Ukraine Latest: US ‘Actively Examining’ Russia Bond Carveout

(Bloomberg) -- US Treasury Secretary Janet Yellen said her department is “actively” examining whether to extend a sanctions carveout for Russian payments on foreign currency bonds. 

A video call between the European Union and Prime Minister Viktor Orban to discuss proposed sanctions on Russian oil imports that Hungary is resisting was postponed. President Joe Biden and Italian Prime Minister Mario Draghi discussed the war in a meeting at the White House. It was the first visit to Washington by a European Union leader since combat broke out in Ukraine on Feb. 24.

Ukraine’s natural gas grid said Russian flows to Europe via a key entry point will stop from Wednesday as Moscow’s forces disrupt operations, a move that has the potential to reduce supplies. A key committee in Finland’s parliament backed NATO membership. 

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

Key Developments

• Russia Trains Missiles on Ukraine’s Quiet Zone to Target Trade
• Spy Chief Says Ukraine Could Leave Russia Weaker But Aggressive
• Traders Prepare to Ditch Moscow Ruble Rate as Market Split Grows
• Ukraine, Russia Gas Clash Raises Threat to Europe’s Supply
• Draghi Urges Biden to Foster Long-Term Peace Plan for Ukraine

All times CET: 

Draghi Urges Biden to Foster Peace Negotiations (1:20 a.m.)

Draghi said allies should start work on negotiations toward a long-lasting peace process in Ukraine, even as they continue to sanction Russia over its invasion of the country.

“People are asking, how can we end those atrocities? How can we reach a cease fire? At the moment it is hard to have answers to that, but we need to think carefully about those questions,” he told Biden during a meeting at the White House Tuesday. He said that Russian President Vladimir Putin has failed at damaging the US alliance with Europe. Biden told Draghi that Italy has been one of the US’s closest allies in confronting the Kremlin. 

NATO Chief Stoltenberg Tests Positive for Covid-19 (9:53 p.m.)

NATO Secretary General Jens Stoltenberg has Covid-19, according to a tweet from the alliance’s press office. Stoltenberg is experiencing mild symptoms and will work from home, according to the statement. The diagnosis comes just days before NATO foreign ministers are due to meet in Berlin this weekend.

Biden to Meet Pelosi, Lawmakers Who Visited Ukraine (9:31 p.m.)

President Joe Biden will meet Tuesday afternoon with House Speaker Nancy Pelosi and other lawmakers who recently visited Ukraine, White House Press Secretary Jen Psaki said.

Among the issues expected to be discussed are whether the US should designate Russia as a state sponsor of terrorism. The meeting comes hours before the House plans to vote on a nearly $40 billion aid bill for Ukraine.

US Reviews Carveout for Russian Bond Payments (7:30 p.m.)

The US Treasury is busy examining whether or not it will extend a time-limited carveout from sanctions measures that has so far allowed Russia to keep making payments on its foreign currency bonds and steer clear of default. 

The future of those provisions -- which allow US holders of Russian sovereign bonds to receive payments on the debt and are currently set to expire May 25 -- are being “actively” examined at present, Yellen told lawmakers Tuesday in response to questioning.

“We want to make sure that we understand what the potential consequences and spillovers would be of allowing the license to expire,” Yellen said.

Zelenskiy Asks Malta to End ‘Golden Passports’ for Russians (7:01 p.m.)

Ukrainian President Volodymyr Zelenskiy said it is “high time” for Malta to end its support for so-called golden passports, which typically offer people citizenship in exchange for investing in a nation’s property or assets, for Russians. 

“It is high time to stop privileges for Russian citizens,” Zelenskiy said Tuesday in an address to Malta’s parliament. He also called on Malta to block Russian citizens’ access to real estate, bank accounts and yachts, among other things. 

EU Seeks to Boost Ukraine’s Food Exports Via Land (5:48 p.m.)

The EU is finalizing a plan to facilitate land exports of Ukraine’s stocks of food products with the Russian invasion blocking access to the country’s vital Black Sea ports. The bloc on Wednesday will consider a strategy that would address technical and bureaucratic initiatives to speed up the shipping of vegetable oils, corn and wheat, some of Ukraine’s key exports, people familiar with the discussions said.

The EU’s executive arm is concerned about logistical bottlenecks that could hamper efforts to utilize alternative land routes via neighboring countries, since infrastructure gaps could hinder exports despite recent moves to remove trade barriers with Kyiv. It will be a challenge to move a significant portion of the 25 million tons of products stuck there in time for the beginning of the next harvest season.

Ukraine Gas Grid Says Russia Flows Via Key Entry Point to Stop (5:20 p.m.)

Ukraine’s natural gas grid said Russian flows to Europe via a key entry point will stop from Wednesday as occupying forces disrupt operations, a move that has the potential to reduce supplies.

