Saturday, 03 December 2022 05:49

What to know after Day 283 of Russia-Ukraine war

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WESTERN PERSPECTIVE

The Group of Seven nations and Australia joined the European Union on Friday in adopting a $60-per-barrel price cap on Russian oil, a key step as Western sanctions aim to reorder the global oil market to prevent price spikes and starve President Vladimir Putin of funding for his war in Ukraine.

Europe needed to set the discounted price that other nations will pay by Monday, when an EU embargo on Russian oil shipped by sea and a ban on insurance for those supplies take effect. The price cap, which was led by the G-7 wealthy democracies, aims to prevent a sudden loss of Russian oil to the world that could lead to a new surge in energy prices and further fuel inflation.

U.S. Treasury Secretary Janet Yellen said in a statement that the agreement will help restrict Putin’s “primary source of revenue for his illegal war in Ukraine while simultaneously preserving the stability of global energy supplies.”

The agreement comes after a last-minute flurry of negotiations. Poland long held up an EU agreement, seeking to set the cap as low as possible. Following more than 24 hours of deliberations, when other EU nations had signaled they would back the deal, Warsaw finally relented late Friday.

A joint G-7 coalition statement released Friday states that the group is “prepared to review and adjust the maximum price as appropriate,” taking into account market developments and potential impacts on coalition members and low and middle-income countries.

“Crippling Russia’s energy revenues is at the core of stopping Russia’s war machine,” Estonian Prime Minister Kaja Kallas said, adding that she was happy the cap was pushed down a few extra dollars from earlier proposals. She said every dollar the cap was reduced amounted to $2 billion less for Russia’s war chest.

“It is no secret that we wanted the price to be lower,” Kallas added, highlighting the differences within the EU. “A price between 30-40 dollars is what would substantially hurt Russia. However, this is the best compromise we could get.”

The $60 figure sets the cap near the current price of Russia’s crude, which recently fell below $60 a barrel. Some criticize that as not low enough to cut into one of Russia’s main sources of income. It is still a big discount to international benchmark Brent, which slid to $85.48 a barrel Friday, but could be high enough for Moscow to keep selling even while rejecting the idea of a cap.

There is a big risk to the global oil market of losing large amounts of crude from the world’s No. 2 producer. It could drive up gasoline prices for drivers worldwide, which has stirred political turmoil for U.S. President Joe Biden and leaders in other nations. Europe is already mired in an energy crisis, with governments facing protests over the soaring cost of living, while developing nations are even more vulnerable to shifts in energy costs.

But the West has faced increasing pressure to target one of Russia’s main moneymakers — oil — to slash the funds flowing into Putin’s war chest and hurt Russia’s economy as the war in Ukraine drags into a ninth month. The costs of oil and natural gas spiked after demand rebounded from the pandemic and then the invasion of Ukraine unsettled energy markets, feeding Russia’s coffers.

U.S. National Security Council spokesman John Kirby told reporters Friday that “the cap itself will have the desired effect on limiting Mr. Putin’s ability to profit off of oil sales and limit his ability to continue to use that money to fund his war machine.”

More uncertainty is ahead, however. Covid-19 restrictions in China and a slowing global economy could mean less thirst for oil. That is what OPEC and allied oil-producing countries, including Russia, pointed to in cutting back supplies to the world in October. The OPEC+ alliance is scheduled to meet again Sunday.

That competes with the EU embargo that could take more oil supplies off the market, raising fears of a supply squeeze and higher prices. Russia exports roughly 5 million barrels of oil a day.

Putin has said he would not sell oil under a price cap and would retaliate against nations that implement the measure. However, Russia has already rerouted much of its supply to India, China and other Asian countries at discounted prices because Western customers have avoided it even before the EU embargo.

Most insurers are located in the EU or the United Kingdom and could be required to participate in the price cap.

Russia also could sell oil off the books by using “dark fleet” tankers with obscure ownership. Oil could be transferred from one ship to another and mixed with oil of similar quality to disguise its origin.

Even under those circumstances, the cap would make it “more costly, time-consuming and cumbersome” for Russia to sell oil around the restrictions, said Maria Shagina, a sanctions expert at the International Institute for Strategic Studies in Berlin.

Robin Brooks, chief economist at the Institute of International Finance in Washington, said the price cap should have been implemented when oil was hovering around $120 per barrel this summer.

“Since then, obviously oil prices have fallen and global recession is a real thing,” he said. “The reality is that it is unlikely to be binding given where oil prices are now.”

European leaders touted their work on the price cap, a brainchild of Yellen.

“The EU agreement on an oil price cap, coordinated with G7 and others, will reduce Russia’s revenues significantly,” said Ursula von der Leyen, president of the European Commission, the EU’s executive arm. “It will help us stabilize global energy prices, benefiting emerging economies around the world.”

** With Ukraine scrambling to keep communication lines open during the war, an army of engineers from the country’s phone companies has mobilized to help the public and policymakers stay in touch during repeated Russian missile and drone strikes.

The engineers, who typically go unseen and unsung in peacetime, often work around the clock to maintain or restore phone service, sometimes braving minefields to do so. After Russian strikes took out the electricity that cellphone towers usually run on, they revved up generators to keep the towers on.

“I know our guys — my colleagues — are very exhausted, but they’re motivated by the fact that we are doing an important thing,” Yuriy Dugnist, an engineer with Ukrainian telecommunications company Kyivstar, said after crunching through a half-foot (15 centimeters) of fresh snow to reach a fenced-in mobile phone tower on the western fringe of Kyiv, the capital.

