Ukraine latest: Russia says it controls the Mariupol steel works

Russia said its forces took full control of the Azovstal steel works, the last holdout of Ukrainian troops in Mariupol, after the remaining defenders surrendered. The strategic southern port city has been devastated in almost three months of assault.

Finance chiefs from the Group of Seven major economies pledged to deliver almost $20 billion of support to Ukraine this year. The European Union said it may sell bonds in July to help finance an aid package.

President Volodymyr Zelenskiy called on allies to help ensure that Russia is made to pay reparations. Ukraine estimated its direct war losses at $100 billion as of the start of May. The country’s foreign debt was downgraded by Moody’s, which said a drawn-out war is increasing the risk that Ukraine won’t be able to repay it.

Key Developments

• Putin’s War Means Russia’s Rich Aren’t Welcome at Davos Anymore
• G-7 Officials Roll Out $19.8 Billion Aid Package for Ukraine
• Scholz’s Push to Make Germany a Real Military Force Hits Trouble
• Investors Urge US to Extend Russian Bond Payment Waiver
• Ruble Hits 5-Year High as Gazprom Clients Heed Putin on Gas
• Firm With a Royal Sheen Helped Abramovich Spread His Wealth

All times CET:

Putin’s War Means Russia’s Rich Aren’t Welcome at Davos Anymore (7:06 a.m.)

The first in-person meeting in the Swiss Alps of the World Economic Forum in two years starts on Sunday after Covid-related interruptions. The frostiness toward Russia, whose oligarchs have thrown some of the most famously glitzy parties at the World Economic Forum, will be palpable.

President Vladimir Putin’s decision to invade Ukraine has put an abrupt end to decades of Russian presence and influence in Davos. There will likely be a more subdued tone as a whole, with the WEF attended by a clutch of Ukrainian officials seeking to keep global attention on their plight with the war in its third month. A keynote address via video conference will be given by Zelenskiy.

It will be the first WEF in Switzerland since the fall of communism without a single Russian official or business leader. Russian companies have been nixed as strategic partners, a group of international businesses that play a prominent part in the calendar of events at a cost of 600,000 Swiss francs ($615,000) per year.

Finland Loses Main Gas Supply as Russia Turns Off Taps (6:55 a.m.)

Finland became the third European country cut off from Russian natural gas after refusing to pay in rubles. Gas accounts for only about 5% of the Nordic country’s energy mix, though. Poland and Bulgaria already had their supplies turned for the same reason.

Finnish importer Gasum Oy said natural gas supplies to Finland under its supply contract have been cut off, according to a statement Saturday.

Gasum will supply natural gas to its customers from other sources through the Balticconnector pipeline, while its gas filling stations will continue in normal operation, it said.

Ukraine Cut by Moody’s on Debt Risk From Drawn-Out War (10:55 p.m.)

Moody’s Investors Service cut Ukraine’s credit rating to the third-lowest level, saying a drawn-out war is raising the risks that the nation won’t be able to repay its debt.

The agency downgraded Ukraine by a notch to Caa3, rated on par with serial defaulters like Ecuador and Belize. At the Caa3 rating level, Moody’s expects a recovery in the event of default of typically between 65% to 80%, according to a statement published Friday.

Zelenskiy Says Russia Must Be Made to Pay Reparations (10:15 p.m.)

Russia must pay compensation for the damage its aggression has inflicted on Ukraine, Volodymyr Zelenskiy said in his daily video address to the nation, calling on allies to “create a mechanism” for reparations.

The Ukrainian president said countries should seize Russian assets on their territories and create a fund that will help cover war losses, as well as setting up an international commission to look into compensation claims. Ukraine estimated its direct losses at about $100 billion as of the beginning of May.

UK Seeks to Send Arms to Moldova, Truss Tells Telegraph (9:55 p.m.)

The UK wants NATO members to send modern weaponry to Moldova, which may need to defend itself from a potential attack by Russia, the Telegraph reported citing Foreign Secretary Liz Truss.

“I would want to see Moldova equipped to NATO standard,” Truss told the newspaper in an interview. “This is a discussion we’re having with our allies.”

Russia Says It Took Control of Azovstal Steel Works (9:05 p.m.)

