Diplomacy
Ukrainian President Volodymyr Zelenskyy said that a withdrawal of Russian troops to pre-invasion lines would be a victory because fighting for full control of Donetsk and Luhansk could cost 40,000-50,000 of its best-trained fighters.
There were more expulsions of Russian diplomats in Europe in the wake of the Bucha massacre, including Denmark (15 diplomats), Spain (25), Italy (30), Sweden (3), and Romania (10). Latvia and Estonia also each ordered two Russian consulates closed. Israel and India, which have both toed a fine line with Russia, condemned the Bucha massacre.
The President of the European Commission and its foreign policy chief will travel to Kyiv this week to meet with Ukrainian President Volodymyr Zelenskyy. Secretary of State Antony Blinken talked with his Indian counterpart again.
NATO’s Secretary General said that allies would likely welcome membership applications from Finland and Sweden.
Sanctions
The U.S. announced a bevy of initial sanctions, with more to come tomorrow, including a potential ban on all new investments in Russia.
The Treasury Department will not permit dollar debt payments to be made from Russian government accounts at U.S. financial institutions. This will force Russia to either drain domestic dollar reserves or spend new revenue to make bond payments. It could also make a Russian default more likely because it will now be even more difficult for Russia to make payments in dollars. The IRS will stop sharing information with Russia’s tax authorities, which will hamper Russia’s ability to collect taxes. The Treasury Department sanctioned darknet market Hydra and virtual currency exchange Garantex for facilitating Russian cybercrime. Germany shut down Hydra servers in the country and seized $25 million in bitcoin as well.
The EU announced its fifth wave of sanctions, which includes:
- A ban on Russian coal imports
- A full transaction ban on four banks, including VTB (Russia’s second-largest bank)
- A ban on Russian and Belarusian ships and road transport operators (humanitarian and fossil fuel deliveries are exempted)
- Full export bans on €10 billion worth of products, including advanced semiconductors, machinery, and transport equipment
- Import bans on €5.5 billion worth of products
- Additional targeted sanctions, such as a ban on Russian companies from EU procurement and exclusion of all financial support to Russian public bodies
- Additional sanctions on individuals (this could include two of Russian President Vladimir Putin’s daughters)
The EU is also still working on potential oil sanctions. Among the options being considered are to phase out Russian oil by using the EU’s strategic oil reserves as a cushion, put tariffs on the sector, and create an escrow account to freeze oil-related profits. Ukraine wants the EU to designate a single entity to negotiate a new, low price for Russian gas deliveries that would reduce Russian profits but also allow Ukraine to earn transit fees. All this said, Austria is resisting measures that target Russian oil and gas.
The UK called for maximum sanctions. 207 of 705 European Members of Parliament sent a letter to the EU’s leadership also urging maximum sanctions, including a full oil, gas, and coal embargo (Ukraine renewed its call for this action today), closure of all ports to Russian vessels and goods, full disconnection from SWIFT, and further extension of sanctions to oligarchs, officials, and civil servants.
Sens. Dianne Feinstein (D-CA) and Pat Toomey (R-PA) sent a letter to President Joe Biden urging him to lift the Section 232 steel tariffs from Ukraine.
Consequences
The Russian Central Bank’s reserves have reportedly fallen from $643.2 billion on February 18 to $604.4 billion on March 25.
Ukraine Sitrep
The Wall Street Journal reports that the Czech Republic has quietly sent Ukraine about a dozen Soviet-era tanks, as well as howitzers and amphibious tracked infantry fighting vehicles. They and Slovakia are also considering helping repair and refit damaged Ukrainian military equipment. Estonia will send anti-tank missiles, automatic weapons, grenades, and other lethal ammunition to Ukraine.
Washington Post reporters went into the northern Ukrainian city of Chernihiv after weeks under siege.