(Bloomberg) — U.S. Secretary of State Antony Blinken joins a meeting of European Union foreign ministers Monday as Russia and Ukraine accuse each other of escalating military activity.
The EU warned that “any further military aggression by Russia against Ukraine will have massive consequences and severe costs.” Russian President Vladimir Putin has repeatedly denied he plans to attack Ukraine.
So far, the EU has been unwilling to discuss specific sanctions against Moscow, even behind closed doors, and some countries are worried that certain punishments could hit Europe harder than Russia, particularly amid the current energy crunch.
Key Developments:
- U.S. orders families of diplomats out of Ukraine, citing the risk of a conflict.
- European economies are at risk in a clash with Russia.
- U.K. warns that Russia is plotting to install a pro-Kremlin government in Ukraine.
- German navy head quits after making remarks favorable to Russia.
All times are local (CET).
Ukraine Tension Worsens Stock Selloff (3:32 p.m.)
The threat of armed conflict exacerbated a selloff in European stock markets, with the region’s main equities benchmark dropping by 3% on Monday. That’s the worst selloff since Nov. 26, when the omicron variant was first identified as a threat. Leisure and travel stocks were among Monday’s biggest losers in the Stoxx 600 index.
“We think that there will ultimately not be a full blown conflict, but the visibility is low and the potential for a rapid escalation exists,” JPMorgan Chase & Co. strategists wrote in a note to clients.
French Ambassador Says U.S., Europe Aligned (3:22 p.m.)
Philippe Etienne, the French ambassador to the U.S., said that European nations and the U.S. are aligned in a strategy to deter Putin from taking any additional aggressive action and to keep lines of diplomacy open to resolve the crisis over a longer period.
“The French approach is not to deal with diplomacy only,” Etienne said Monday on Bloomberg Surveillance. “It’s also a clear indication on the European side that we will take the measures to face and to answer aggression. So it’s this dual approach where I do not see differences between the Europeans and the Americans.”
Zelenskiy Calls on Meeting to Discuss National Security (2:41 p.m.)
Ukrainian President Volodymyr Zelenskiy called for a meeting of the National Defense and Security Council on Monday to discuss “ensuring national security from internal and external threats, the economy, energy, the fight against coronavirus.”
Oleksiy Danilov, secretary of the council, will give a press briefing around 6:30 p.m. Kyiv time.
Russian Central Bank Halts FX Purchases to Protect Ruble (2:14 p.m.)
The Bank of Russia said it’s halting purchases of hard currency in a bid to ease pressure on the ruble, which has tumbled amid tensions over Ukraine. The Russian currency pared losses after the announcement, trading down 1.8% at 78.6450 per dollar as of 4:04 p.m. in Moscow
Johnson Says Ukraine Invasion Would Echo Chechnya (2:02 p.m.)
U.K. Prime Minister Boris Johnson warned Russia that an invasion of Ukraine would result in a painful and bloody battle, echoing the war in Chechnya.
“Invading Ukraine from a Russian perspective is going to be a painful, violent and bloody business,” Johnson tells reporters on a visit to a hospital in Milton Keynes, England. “I think it’s very important to people in Russia to understand that this could be a new Chechnya.”
Asked if an invasion will go ahead, Johnson replied: “I don’t think it’s by any means inevitable now. I think that sense can still prevail.”
Kremlin Sees ‘Very High’ Risk of Ukrainian Offensive in Donbas (12:55 p.m.)
Russia has observed a buildup of Ukrainian forces along the frontline with Moscow-backed separatists and sees a “very high” risk of an offensive by Kyiv, Kremlin spokesman Dmitry Peskov said on a conference call on Monday, declining to provide details.
“The threat is there and it’s very high, higher than before,” Peskov said, as he blamed the U.S. and NATO for increasing tensions, saying the U.S. move to evacuate diplomats’ families from Kyiv exacerbated the situation. Ukraine has denied any plans to retake the nation’s eastern Donbas region by force.
Ukraine Distrusts Russian Denial of Invasion Plans: Ambassador to U.K. (12:36 p.m.)
Ukraine doesn’t believe Russia’s assertion that it has no plan to invade, the country’s ambassador to the U.K., Vadym Prystaiko, told Bloomberg TV.
“We do not believe what Putin is saying: He has been in Ukraine and fighting with us for the last seven years,” Prystaiko said. “So why would we believe him right now?”
Germany Yet to Decide on Artillery for Ukraine (12:35 p.m.)
The German government has yet to make a decision on whether to approve a delivery of artillery pieces to Ukraine from Estonia, according to a defense ministry spokesman.
The weapons belonged to the former East German army and were transferred first to Finland and then on to Estonia, spokesman Christian Thiels said at a regular government news conference. Both German and Finnish approval is required before Estonia can deliver them to Ukraine, in line with standard practice in such cases, he added.
Germany has ruled out directly supplying Ukraine with “lethal weapons” despite pressure from Kyiv.
Separately, a foreign ministry spokesman confirmed that Germany will help families of embassy staffers and government-linked institutions to leave Ukraine.
EU Announces Financial Support for Ukraine (12:19 p.m.)
