Ukraine should consider the implications of moves like its recent transit ban of crude from a major Russian supplier on its neighbours such as Hungary and Slovakia, Luxembourg’s Foreign Minister Xavier Bettel said on Tuesday.
Italian Prime Minister Giorgia Meloni trumpeted China’s potential for helping bring an end to Russia’s grinding war in Ukraine, as she sought to forge closer ties with the world’s No 2 economy.
Russia is moving to regulate the use of cryptocurrencies, as companies wrestle with increasing difficulties in foreign payments under the threat of US sanctions over the war in Ukraine.
Ukraine earns rebuke from EU ally over Lukoil oil transit ban
Ukraine should consider the implications of moves like its recent transit ban of crude from a major Russian supplier on its neighbours such as Hungary and Slovakia, Luxembourg’s Foreign Minister Xavier Bettel said on Tuesday.
The rebuke of Kyiv by a European partner over an escalating row came after Budapest warned the country may face fuel shortages as early as September and threatened to retaliate.
Speaking at a news conference in Latvia on Tuesday, Bettel said that if such moves affected consumers in other nations then “other countries have to be around the table too or at least be informed”.
“We should avoid creating new tensions where we make it too easy for other countries, and especially this time for Hungary and Slovakia to say that they don’t agree,” Bettel said. That in turn could lead to a tit fot tat of sanctions and restrictions between the countries, said the Luxembourg foreign minister.
Ukraine in June toughened sanctions against Lukoil, effectively prohibiting the Russian oil company from using the war-torn country as a transit route to some customers in central Europe. Hungary has asked the European Union to help broker a solution with Kyiv.
Ukraine was in close contact with the European Commission and ready to join consultations to resolve the dispute if the EU’s executive decided on them, said foreign ministry spokesperson Heorhii Tykhyi on Tuesday.
“We’re in constant contact with the Slovak side — at the level of prime ministers but also at other ministries and we are studying incoming proposals,” he told reporters in Kyiv, without elaborating on the progress in talks with Budapest.
Meloni touts Xi as ‘key player’ in any Ukraine peace process
Italian Prime Minister Giorgia Meloni trumpeted China’s potential for helping bring an end to Russia’s grinding war in Ukraine, as she sought to forge closer ties with the world’s No 2 economy.
While Meloni said Beijing’s backing of the Russian industrial complex was an area of “great friction”, she cited President Xi Jinping’s government as an important stakeholder in finding a solution to the conflict at a press briefing in Beijing on Tuesday.
“I believe China can become, starting from the principles of sovereignty and territorial integrity that it always appeals to, a key player in helping identify the elements of a just peace,” Meloni said of the war in Ukraine, during her first official visit to the Asian nation since coming to power in 2022.
The Italian leader’s charm offensive in China comes just months after her abandonment of Xi’s flagship Belt and Road Initiative threatened to derail bilateral ties. Her diplomatic balancing act in China is complicated by the European Union’s tougher stance toward Beijing on trade, and criticisms that Beijing is sending Moscow dual-use items that are boosting the Kremlin’s battlefield efforts.
The Italian delegation had been nervous about how Meloni’s visit would play out in the wake of Rome’s snub, according to a person with knowledge of the matter, who asked not to be identified discussing private issues. It wasn’t a given she would sit down with Xi as they hold different positions, with the Chinese leader being head of state, and Meloni head of government, the person added.
Meloni characterised her meeting on Monday with Xi as “frank and respectful”, and announced that prime ministers from both nations would hold yearly meetings to maintain communication. She also signed a three-year action plan to relaunch cooperation with China.
Russia races to legalise crypto as sanctions weigh on firms
Russia is moving to regulate the use of cryptocurrencies, as companies wrestle with increasing difficulties in foreign payments under the threat of US sanctions over the war in Ukraine.
Legislators in the lower house of parliament, the State Duma, passed a cryptocurrency bill on Tuesday, as well as separate legislation regulating crypto mining. The legislation aims to open up cross-border payments with cryptocurrency under regulation by the central bank in what policymakers have called an experiment.
The draft laws were expected to gain quick approval from senators in the Federation Council before being signed into law by President Vladimir Putin to take effect on 1 September, according to Anatoly Aksakov, head of the Duma’s financial market committee.
