Putin gives troops a rest after seizing Lysychansk; Ukraine presents blueprint for reconstruction

Russian President Vladimir Putin made a public display of the seizure of the city of Lysychansk, telling his defence minister, Sergei Shoigu, in televised remarks, to give soldiers who had captured the city a rest and rely on other units to continue offensive operations. The Ukrainian military said holding Lysychansk would have led to “fatal consequences” against Russia’s advantage in artillery, aviation, ammunition and personnel.

Ukraine presented a blueprint for reconstruction following Russia’s invasion, which has destroyed cities, displaced millions and devastated the economy. The plan, unveiled at a two-day conference in the Swiss city of Lugano, includes investments in infrastructure and the climate and digital spheres. Ukraine’s prime minister suggested the bulk of some $750-billion needed for reconstruction could be paid for with seized Russian assets.

Key developments

• Russia’s crude oil shipments to crucial Asian markets falter 


• Ukraine to unveil massive rebuilding plan even as war bogs down


• Putin’s media blitz on Africa food crisis sparks alarm in Europe


• Germany risks a cascade of utility failures, economy chief says


• JPMorgan sees ‘stratospheric’ $380 oil on worst-case Russian cut


• The great European energy market bailout is only getting started

On the ground

With Lysychansk under its control, Russia is switching its focus further west into Donetsk, intensifying shelling of the region, according to Ukrainian officials. Moscow’s forces also hit residential areas, killing nine civilians and wounding 25 there over the past 24 hours. Russia is attempting to blunt counteroffensives by Kyiv’s forces in the Kharkiv region in the northeast as well as the Kherson and Mykolayiv regions in the south, the Ukrainian military said.

Ukraine seeks to block exports of its grain by Russia 

Ukraine is working with the UN and Turkey to make sure that “civilised countries” don’t take its grain illegally exported by Russia, Ukrainian President Volodymyr Zelensky said during a meeting with Sweden’s Prime Minister Magdalena Andersson in Kyiv.

Unblocking grain exports from Ukraine is difficult and yet possible, Zelensky said, adding that he believes the UN is ready to lead in making it happen. He said ships need to have security guarantees, except those from Russia, which Ukraine doesn’t trust.

Ukraine expects to harvest 60 million tonnes of grain this fall, Zelensky said, while there are already 22 million tonnes blocked by Russia in its ports.

“We need to export all the grain,” he said.

The best way to stop Russia’s war is to increase support for Ukraine and pressure on Russia through sanctions, Sweden’s Andersson said during the meeting.

 

Russian official to head occupied southern Ukrainian region  

A Russian official was appointed to head the government of the occupied southern Ukrainian region of Kherson, the Tass news service reported on Monday. Sergei Eliseev, a senior official from the Baltic exclave of Kaliningrad, named both Russians and Ukrainians as his deputies, Tass said, citing a statement by Kherson’s Russian occupation authority.

Russia last month filled senior government posts in the breakaway Moscow-backed eastern Ukrainian regions of Luhansk and Donetsk.

Russia’s crude shipments to crucial Asian markets falter 

Russia’s seaborne crude exports in the seven days to 1 July rebounded from the previous week’s plunge, but shipments to Asia are slipping, even as flows are diverted to the country’s Black Sea terminal to cut the voyage distance to India.

Aggregate crude flows from Russian ports were up week-on-week by 23%, recovering most of the volume lost over the previous seven days during a brief halt in shipments from the Baltic port of Primorsk. Still, cargoes bound for Asia — a crucial market where China and India have stepped in to prop up Russian exports, others have shunned in response to its invasion of Ukraine — were down by more than 15% on both a weekly and four-week average basis from the highs seen at the end of May.

Read more: Russia’s crude oil shipments to crucial Asian markets falter 

Turkey probes origin of grain on Russian ship  

Turkey has begun an investigation into the origin of grain aboard a Russian vessel anchored off its Black Sea port of Karasu after Ukraine said the cargo was stolen, senior Turkish officials told Bloomberg. Kyiv has accused Russia of stealing grain from territories it has occupied since its 24 February invasion. Russian Foreign Minister Sergei Lavrov confirmed on Monday the vessel was Russian, but said Moscow was still working to clarify what had happened.

The vessel has yet to dock or unload and is waiting off the port as Turkey investigates the origin and trajectory of the shipment, said the officials, who spoke on condition of anonymity due to the sensitivity of the case. Turkey is handling the situation with care as it works to arrange four-way talks with the United Nations, Russia and Ukraine to establish a Black Sea corridor to restart Ukrainian food shipments disrupted by the war, one of the officials said. It may host the UN-backed dialogue as early as next week, he added.

