Russia punishes Western energy companies

Military operations were stalled by fierce Ukrainian resistance, so apart from Kherson and taking part of the Zaporizhia region, Russia’s victories on the ground remained limited. (Photo: Getty Images)

This text brings together all the reactions since Russia’s invasion of Ukraine for the day of May 11, 2022. It will be updated on the day. To find all of our coverage in the conflict, here it is.

2:00 pm | MOSCOW – Russia has imposed sanctions on more than 30 companies from the European Union, the United States and Singapore, in retaliation for sanctions imposed on it for its military offensive against Ukraine, according to a decree published Wednesday by the government.

The list of sanctioned companies includes 31 companies, most of which belong to Gazprom Germania, the German subsidiary of the Russian gas giant, which the German state has placed under its control because of its strategic importance. Gazprom for its part announced in early April its “removal” from this subsidiary, without saying more.

The sanctions also relate to EuRoPol GAZ SA, the owner of the Polish part of the Yamal-Europe gas pipeline.

Sanctions include a ban on transactions and the entry into ports of Russian ships linked to the companies concerned.

Western sanctions against Russia, which have not yet been imposed, range from the freezing of Russian reserves to an embargo on strategic products, and financial sanctions.

11:23 am | BERLIN-Germany’s finance minister said Wednesday he was “open” to the idea of ​​using Russian central bank capital frozen under Western sanctions to help rebuild Ukraine.

“I am open to a discussion at the international level about the confiscation of capital from the Russian Central Bank,” Christian Lindner said at a press conference.

He was asked about whether to use assets targeted under sanctions against Russia to help rebuild Ukraine.

“I can imagine it from a political point of view, if that is desired,” he added.

Regarding the fixed assets of private individuals and companies, the situation is more complicated, as expropriations are subject to “legal standards that we cannot ignore at the political level”, he said.

European Council President Charles Michel spoke last week for the confiscation of Russia’s assets frozen in the EU to make it “available” for Ukraine’s reconstruction.

“Personally, I am fully convinced that it is very important not only to freeze the assets, but also make their confiscation possible, to make them available for national reconstruction”, he declared in the Ukrainian press agency. Interfax.

U.S. President Joe Biden for his part asked Congress at the end of April to give him the possibility to confiscate the assets of Russian oligarchs stranded in the United States to use them for benefit of Ukraine. Canada is on the same line.

Seek an opinion from the European Council’s legal service on the feasibility of such a proposal, as “there are 27 legal systems in the EU and in many EU member states, a court decision is required”, however, Mr. .Michel.

“It’s a difficult and long process,” he admits.

Russia: Central Bank foreign reserves are falling

Russia: Central Bank foreign reserves are falling

10:10 am | MOSCOW – The Russian Central Bank’s foreign currency reserves are declining, hitting a record high before the offensive in Ukraine began on Feb. 24, according to data released by the institution on Wednesday.

These reserves – almost half of which were frozen overseas – dropped by US $ 14 billion a week, to US $ 593.1 billion on April 29.

The Western sanctions dealt a difficult and unexpected blow to Moscow by blocking part of these reserves held abroad, i.e., approximately US $ 300 billion, shortly after the start of the conflict in Ukraine.

These reserves, a pillar of Russia’s economy, climbed to US $ 643.2B on February 18, before starting to decline.

They are an important instrument used to support the ruble and pay off international debts, two points at which Russia has suffered because of sanctions on the West.

So far, Moscow has found solutions in both areas.

Faced with the collapse of the ruble in the first weeks after the start of the conflict, the authorities asked large export companies to convert large parts of their foreign currencies into rubles, to support the national currency.

But if the decline in foreign currency held by Moscow continues at this rate, the authorities may find themselves in trouble.

On Monday, the head of European diplomacy Josep Borrell, in an interview with the Financial Times, said he was in favor of seizing and using billions of Russians frozen abroad to rebuild Ukraine.

Money transfers to Ukraine will increase by more than 20%

10:02 am | Washington – Money transfers to low- and middle -income countries are expected to rise 4.2% this year and Ukraine, which is suffering from Russia’s offensive, is the main beneficiary with an expected jump of more than 20%, according to in a World Bank report released on Wednesday.