“Previously, there were fears that the legalisation of cryptocurrency could create problems for the development of the domestic market,” Aksakov said in a phone interview. While cryptocurrencies may help Russia to bypass Western sanctions, their use was “an objective phenomenon and cannot be ignored” by regulation, he said.
The move marks a rapid shift in attitude toward digital instruments and comes as Russian businesses confront growing payment pressures triggered by US threats of secondary sanctions on foreign banks. While the use of digital currency for payments is currently prohibited in Russia, Putin this month called on the government “not to miss the moment” in regulating the method inside the country and in foreign deals.
Cryptocurrencies “are increasingly used in the world as a means of payment in international settlements”, Putin told officials.
As recently as January 2022, just weeks before Russia’s full-scale invasion of Ukraine began, the central bank proposed a blanket ban on the use and creation of cryptocurrencies, arguing that they posed major risks to financial stability and economic security.
The bank softened its position at the end of last year, supporting the experimental use of cryptocurrency and mining in cross-border settlements. Still, it urged financial organisations in Russia not to publicise services related to digital currencies.
“We are ready to be flexible in external settlements,” Bank of Russia Governor Elvira Nabiullina told members of the Federation Council on Tuesday. She said she expected local companies to start using cryptocurrency for international payments “before the end of this year”, under what she called “an experimental regime”.
Raiffeisen Bank ups efforts to reduce Russia business
Raiffeisen Bank International said it was stepping up efforts to reduce business in Russia, after facing increased scrutiny of its most profitable unit from regulators.
The bank said it would drastically scale back operations in the country with initial steps already in effect, according to an earnings report published on Tuesday.
The Viennese lender, which operates the largest foreign-owned bank in Russia, is shrinking its business after receiving a European Central Bank (ECB) order in April to cut its loan book and reduce payment services. UniCredit, another European lender still active in Russia, has taken steps questioning the legality of the ECB order.
“In line with the ECB’s requirements, we accelerate the reduction of the business volume in Russia,” said Raiffeisen Chief Executive Officer Johann Strobl.
New top Russian grain trader emerges as rival falls out of favour
A new trader has emerged as Russia’s biggest exporter of grain after a long-time market leader became entangled in a rift with the country’s agriculture regulator.
Grain Gates pushed past TD Rif in the 2023-24 season that ended in June, exporting 14 million tonnes, according to data from analysts ProZerno. TD Rif — which changed its name to Rodnie Polya in April — had held the top spot for nine seasons and the two firms were neck-and-neck at the season’s halfway mark.
TD Rif saw its export share tumble after its ships were blocked or delayed by the country’s agricultural watchdog. Owner Petr Khodykin told a local newspaper this month that the company’s losses could total as much as $50-million.
It’s the latest upheaval among traders in the Russian grain market, upended since Putin’s 2022 invasion of Ukraine. Russia is the world’s biggest wheat exporter, and local companies — some with links to the state — have moved to take control since major Western traders stopped originating grain for export there last year.
That also means that the Kremlin has greater control over world grain and wheat supplies. Previously it had been using that to try and put a floor under Russian wheat prices for export, and to bolster its diplomatic efforts as it gives free grain cargoes to some allies in Africa.
Russia’s crude exports slump to the lowest in 11 months
Russia’s four-week average crude exports dropped to the lowest since late August of last year amid a plunge that cut 710,000 barrels a day from the recent peak in April. The slump came despite a small increase in weekly flows.
The decline — the fourth straight —probably stems from Russia’s improving compliance with an Opec+ output target, coupled with a recovery in domestic refining.
Moscow plans to make extra production cuts later this year and during the warmer months of 2025 to compensate for pumping above its quota, set by the group, earlier this year.
Meanwhile, refinery runs were edging closer to a six-month high in July. A Ukrainian drone attack on July 22 caused a fire at Rosneft’s Tuapse refinery, but didn’t stop the plant from running.
A five-day gap in the loading programme for Ust-Luga, covering most of the past week, suggests that maintenance cut into flows from the port, with just a single tanker leaving in the seven days to 28 July. Shipments from Baltic ports fell below one million barrels a day, equalling their lowest since December 2022. But the drop was offset by an increase in shipments from other terminals.
Separately, Ukraine has toughened sanctions on Russia’s Lukoil, preventing it from supplying piped crude to refineries in Central Europe across Ukrainian territory. Lukoil will divert about 90,000 barrels a day of crude that it is unable to deliver to Hungary and Slovakia to other destinations. DM