March 24, 2022Newsletter

Russia Update: March 24, 2022


The Economist reports that Ukraine is willing to make major concessions on Russia’s demands, including some sort of compromise on territories. The two sticking points are Russia’s maximalist definition of demilitarization – it wants Ukraine to reduce its army to a fifth of its current size – and Ukraine’s belief that Russia will not pull out of parts of Ukraine it has taken over since the invasion. Turkish President Recep Tayyip Erdo─čan echoed this sentiment, saying that ceasefire talks are progressing on technical issues, but still at odds on territorial questions like Crimea. Russia also confirmed that oligarch Roman Abramovich helped organize initial negotiations between Russia and Ukraine.

Ukrainian President Volodymyr Zelenskyy spoke to NATO leaders, asking for more military assistance but not a no-fly zone or NATO membership.

Russian defense officials have declined calls from American Defense Department officials. Russia kicked out a number of U.S. diplomats in response to the U.S. expulsion of UN diplomats from New York City.


The U.S. announced a new round of sanctions while President Joe Biden is in Brussels, Belgium. This includes full blocking sanctions on 400 individuals and entities, including 328 members of Russia’s lower house of parliament, the CEO of Sberbank, Gennady Timchenko and his family/companies, the board members of Sovcombank, and 48 Russian state-owned defense companies. It also announced a new G7 sanctions evasion initiative and that the G7 will work to block Russia’s ability to access and deploy its gold reserves. (State Department fact sheet here, Treasury Department fact sheet here)

Biden also gave a press conference. When asked about consequences should Russia use chemical weapons, he answered, “The nature of the response would depend on the nature of the use.” This as the U.S. reportedly games out scenarios should Russia employ chemical or nuclear weapons. He also gave a veiled warning to China, saying, “China understands that its economic future is much more closely tied to the West than it is to Russia. I’m hopeful that [China] does not get engaged.”

The UK announced additional sanctions on 65 individuals, banks, and industries. Like the U.S., this included the CEO of Sberbank.

House Financial Services Committee Chairwoman Maxine Waters (D-CA) sent letters to a number of financial trade associations asking them for actions their industry has taken to exit Russia, firms that have and haven’t exited Russia, and activities taken by the industries and companies to comply with sanctions. Sen. Rand Paul (R-KY) is blocking quick passage of the bill to revoke permanent normal trade relations from Russia and Belarus and to empower the President to raise tariffs on the two countries. A number of bills have been introduced to sanction China for its potential involvement in the war.

The WTO rejected Belarus’ bid to join.


Russia’s move yesterday to require settlement of energy contracts in rubles may be an effort to exploit divisions within the EU on sanctions. The EU said that demanding rubles is a “clear breach of contract,” while Poland’s largest oil and gas company said it wouldn’t pay in rubles. Evidence is emerging that energy payments are helping soften the blow of Russian sanctions. The U.S. if finalizing a plan to supply the EU with a large amount of LNG through the end of the year.

Russia’s stock market “reopened” after being closed since Monday, February 28, though there were heavy restrictions on trade with foreigners and a ban on short selling, leading the U.S. to call it “a charade: a Potemkin market opening.” Steelmaker Severstal became the first Russian company to run out of time to make an interest payment on foreign-currency debt after Citigroup blocked the transaction, putting it at risk of default.

The European Central Bank will oversee the wind-down of a Cyprus-based lender with strong Russian ties. Russia’s space agency said it would reallocate rockets away from European satellite launches and to Russian companies or friendly countries. Russia is facing a tech worker exodus.

Ukraine Sitrep

The UK believes that Russia will likely deploy more conscripts and reserves, as well as mercenaries and private contractors. Ukraine and Russa exchanged 10 POWs each. A senior NATO official estimates that 40,000 Russian troops have been killed, wounded, captured, or are otherwise missing. The New York Times stitched together radio intercepts that provides a window into the disorganization of Russia’s military.

The White House announced that the U.S. will take in up to 100,000 Ukrainian refugees and provide an additional $1 billion in humanitarian assistance. Ukraine accused Russia of forcibly moving 6,000 citizens out of Mariupol to Russia.

U.S. efforts to supply Ukraine with Soviet-era long-range missile systems is bogged down. The countries that would supply them (Slovakia, Greece, and Bulgaria) are either balking or want a backfill of new equipment. There are also questions of how to get it to Ukraine in a manner that won’t provoke Russia.

President Biden said that the threat of a food shortage is “real.” The U.S. still opposes sending fighter jets to Ukraine.

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