “The US Treasury will not permit any dollar debt payments to be made from Russian government accounts at US financial institutions. Russia must choose between draining remaining valuable dollar reserves or new revenue coming in, or default,” a US Treasury spokesperson said late on Monday. Russian dollar bond prices, which had rebounded somewhat from their post-invasion slump, fell on Tuesday. A bond maturing in 2028 traded at a price of 34 cents on the dollar, down from 42 cents on Monday. (Source: FT.com)

 

05 Apr 22. Ukraine morning briefing: Five developments as Russians forced to retreat from key northern areas.

Good morning. Russian troops are preparing for a big attack in the Luhansk region of eastern Ukraine, officials warned on Monday night, urging a mass evacuation.

However, in the North the Ukrainians are pushing back their adversaries.

Here’s what happened overnight – and you can follow the latest updates in our liveblog.

1. MoD: Ukraine gains back ground

Ukrainian forces have retaken key northern terrain, forcing Russian troops to retreat from areas around the city of Chernihiv and north of Kyiv, the UK’s Ministry of Defence said on Tuesday.

Low-level fighting is likely to continue in some of the recaptured areas, it warned, but will reduce this week as the remainder of the Russian forces withdraw.

Many Russian units withdrawing from northern Ukraine are likely to require significant re-equipping and refurbishment before being available to redeploy for operations in eastern Ukraine, such as an expected attack on the Luhansk region.

2. Zelensky to address UN today

Volodymyr Zelensky will address the UN Security Council for the first time at a meeting on Tuesday that is certain to focus on what appears to be deliberate killings in the town of Bucha on the outskirts of the capital Kyiv.

The discovery after the withdrawal of Russian troops has sparked global outrage and vehement denials from the Russian government.

According to Ukraine’s prosecutor-general Iryna Venediktova, the bodies of 410 civilians have been removed from Kyiv-area towns that were recently retaken from Russian forces.

Mr Zelensky said his government was “doing everything possible to identify all the Russian military involved in these crimes as soon as possible”.

He added: “The time will come when every Russian will learn the whole truth about who of their fellow citizens killed, who gave orders, who turned a blind eye to the murders. We will establish all of this – and make it known to the world.”

3. Kick Russia off UN council, says Ukraine

There should be no place for Russia on the UN Human Rights Council, Ukraine’s foreign minister said on Monday night.

“Spoke with UN Secretary General @AntonioGuterres on the current security situation and the Bucha massacre,” Dmytro Kuleba tweeted.

“Stressed that Ukraine will use all available UN mechanisms to collect evidence and hold Russian war criminals to account. No place for Russia on the UN Human Rights Council.”

Liz Truss on Monday urged France and Germany to agree to tough new sanctions against Moscow.

4. Russia vows to expel Western diplomats

Russia will respond proportionately to the expulsion of its diplomats from a number of Western countries, its ex-president Dmitry Medvedev said late on Monday.

“Everyone knows the answer: it will be symmetrical and destructive for bilateral relations,” Mr Medvedev said in a posting on his Telegram channel. “Who have they punished? First of all, themselves.”

On Monday, France said it would expel 35 Russian diplomats over Moscow’s actions in Ukraine and Germany declared a “significant number” of Russian diplomats as undesirable.

“If this continues, it will be fitting, as I wrote back on 26th February – to slam shut the door on Western embassies,” Mr Medvedev said. “It will be cheaper for everyone. And then we will end up just looking at each other in no other way than through gunsights.”

5. Russia nears default as US stops bond payments

Russia’s latest sovereign bond coupon payments have been stopped, a spokesman for the US Treasury said, putting it closer to a historic default.

The latest payments have not received authorisation by the US Treasury to be processed by correspondent bank JPMorgan, Reuters reported.

The payments were due on bonds due in 2022 and 2042. The correspondent bank processes the coupon payments from Russia, sending them to the payment agent to distribute to overseas bondholders.

A US Treasury spokesman said: “Today is the deadline for Russia to make another debt payment. Beginning today, the US Treasury will not permit any dollar debt payments to be made from Russian government accounts at US financial institutions. Russia must choose between draining remaining valuable dollar reserves or new revenue coming in, or default.”

(Source: Daily Telegraph)

 

04 Apr 22. Russians Retreating from Around Kyiv, Refitting in Belarus. Roughly two-thirds of Russian forces used to target Ukraine’s capital departed Kyiv and are refitting in Belarus, a senior defense official speaking on background said today.

“We assess that they are largely consolidating themselves in Belarus prior to some level of redeployment back into Ukraine,” the official told Pentagon reporters.

That does mean, however, that about a third of the forces President Vladimir Putin used to invade his neighbor are still near Kyiv. The official cannot predict when or if the nearby group of remaining Russian units will retreat to join the other of their forces already consolidated in Belarus.

“What we continue to believe is that they’re going to be refit, resupplied, perhaps maybe even reinforced with additional manpower, and then sent back into Ukraine to continue fighting elsewhere,” the official said. “Our best assessment … is that they will be applied in the eastern part of the country in the Donbas region.”