The Gas Transmission System Operator of Ukraine said it can no longer accept Russian gas transit via Sokhranivka from 7 a.m. local time, according to a statement on its website. It’s still possible for the fuel to be re-routed via another key entry point, allowing European contracts to be fulfilled, though it’s unclear who is responsible for making that decision.

Ukraine had already warned Russia that the actions of its troops and occupiers in the Luhansk region could end up disrupting about a third of the gas the Eastern European nation transits to Europe. 

NSA Probing Kaspersky’s Reach in US (4:19 p.m.)

The National Security Agency is investigating the extent to which software made by the Russian cybersecurity company Kaspersky is embedded in US businesses and organizations amid rising security concerns over Russia’s invasion of Ukraine.

“I am still very worried about US companies that are using Kaspersky,” said Rob Joyce, the NSA’s director of cybersecurity, in an interview in which he revealed the inquiry. “We think that is ill-advised with this global situation.”

Some companies, including those in financial services, voluntarily abandoned Kaspersky antivirus products after the US government banned the company’s software from federal systems in 2017, citing espionage fears. But the company’s products continue to be used in the US, which Joyce called “an installed base across random critical infrastructure and industry.”

Swedish Ruling Party Reported to Say Yes to NATO (2:37 p.m.)

Sweden’s ruling Social Democrats are set to declare their support on May 15 for the country to join NATO, Finland’s largest newspaper Helsingin Sanomat reported, citing sources it didn’t identify.

Finland’s government has been aware of the conclusion since at least last week, the newspaper said. 

Previous reports by news agency TT indicate that Swedish Prime Minister Magdalena Andersson wants to wait for the delivery of the country’s cross-party security policy review, due May 13, before she decides on the NATO position.

Zelenskiy Urges Slovakia to Back Russian Oil Ban (1:57 p.m.)

Ukrainian President Volodymyr Zelenskiy urged Slovak lawmakers to back the EU’s proposed ban on purchasing oil from Russia as the government in Bratislava tries to negotiate a three-year exemption with the bloc because of its heavy dependence on Russian crude.

Zelenskiy thanked Slovakia for supplying his military with weapons but said that the EU’s sixth package of sanctions was also vital for Ukraine’s defense. “If they will be weaker, it will be harder for us. We need this sixth package.” Zelenskiy told lawmakers in a video speech. “We understand it will be hard for you, but banning oil is important.”

Finnish Parliament Committee Says Country Should Join NATO (12:25 p.m.)

Finland should join the North Atlantic Treaty Organization to best ensure the security of all Finns, according to the parliament’s defense committee, as the nation prepares to decide on an application within days.

Russia’s invasion of Ukraine galvanized public support for joining the military alliance. Finland is, along with Sweden, considering NATO membership and giving up its non-alignment that stretches back to before the cold war.

EU Approves Release of 600 Million Euros for Ukraine (12:08 p.m.)

The EU has approved the release of 600 million euros to help Ukraine with its urgent financial needs, according to bloc officials who asked not to be identified. The money is part of the EU’s 1.2 billion euro emergency assistance package adopted by the bloc early this year.

The European Commission is expected to complete the process Wednesday and the funds could be transferred in the coming days, according to one of the officials.

Ukrainian Troops Retreat From Popasna in Luhansk Region (12:06 p.m.)

Ukrainian troops retreated from Popasna in the Luhansk region to more fortified positions, the area’s Governor Serhiy Haiday said in statement on Facebook. 

Fighting over the city, which is near the border between the Luhansk and Donetsk regions and occupies strategic heights, was ongoing over the last two months. 

German, Dutch Foreign Ministers Visit Kyiv (12:00 p.m.)

German Foreign Minister Annalena Baerbock and her Dutch counterpart Wopke Hoekstra traveled to Kyiv Tuesday where they will hold meetings with Ukrainian government officials.

Baerbock visited the town of Bucha near the capital, which is the site of alleged Russian atrocities against civilians, while Hoekstra was in the Kyiv suburb of Irpin, where he viewed bombed-out houses and buildings. “These acts cannot go unpunished,” he said in a tweet. “The Netherlands is committed to establish the truth and achieve justice.”

Macron Speaks With Orban on Energy Security (11:48 a.m.)

Orban spoke about energy security on Tuesday with Macron, whose country holds the EU’s rotating presidency, an aide to the Hungarian leader said, as diplomacy over potential sanctions on Russian oil continues. 

A video call between Orban, European Commission President Ursula von der Leyen and Hungary’s neighbors won’t be held Tuesday, according to a spokesman for the bloc. He didn’t immediately explain why the call, which was announced the previous day, was delayed. 

The EU’s sixth sanctions package would ban crude oil shipments over the next six months and refined fuels by early January, but Hungary has threatened to veto the measures due to its reliance on Russian energy imports. Orban and von der Leyen made progress in talks over the issue Monday but failed to reach a breakthrough, according to both sides. 

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