Russia forces took full control of the Azovstal steel works, the last holdout of Ukrainian troops in Mariupol, after the remaining defenders “surrendered,” the Ministry of Defense in Moscow said in a video statement.

Defense Minister Sergei Shoigu reported results of the months-long battle for the plant to President Vladimir Putin, according to the ministry. Thousands of Ukrainian troops had been hiding out in the catacombs beneath the giant factory, gaining hero status at home as they held off Russian forces even though they were surrounded and ran short of supplies. Ukraine didn’t immediately confirm the Russian claim.

The Defense Ministry in Moscow said 2,439 Ukrainian troops surrendered since May 16 at Azovstal, including at least one commander. Ukrainian officials have said they expect Russia to return the prisoners in a swap in the future, but Moscow has said it may try at least some of them for war crimes and has taken many to Russian territory.

Russia Adds Khodorkovsky, Kasparov to List of Foreign Agents (8:09 p.m.)

Russia’s Justice Ministry designated Mikhail Khodorkovsky and Garry Kasparov as “foreign agents,” Tass reported, in a largely symbolic move against outspoken Kremlin critics who’ve lived abroad for years.

Khodorkovsky, the one-time tycoon whose Yukos oil giant was seized by the government after he challenged the Kremlin’s control of politics, was sent out of Russia following his release from prison in 2013. Kasparov, a chess grandmaster who has frequently criticized President Vladimir Putin, also lives outside the country.

Authorities have used the “foreign agent” designation against scores of activists and critics. Inside Russia, those hit with the label face onerous disclosure and other requirements and frequent audits by officials. Interfax said the Justice Ministry accused Khodorkovsky and Kasparov of conducting political activity with funding from the US and Ukraine.

Canada Sees G-7 Interest in Russian Asset Seizure Law (5:24 p.m.)

Finance Minister Chrystia Freeland said her Group of Seven counterparts are looking closely at Canada’s new legislation that would allow the confiscation of Russian assets to help pay for rebuilding in Ukraine.

The G-7 recognizes “that Ukraine’s financial needs are huge. The needs for the rebuilding are huge and it is entirely appropriate for the aggressor to help pay for that rebuilding,” she said.

Canada also unveiled new sanctions on 14 Russian individuals and a ban on the import and export of luxury goods to and from Russia.

Germany Says No Need to Suspend EU Deficit Rules on War (5:18 p.m.)

German Finance Minister Christian Lindner sees no need to suspend euro-zone deficit rules in 2023, saying that despite Russia’s invasion of Ukraine, the economic fallout isn’t a reason for a further exemption.

The European Commission will on Monday propose extending a suspension of the budget rules until end-2023, people familiar with the matter told Bloomberg. Under the rules, which had been set aside until the end of this year due to the pandemic, national deficits are limited to 3% of gross domestic product and public debt to 60% of output.

Putin Demands Tighter Control Over Digital Space (3:32 p.m.)

Russia has successfully defended itself against a massive increase in coordinated cyberattacks by foreign states including on “critical” infrastructure since the start of its invasion of Ukraine,  Putin told a televised meeting of his Security Council.

He called on officials to create a state system to prevent information leaks online, without elaborating. Protections against attacks on information systems and communication networks must continue to be strengthened so there are no digital “weak points” to exploit, Putin said.

The Kremlin has increasingly cracked down on foreign social media and technology companies, blocking access to some services, since the war, arguing it’s preserving “digital sovereignty.” Critics say it’s attempting to prevent Russians seeing information about the invasion that contradicts official versions of events.

G-7 Officials Roll Out $19.8 Billion Package for Ukraine (3:20 p.m.)

Finance chiefs from the Group of Seven leading economies pledged to deliver $19.8 billion of budget aid to Ukraine this year as the country struggles to continue functioning amid destruction wrought by Russia’s invasion.

The amount includes $9.5 billion of commitments made in the run-up to this week’s meeting, “to help Ukraine close its financing gap and continue ensuring the delivery of basic services to the Ukrainian people.”

EU Could Tap Markets in July for Ukraine Funds (3:12 p.m.) 

The European Union told member states that it could tap markets in July to pay for a first installment of funds for Ukraine out of the 9 billion euros it has allotted for Kyiv’s short-term needs, according to people familiar with the discussion. Ukraine has said it needs about 5 billion euros per month.