Putin launched more than 125 battalion tactical groups into Ukraine Feb. 24. Looking across the country, the majority of those units are still in Ukraine.

In Bucha, a town on the western outskirts of Kyiv and scene of heavy fighting, Ukrainian troops found evidence of Russian murders of local civilians. “We can’t independently confirm the reports of atrocities in Bucha,” the official said. “We have no reason whatsoever to refute the Ukrainian claims about these atrocities. Clearly, they are deeply, deeply troubling.”

American officials warned that the Russian invasion of Ukraine would be brutal, “and they have proven to be that and then some,” the official said.

While the Russian retreat from Kyiv is heartening, no one is calling this a Ukrainian victory; though, Putin’s goal to overthrow Ukraine’s elected government has been thwarted. “Mr. Putin made it clear he didn’t … acknowledge Ukrainian sovereignty,” the official said. “He made it very clear that he was after regime change in Ukraine. A key piece of achieving that regime change was taking the capital city. He has failed to do that. … They’re moving away from Kyiv.”

But that does not mean Kyiv is out of danger. The capital can still be hit by air attacks and long-range fires. “Nobody is taking this for granted,” he said. “Nobody is spiking any football here. The truth is, we’re not sure exactly what the long-range goal here is.”

In the meantime, the United States is delivering weapons and supplies to the embattled Ukrainian forces. There is a new $300 million pot of money that can be used to get these needed capabilities into Ukraine, a process that is being rushed.

“Everything we’re doing with respect to Ukraine is being expedited — everything,” he said.  (Source: US DoD)

 

04 Apr 22. Volodymyr Zelensky visits Bucha on Monday, an area near Kyiv where Russian troops were accused of committing atrocities as they retreated. Volodymyr Zelensky has warned that Russians would begin a campaign to “hide their guilt” in the territories of Ukraine that remain under Moscow’s control, after its troops retreating from Kyiv’s suburbs in recent days left behind the corpses of hundreds of civilians. The remarks by Ukraine’s president on Tuesday came as the US Treasury announced new steps to make it more difficult for Russia to make debt payments in dollars through American banks, bringing Moscow a step closer to a potential default on its obligations to international investors. Zelensky toured the town of Bucha and other suburbs of Kyiv with foreign journalists on Monday, as investigators began to gather evidence of what Ukrainian officials have called “war crimes” committed by Russian troops before they withdrew. (Source: FT.com)

 

04 Apr 22. BIS Adds 120 Entities in Russia and Belarus to the Entity List. The U.S. Commerce Department’s Bureau of Industry and Security (BIS) will publish in the April 7 Federal Register a new rule adding 120 entities to the Entity List. Ninety-five (95) entities are being added as military end-users under the destinations of Belarus (24 entities) and Russia (71 entities) for acquiring and attempting to acquire items subject to the Export Administration Regulations (EAR) in support of Belarus and Russia’s militaries. The measures are effective as of April 1, 2022. Twenty-five (25) entities also are being added under the destination of Russia for acquiring and attempting to acquire items subject to the EAR in support of Russia’s military modernization efforts. This rule applies a highly restrictive policy of denial for the review of license applications for exports, reexports, and transfers (in-country) to the listed entities of all items subject to the EAR and prohibits the use of all license exceptions for such transactions. Additionally, the 95 ‘military end users’ are being designated under Footnote 3 of the Entity List—a designation added in the Russia export control measures that became effective February 24, 2022. Footnote 3 entities are subject to the Russian/Belarusian Military End User foreign-produced “direct product” rule (“Russia/Belarus MEU FDP Rule”) that applies to reexports, exports from abroad, and transfers (in-country) of certain foreign-produced items based on controlled U.S. technology, software, or tooling. Application of the Russia/Belarus MEU FDP Rule to these entities tremendously expands the universe of commodities, software, and technologies that they will be unable to obtain in the global market. In total, BIS has added 260 entities to the Entity List in response to Russia’s invasion of Ukraine. Click here for the upcoming Federal Register notice. Additional information on BIS’s actions in response to Russia’s invasion of Ukraine is available here: https://bis.doc.gov/index.php/policy-guidance/country-guidance/russia-belarus (Source: glstrade.com)

 

04 Apr 22. OFAC Targets Sanctions Evasion Networks and Russian Technology Companies Enabling Ukraine War. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has designated 21 entities and 13 individuals as part of its crackdown on the Kremlin’s sanctions evasion networks and technology companies, which are instrumental to the Russian Federation’s war machine. OFAC has also determined that three new sectors of the Russian Federation economy are subject to sanctions pursuant to Executive Order 14024 (E.O. 14024). This allows OFAC to impose sanctions on any individual or entity determined to operate or have operated in any of those sectors. As a result of these actions, all property and interests in property of the designated persons described above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. In addition, financial institutions and other persons that engage in certain transactions or activities with the sanctioned entities and individuals may expose themselves to sanctions or be subject to an enforcement action. The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person, or the receipt of any contribution or provision of funds, goods, or services from any such person. Click here for identifying information on the designated individuals and entities: https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20220331 (Source: glstrade.com)

–