Read more: Turkey probes origin of grain on Russian ship

Russia should pay for reconstruction, says Ukraine’s premier  

Assets seized from the Russian state and oligarchs should make up the bulk of the $750-billion in aid needed to rebuild the country, Ukrainian Prime Minister Denys Shmyhal said.

“Russia has unleashed this bloody war, they have caused this large-scale destruction — and they must be held responsible for it”, he told delegates at the Ukraine Recovery Conference in Lugano. Ukraine has lost $100-billion worth of infrastructure during the war, Shmyhal said. He estimated the volume of frozen Russian assets worldwide that could go toward the recovery at between $300-billion and $500-billion.

Ukraine reconstruction conference planned  

European leaders are planning an international conference devoted to the rebuilding of Ukraine after the summer, European Commission President Ursula von der Leyen said at the Lugano conference. The aim will be to “bring together the brightest minds and leading global experts on reconstruction to ensure that this generational undertaking is done in the right way”, she said, citing also the role of German Chancellor Olaf Scholz as co-organiser.

Though she didn’t cite any aid targets or pledging of financial assistance in her remarks, she addressed the importance of spending any money wisely to bolster investor confidence. Funds will be “first and foremost spent efficiently and effectively, with maximum impact for the people of Ukraine”, she said.

European gas extends blistering rally as supply woes deepen  

Natural gas in Europe rose to the highest level in almost four months as planned strikes in Norway threaten to further tighten a market that’s already reeling from Russia’s supply cuts.

Benchmark futures, which have more than doubled this year, surged by as much as 10% on Monday. About 13% of Norway’s daily gas exports are at risk amid plans to escalate an impending strike by managers, the nation’s oil and gas lobby warned over the weekend. Three fields are set to be shut by the strike starting on Tuesday, while planned action the following day would take out another three projects.

Read more: European gas extends blistering rally as supply woes deepen

Putin makes public display of victory in Luhansk region  

The Russian leader congratulated Defence Minister Sergei Shoigu after Russian forces took control of Lysychansk. Speaking in televised comments, Putin told Shoigu to give the units involved in the latest offensive time off to rest and to shift responsibility for continuing operations to other forces.

Shoigu had reported to Putin on Sunday that Russian forces had taken control of the city, a fiercely contested industrial centre that was one of the last major targets outside Moscow’s control in Luhansk.

Ukraine reclaims Black Sea island abandoned by Russia 

The Ukrainian military said the nation’s jurisdiction over Snake Island, a strategically significant outpost off the Black Sea coast, had been recovered. Natalia Humeniuk, a spokeswoman for the military’s southern command, said in a video briefing that the national flag had been planted on the territory.

Russian forces took control of the island in the western Black Sea early in the war, but struggled to hold it as Kyiv ordered a series of missile and artillery attacks. Russia confirmed last week that its troops had left the island.

 

US envoy to Beijing urges China to stop spreading Russian ‘lies’  

The US ambassador to China called on the Foreign Ministry in Beijing to stop spreading Russia’s “lies”, in an unusually direct and public rebuke by the top US diplomat in the country.

Ambassador Nicholas Burns made the “request” in response to a question at a government-backed forum on Monday about what China could do to resolve the crisis over Russia’s invasion of Ukraine. Burns reiterated President Joe Biden’s call for Beijing to avoid helping Moscow carry out the war, before pivoting to a simmering point of contention between the world’s two largest economies.

European Investment Bank to propose €20bn fund for rebuilding 

The European Investment Bank will propose a new €20-billion fund to help finance the reconstruction of Ukraine when donors gather in Lugano.

The fund would aim to mobilise as much as €100-billion of investment from other sources over the next 10 years and could potentially be scaled up, according to people familiar with the matter.

That’s just a fraction of what Ukraine will need when the war is over. The EIB has estimated that the costs of rebuilding the country could surpass $1-trillion and the EU has acknowledged that it will cover the bulk of the costs.

Russian warship sails near disputed East China Sea isles 

A Russian Navy vessel joined a warship from China in sailing near islands in the East China Sea on Monday, Japanese public broadcaster NHK said, citing government officials. Japan earlier expressed “grave concerns” to Beijing over one of its warships on Monday passing near the uninhabited islands — known as Senkaku in Japan and Diaoyu in China — that are at the centre of a territorial dispute between Japan and China.

Read more: How a few tiny islands put Japan and China in dispute: QuickTake

In May, Russian and Chinese warplanes conducted a joint drill near the airspace of US allies Japan and South Korea, in a show of power by the long-time partners that came as US President Joe Biden wound down an Asian trip to seek support over Putin’s invasion of Ukraine. DM