The EU said it plans to transfer three or four more installments by the end of the year, said the people, who asked not to be identified because the talks were private. The loans will have maturities of more than 20 years and interest payments will be covered by the EU budget.

Schroeder Quits Rosneft Job Over Putin Ties (2:25 p.m.)

Former German Chancellor Gerhard Schroeder is quitting his post as chairman of Russian state-owned oil company Rosneft PJSC after widespread calls for him to cut ties to Russian President Vladimir Putin over the invasion of Ukraine.

Rosneft said in a statement Friday that the 78-year-old Schroeder had informed the company he was unable to extend his tenure. Schroeder, a Social Democrat like current Chancellor Olaf Scholz, led the government 1998 to 2005. He has become an embarrassment for his Social Democratic Party after refusing to distance himself from Putin and give up lucrative jobs with Russian state-owned energy companies.

Turkey’s Erdogan Plans to Speak With NATO Chief (1:14 p.m.)

President Recep Tayyip Erdogan said he plans to speak with NATO Secretary-General Jens Stoltenberg and others about Turkey’s concerns over bids by Finland and Sweden to join the defense alliance.

Turkey this week blocked the Nordic nations’ formal NATO application from moving forward over Erdogan’s claim that they support Kurdish militias.

Terrorist groups linked with Kurdish PKK militants have been “freely demonstrating” in Europe and the West in general, Erdogan said in Istanbul.

New LNG Deal to Help Finland, Estonia End Russian Imports (11:40 a.m.)

Excelerate Energy Inc. signed a 10-year deal to move a ship that stores liquefied natural gas to Finland, allowing the nation and its neighbor, Estonia, to end Russian natural gas imports as soon as winter.

Ruble Surges to 7-Year High as Gazprom Clients Heed Putin (11:34 a.m.) 

Russia’s currency surged to its highest level in seven years against the euro as more foreign companies appeared to be complying with Vladimir Putin’s demand that they switch to paying in Russia’s currency for natural gas.

The ruble jumped as much as 9% against the euro, hitting its strongest level since June 2015. The Russian currency was up 6.6% against the dollar at 58.0625 in Moscow.

Capital controls, collapsing imports and surging energy prices have left the ruble about 20% stronger than before the invasion of Ukraine almost three months ago.

Poland Calls for EU Help on Ukrainian Grain Shipments (11:04 a.m.)

The European Union needs to quickly help Poland in expanding the infrastructure needed to export Ukrainian grains to the Middle East and northern Africa, Polish Prime Minister Mateusz Morawiecki said on Friday.

Russia’s blockade of key Ukrainian Black Sea ports has stymied exports of grains and is forcing Kyiv to look for alternatives. Western officials have warned that Russia is attempting to weaponize food supplies.

Ukraine May Revive Rate Decisions as Soon as June (9:37 a.m.) 

The National Bank of Ukraine is considering a return to regular monetary policy decisions as soon as next month, three people with knowledge of discussions said.

Interest rate decisions were suspended in the aftermath of Russia’s February invasion, which devastated Ukraine’s economy and spurred inflation.

Stable Flows From Russia Drive Down Gas Prices (8:30 a.m.)

Natural gas prices in Europe declined again on Friday as rising stockpiles and stable Russian supplies counter some risk on Russian new payment rules. Benchmark front-month Dutch futures dropped as much as 3.3% to 88 euros per megawatt-hour, on pace for a 9.1% weekly loss.

War, Drought and Disease Hammer Livestock Farmers (6 a.m) 

Crop and energy costs surging in the wake of Russia’s war in Ukraine have compounded the woes for livestock producers, even as they struggle with everything from droughts curbing grazing lands to bird-flu outbreaks from North America to Europe that wiped out millions of poultry.

US, UN Mull Grain Export Plan, WSJ Says (1:26 a.m.)

The US and United Nations Secretary-General Antonio Guterres are reviewing plans for the possible export of Ukrainian grain by railway through Belarus to the Lithuanian port of Klaipeda, the Wall Street Journal reported, citing unidentified US officials. The US may offer a six-month sanctions break on Belarus’ potash fertilizer industry, the newspaper said.

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