Dugrist and his co-workers offered a glimpse of their new daily routines, which involve using an app on their own phones to monitor which of the scores of phone towers in the capital area were receiving electricity, either during breaks from the controlled blackouts being used to conserve energy or from the generators that kick in to provide backup power.

One entry ominously read, in English, “Low Fuel.”

Stopping off at a service station before their rounds, the team members filled up eight 20-liter (5.3 gallon) jerrycans with diesel fuel for a vast tank under a generator that relays power up a 50-meter (160-foot) cell tower in a suburban village that has had no electricity for days.

It’s one of many Ukrainian towns that have had intermittent power, or none at all, in the wake of multiple rounds of devastating Russian strikes in recent weeks targeting the country’s infrastructure — power plants in particular.

Kyivstar is the largest of Ukraine’s three main mobile phone companies, with some 26 million customers — or the equivalent of about two-thirds of the country’s population before Russia’s Feb. 24 invasion drove millions of people abroad, even if many have since returned.

The diesel generators were installed at the foot of the cell phone towers since long before the invasion, but they were rarely needed. Many Western countries have offered up similar generators and transformers to help Ukraine keep electricity running as well as possible after Russia’s blitz.

After emergency blackouts prompted by a round of Russian strikes on Nov. 23, Kyivstar deployed 15 teams of engineers simultaneously and called in “all our reserves” to troubleshoot the 2,500 mobile stations in their service area, Dugrist said.

He recalled rushing to the site of a destroyed cell tower when Russian forces pulled out of Irpin, a suburb northwest of Kyiv, earlier this year and getting there before Ukrainian minesweepers had arrived to give the all-clear signal.

The strain the war is putting on Ukraine’s mobile phone networks has reportedly driven up prices for satellite phone alternatives like Elon Musk’s Starlink system, which Ukraine’s military has used during the conflict, now in its 10th month.

After widespread infrastructure strikes last week, Ukrainian President Volodymyr Zelenskyy convened top officials to discuss the restoration work and supplies needed to safeguard the country’s energy and communication systems.

“Special attention is paid to the communication system,” he said, adding that no matter what the Russia has in mind, “we must maintain communication.”

RUSSIAN PERSPECTIVE

Flooding Ukraine with weapons is a destructive policy, Russian President Vladimir Putin pointed out in a phone call with German Chancellor Olaf Scholz on Friday, according to the Kremlin press service.

"Attention was drawn to the destructive policy that is being pursued by Western countries, including Germany, who are flooding the Kiev regime with weapons and training Ukrainian troops," the Kremlin press service said in a statement.

According to the Kremlin, "as a result of all this, as well as of the comprehensive financial support for Ukraine, Kiev keeps outright rejecting the very idea of talks." "In addition, it encourages radical Ukrainian nationalists to commit more heinous crimes against civilians," the statement added.

"The Russian president called on Germany to reconsider its approach with regard to Ukraine developments," the statement stressed.

The leaders of Russia and Germany discussed various aspects of the situation around Ukraine. "Putin once again explained the details of Russia’s approach to conducting its special military operation," the Kremlin press service noted.

The conversation was initiated by Germany. Putin and Scholz last held a phone call on September 13.

** Ukrainian President Vladimir Zelensky has announced new measures seeking to ban religious institutions deemed to have links with Russia. He said the move is intended to safeguard the nation’s “spiritual independence” amid Kiev’s conflict with Moscow.

The president's principal target is the Ukranian Orthodox Church, the country's largest, which is linked to the Moscow Patriarchate.

The statement comes as the SBU, Ukraine’s domestic security agency, launched what it called a “counter intelligence” action at several Ukrainian Orthodox Church sites in three regions. The raids targeted at least eight religious sites on Friday, aiming to identify individuals suspected of undermining Ukraine’s sovereignty.

Writing on Telegram, Zelensky said on Thursday that the National Security and Defense Council had held a meeting, which focused on “numerous facts of ties of certain religious circles in Ukraine with the aggressor state.” The Council has instructed Ukraine’s government to introduce a law to make it impossible for “religious organizations affiliated with centers of influence” in Russia to operate in the country, Zelensky said.

Meanwhile, Ukraine’s state watchdog responsible for overseeing the religious sphere was ordered to establish whether the Ukrainian Orthodox Church has religious links with the Moscow Patriarchate. 

The Council also accused Russian special services of “subversive activities” in the religious sphere and instructed all national security bodies to “identify and counter” these alleged efforts. According to Zelensky, Kiev will also impose personal sanctions on a number of individuals, with the list expected to be published in the near future.

The Ukrainian authorities also intend to check whether religious organizations have the right to use property located on the territory of the Kiev Pechersk Lavra, Zelensky said in an apparent reference to the Ukrainian Orthodox Church, which currently administers the site.

Last week, the lavra, which is considered to be the most prominent Orthodox Christian monastery in Ukraine, was raided by the SBU. The agency said it wanted to prevent alleged “subversive activities of Russian special services.” 

Ukraine has long experienced religious tensions, with a number of entities claiming to be the true Ukrainian Orthodox Church, challenging the authority of the Moscow Patriarchate.

The two main rival factions are the Ukrainian Orthodox Church, which declared independence from Moscow after Russia launched its military operation, and the Orthodox Church of Ukraine (OCU), which is considered by the Russian Orthodox Church to be schismatic.

 

AP/RT/TASS