European Commission President Ursula von der Leyen announced new funds for Ukraine that includes an emergency macro-financial assistance package of 1.2 billion euros ($1.4 billion), according to a statement on Monday. The funds will include both grants and loans.
The commission will also start work on a second, longer-term package and plans to allocate another 120 million euros to Ukraine in bilateral assistance.
Latvia Seeks More Support From NATO (11:13 a.m.)
Latvia called on NATO to boost its presence in eastern member states, citing the “continuous” military buildup of Russian and Belarusian forces.
“It is time to increase allied forces presence in the Alliance’s Eastern flank both as measures of defense and deterrence,” Latvian Foreign Minister Edgars Rinkevics said on Twitter. NATO has announced several deployments of ships and aircraft to members, including Lithuania and Bulgaria.
Ireland Slams Nearby Russian Naval Exercise (10:36 a.m.)
Irish Foreign Minister Simon Coveney said Russia’s intentions to undertake military exercises about 240 kilometers (149 miles) off the Irish southwest coast is “not welcome and not wanted right now,” particularly given the location would effectively be on the western borders of the EU.
While such an exercise would take place in part of Ireland’s exclusive economic zone, the country doesn’t have the power to stop Russia from doing so since they would be in international waters, he said. “This isn’t time to increase military activity and tension in the context of what’s happening with and in Ukraine at the moment,” Coveney said.
U.K. Withdraws Some Embassy Staff, Dependants From Kyiv (10:36 a.m.)
The U.K. has withdrawn some of its staff and dependents from its Kyiv embassy “in response to growing threat from Russia,” according to a tweet from the foreign office on Monday.
The move comes after the U.S. announced overnight that it was ordering family members of its diplomats to leave Ukraine, while non-essential staff would be able to depart voluntarily.
Romania Urges Faster Sanctions Preparations (10:36 a.m.)
The European Union must speed up its preparations for possible sanctions against Russia, Romanian Foreign Minister Bogdan Aurescu told reporters on his arrival for the Brussels meeting.
Aurescu said “this is the most powerful instrument which the EU can use in order to deter further Russian aggression,” adding that for this reason “we have to speed up the preparation of sanctions.”
The minister said that his colleagues will in their final conclusions “state very firmly that the concept of spheres of influence is obsolete and it should not be used in the current European security context.”
So far the EU has been reluctant to discuss specific penalties for Moscow, causing some to question how firmly the western alliance would respond to Russian action.
Denmark Threatens ‘Never Seen Before’ Sanctions (9:40 a.m.)
Danish Foreign Minister Jeppe Kofod warned that the EU was ready to impose sanctions “never seen before” against Russia in the event it invades Ukraine.
“We are ready to undertake the most severe sanctions, also more severe than in 2014,” he said, referring to the measures imposed by the bloc after Russia annexed Crimea. Kofod said Putin would be “totally isolated” and would pay a heavy price if he tried to use military force to change Europe’s borders.
Ukraine Says U.S. Decision to Remove Families ‘Premature’ (9:31 a.m.)
The decision to remove families of U.S. diplomats from Kyiv was “premature,” Oleh Nikolenko, a spokesman from the Ukrainian foreign ministry, said on Monday.
There has been “no significant change in the security situation recently” because the threat of new waves of Russian aggression has been the same since 2014 and the build-up of Russian troops near Ukraine’s border began in April, Nikolenko said.
European Gas Extends Gain With Threat of Conflict (9:21 a.m.)
European natural gas prices gained as much as 7% at start of trading on Monday. Should the tensions between Russia and Ukraine escalate further, uncertainty around the impact on European gas supplies could briefly push prices to fresh records.
Western sanctions on the newly built Nord Stream 2 pipeline would “potentially end up curtailing flows to Europe for an indefinite period,” Goldman Sachs said in a note.
U.S. Mulls Sending Troops to Eastern Europe, Baltics (9:21 a.m.)
U.S. President Joe Biden is considering sending troops, warships and aircraft to Eastern Europe and the Baltics to support allies in the North Atlantic Treaty Organization, the New York Times reported.
That could involve sending 1,000 to 5,000 troops to eastern Europe, a number that could be boosted tenfold if necessary, according to the report.
Invasion Would Halt NS2: Luxembourg Minister (8:53 a.m.)
The almost-completed Nord Stream 2 gas pipeline between Russia and Germany would not be allowed to operate if Moscow decided to invade Ukraine, according to Luxembourg Foreign Minister Jean Asselborn.
“If there is a Russian intervention then we’ll be in a totally different situation,” Asselborn, who has been in the post since 2004, said in an interview with Germany’s Deutschlandfunk radio. “Everyone knows, Putin included, that if there is an invasion no gas will flow through this pipeline.”
EU Says Families of Diplomats Staying in Ukraine (8:26 a.m.)
Josep Borrell, the EU’s foreign policy chief, told reporters ahead of the meeting that the bloc has no plans to ask the families of diplomats in Ukraine to leave, after the U.S. took such a step.
“Secretary Blinken will explain to us the reasons of this announcement,” Borrell said. “We are not going to do the same thing because we don’t know any specific reasons.”
The foreign ministers will not approve a package of possible sanctions against Russia today, Borrell said. “Be sure that everything will be ready when needed, but we are not going to announce any concrete measures.”
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