In total, migrants should send US $ 630 billion, the report’s authors specified.

“The flow of remittances to many countries in Central Asia, whose main source is Russia, is likely to drop significantly,” warns the Washington institution that publishes this report twice a year.

“These declines, combined with rising food, fertilizer and oil prices, are likely to increase food security risks and exacerbate poverty in many of these countries,” he added.

“The crisis in Ukraine has diverted attention (…) from other developing regions,” Dilip Ratha, lead author of the report was quoted as saying in a statement. But he notes that there is an awareness of the need to support “communities” that have received a “massive influx of migrants”.

It recommends “creating a funding mechanism” to support these countries and regions concerned.

As in previous reports, the World Bank details the excessive cost of these money transfers.

“Worldwide, the average cost for sending US $ 200 was 6% in Q4 2021, double the 3% target,” according to the World Bank database.

The institution points out that it is cheaper to send money to South Asia (4.3%). In contrast, the highest cost was for transfers to sub-Saharan Africa (7.8%).

Finally, he said that the costs of sending money to Ukraine are high: 7.1% from the Czech Republic, 6.5% from Germany, 5.9% from Poland and 5.2% from the United States.

Money transfers are often the primary resource for families in poor countries.

On Tuesday, the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, called for the modernization of the international payment system at a conference in Switzerland.

He then lamented the costs for transferring money from migrants to their families.

“The average cost of a transfer is 6.3%. This means that approximately 45 billion US dollars per year are diverted to the benefit of intermediaries” instead of benefiting recipients, including “millions of low-income households “, he pointed out.

Kyiv: the decrease in gas transit through Ukraine caused by Moscow

8:11 am | Kyiv – The volume of Russian gas passing through Ukraine to Europe dropped on Wednesday, Moscow and Kyiv said, with the latter questioning Russian takeover of gas infrastructure in the east of the country.

“Transit is down today,” Yury Vitrenko, head of Ukrainian energy company Naftogaz, told AFP on Wednesday, without giving further details.

This is the first time since Russia’s aggression began in late February that gas transit has been disrupted in this way, Vitrenko’s adviser Svitlana Zalichchuk told AFP.

Ukrainian gas pipeline operator OGTSOU for its part confirmed, in a press release, that Russian group Gazprom turned off the tap at a Ukrainian branch of the gas pipeline after its declarations the previous day.

OGTSOU warned on Tuesday night that it could no longer ensure normal transit due to the presence of Russian forces at the Sokhranivka and Novopskov installations, in the Lugansk region and where a third of Russia’s gas moves for Europe.

He denounced the “illegal departures” of “gas intended for transit”, sent according to Kyiv to Russian-occupied territories in eastern Ukraine, without providing figures. The Ukrainian operator demands that Russian gas be directed to another crossing, at Sudja, located in Kyiv -controlled territories.

Gazprom for its part denied on Tuesday any case of “force majeure” and argued that it was impossible to divert volumes for “technological reasons”.

He confirmed to Russia’s Tass agency that volumes would now drop to 72 million m3, but indicated that 95.8 million m3 had been delivered the previous day.

According to figures released by OGTSOU on Wednesday morning, volumes passing through Sokhranivka have fallen to zero and those passing through Sudja are expected to increase, but not enough to compensate for the decline.

“It’s a political game on their side,” Ms. Zalichchuk: “They will try to present us as irresponsible, but it is exactly the opposite. They have already occupied our territories, we no longer have access to our infrastructures”.

Asked about the reduction of these deliveries, Kremlin spokesman Dmitry Peskov simply said that “Russia has always honored its contractual obligations and will continue to do so”.

A spokesman for the German Economy Ministry said it was “closely monitoring the situation” but assured that Germany’s “energy security” would continue to be “assured”.

Ukraine is an important transit route for gas used by Russia in Europe. Moscow, like Kyiv, has maintained this flow despite the Russian attack launched on February 24th.

Europeans have been trying to remove their reliance on energy in Russia since launching this offensive, in order to punish Moscow more severely.

On the next page, pro-Russians in the Kherson region want to ask Putin for a merger

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