Diplomacy
There appears to be progress on the diplomatic front…maybe. Russia and Ukraine have apparently been holding virtual negotiations and even formed working groups. Russia and Ukraine began their fourth round of formal negotiations today but hit the pause button to allow working groups to make clarifications. A Russian Member of Parliament said there has been “substantial progress” that could result in a document signing, and the U.S. believes it has seen “some signs of a willingness to have real, serious negotiations,” though they still remain skeptical.
That seeming good news must be weighed against a New York Times report that there are three separate back channel negotiations: through France, Israel and Turkey, and Germany. All three have run into the same problem – that Russian President Vladimir Putin doesn’t want to engage in serious negotiation. For instance, French President Emmanuel Macron and German Chancellor Olaf Scholz spoke with Russian President Vladimir Putin for over an hour on Saturday, but France said the call was “disappointing with Putin’s insincerity.”
Ukrainian President Volodymyr Zelenskyy will again address the House and Senate Wednesday morning. Ukraine’s Foreign Minister challenged world leaders that, if they don’t want to be “dragged into WWIII,” they should continue sending military assistance and imposing tougher sanctions.
Sanctions
Australia announced sanctions on 33 Russian oligarchs, including Roman Abramovich and Alexey Miller. The EU will also freeze the assets of Abramovich, and U.S. hedge funds were told to freeze his assets as well.
Israel, amid pressure from the U.S., will comply with international sanctions against Russia. Bermuda revoked licenses of 745 Russian aircraft (about half of its airline fleet), which could expose the aircraft to devaluation or seizure.
Senate Finance Chairman Ron Wyden (D-OR) is threatening to strip tax credits from U.S. companies tied to Russia and Belarus.
India is finalizing a payment system with Russia that will get around sanctions.
Consequences
Bloomberg projects Russia’s full-year GDP will drop by 9% this year. Russia’s Finance Minister said that Russia may pay international bondholders in rubles instead of dollars. There is a $117 million interest payment due on Wednesday on two dollar-denominated bonds that have no clause for paying in rubles. He also estimates that about half of Russia’s gold and foreign currency reserves have been frozen by sanctions. Russia’s stock market will not open this week. The last full day of trading was Friday, February 25.
Germany is hoping to wean itself off Russian oil and coal by the end of the year.
Silicon Valley is trying to disentangle itself from Russian investors, banks, and investments. UK elites are fleeing the boards of Russian companies. Italy seized a Russian oligarch’s $578 million yacht.
Ukraine Sitrep
Ukraine disclosed a casualty count for the first time, as President Zelenskyy said 1,300 Ukrainian soldiers have died in combat. Zelenskyy also took another walk on the streets of Kyiv on a coffee run of sorts with his advisers.
Despite Russian shelling, Zelenskyy estimates that 125,000 people have been evacuated through humanitarian corridors. The International Red Cross gave a dire warning about the state of Mariupol, noting the city has no electricity, water, gas, and food is dwindling amid heavy shelling. That said, a convoy of 160 cars may have made it out of Mariupol.
U.S. intelligence believes Russia has asked China for military assistance as it reportedly has begun running out of equipment. National Security Adviser Jake Sullivan will meet in person in Rome with a senior Chinese security official to warn China against efforts to bolster China’s Russia’s war efforts.
The U.S. is weighing sending more advanced air defense systems and other military aid, while Russia warned that NATO military shipments are “legitimate targets.” Russia struck a military base close to the border with Poland, killing 35 and injuring almost 150. The base regularly hosts NATO instructors, a potential escalation. The Pentagon says U.S. troops were not present at the training center during the attack.