Ukraine Latest: Zelenskiy Visits Troops; Russia Eyes Bond Debt

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Ukrainian President Volodymyr Zelenskiy visited front-line troops in the Kharkiv region in his first trip away from Kyiv since Russia’s invasion. He also fired the head of the security service in the region for what he saw as a dereliction of duty.

Russia is developing a way to pay its Eurobond debt that would sidestep the western financial infrastructure, now mostly off-limits because of the Ukraine war, Finance Minister Anton Siluanov was cited as saying in an interview with Vedomosti.

European Union nations failed to agree on a deal Sunday on a revised package of sanctions over Moscow’s invasion ahead of a leaders’ summit in Brussels but talks will continue. Serbia got an assurance from Russia on uninterrupted gas supplies.

(See RSAN on the Bloomberg Terminal for the Russian Sanctions Dashboard.)

Key Developments

  • Russia to Settle Eurobond Debt in Mirror of EU Payments for Gas

  • EU Nations Fail to Break Stalemate Over Russian Oil Embargo

  • Putin Pledges Three-Year Gas Supply to Balkan Ally Serbia

  • Europe’s Push to Punish Putin Is Falling Short of the Rhetoric

  • Zelenskiy Visits Troops, Inspects Bombed-Out Housing in Kharkiv

  • Russian Wins in Eastern Ukraine Spark Debate Over Course of War

All times CET:

South Korea Conservatives Plan Ukraine Visit (5:44 a.m.)

Members of South Korean President Yoon Suk Yeol’s conservative People Power Party said they plan to visit Ukraine next month, as the government mulls sending more aid to Kyiv.

Yoon’s government may reach a deal with Canada that could include providing the North American country with up to 100,000 artillery shells, which would then make their way to Ukraine, South Korean broadcaster SBS reported, citing an unidentified military source. Canada has been providing lethal weapons to Ukraine and recently requested South Korea to provide weapons to Ottawa, it said.

Russia to Settle Eurobond Debt in Mirror of EU Payments for Gas (1:12 a.m.)

Foreign investors can open accounts in Russian banks in rubles and hard currency to receive payment, the finance minister told the business newspaper published in Moscow. In short, it’s a reverse-image of the way European nations now pay for Russian gas while avoiding obstacles imposed by sanctions.

“This is how it works for gas payments: we get foreign currency, then it is converted to rubles” on behalf of the gas buyer, Siluanov said. “The Eurobond settlement mechanism will operate in the same way, but in the opposite direction.”

Read more: Russia to Settle Eurobond Debt in Mirror of EU Payments for Gas

Zelenskiy Fires Kharkiv Security Head (9:30 p.m.)

Zelenskiy said he fired the head of Ukraine’s security service in the Kharkiv region, where he handed out medals earlier Sunday to troops fighting Russian forces.

“I dismissed the head of the Security Service of the Kharkiv region because, since the beginning of the war, he has not been trying to protect the city and was thinking only of himself,” Zelenskiy said on Telegram. He didn’t elaborate or provide the official’s name.

EU Yet to Break Stalemate Over Russian Oil (7:11 p.m.)

European Union nations failed to agree on a deal Sunday on a revised package of sanctions over Moscow’s invasion of Ukraine ahead of a leaders’ summit in Brussels but talks will continue during the week.

Hungary is so far refusing to back a compromise despite proposals aimed at ensuring its Russian oil supplies, according to people familiar with the talks. EU ambassadors are scheduled to meet again Monday morning, but the lack of a deal means that sanctions could be a prime topic at the bloc’s two-day meeting starting Monday. An EU official said a deal is still possible in the coming days.

Borrell, Kuleba Speak Ahead of EU Meeting (6:36 p.m.)

The EU’s foreign policy chief spoke with Ukrainian Foreign Minister Dmytro Kuleba on Sunday ahead of a two-day European Union summit to start on Monday in Brussels.

The EU’s next sanctions package, more weapons deliveries to Kyiv, and breaking a Russian blockade on Ukraine’s grain exports are expected to be on the agenda.

Zelenskiy Visits Troops Near Kharkiv in Rare Foray Outside Capital (2:10 p.m.)

Volodymyr Zelenskiy traveled to the Kharkiv region to visit front-line positions of Ukraine’s military. He handed medals to service members and was briefed on the operational situation.

“I want to thank each of you for your service. You risk your life for all of us and our state. Thank you for defending Ukraine’s independence. Take care of yourself!” Zelenskiy said.

It was the first publicly known foray to troop positions outside the immediate Kyiv area for Ukraine’s president since before Russia’s invasion on Feb. 24. Clad in a bulletproof vest, he observed bombed-out Russian military vehicles and saw heavily damaged apartment blocks.

Sievierodonetsk Risks Turning to ‘Rubble’: US Analysts (1:13 a.m.)

In attempting to hold Sievierodonetsk, Kyiv’s forces face the most serious challenge since the isolation of the Azovstal plant in Mariupol, according to the Institute for the Study of War, which called Moscow’s efforts to seize control of the Luhansk city “a desperate and bloody offensive.”

Ukraine “may well suffer a significant tactical defeat in the coming days if Sievierodonetsk falls, although such an outcome is by no means certain,” the US-based military analysts said in a daily update.

Russia is paying a price for its tactical success out of proportion to any possible strategic advantage, they said, saying the town would give Moscow no particular military or economic benefit. “This is especially true because Russian forces are destroying the city as they assault it and will control its rubble if they capture it,” ISW said.

Son of UK MP to be Investigated by Russia, TASS Reports (11:40 a.m.)

The son of a UK member of parliament will be investigated by Russia for his role in combat operations there, the Russian news agency TASS reported. Ben Grant’s mother is Helen Grant, a former minister for sport and tourism.

The former British Royal Marine will be probed for alleged mercenary activity, TASS reported, citing the Russian Investigative Committee. The Guardian reported Grant helped in the rescue of fellow volunteers after a Russian ambush north of Kharkiv this month.

Race Against Food Inflation Starts on Rusty Soviet Rail Tracks (9:00 a.m.)

European leaders are desperately trying to figure out how to get grain out of Ukraine, whose exports are normally bigger than the entire European Union’s.

Russia, accused by the United Nations of waging war on global food security, last week said it would open maritime corridors to unblock ports such as Odesa on the Black Sea if sanctions against the country were lifted.

Ukraine, though, said it was skeptical because of security concerns should it remove the defensive mines it has placed in places like Odesa. Demining its ports would leave Ukraine vulnerable to amphibious assaults.

Zelenskiy Says Defenses Holding in Donbas Campaign (8:10 a.m.)

Zelenskiy repeated his assertion that Russia “is trying to squeeze at least some result for themselves” as the 100th day of its invasion on June 3 approaches. Ukraine’s president plans to address the European Council meeting set to start on Monday.

The key areas of fighting remain around Sievierodonetsk, Lysychansk, Bakhmut and Popasna, where it’s “indescribably difficult” but Ukraine’s defense holds, Zelenskiy said Saturday in his nightly video address. The region’s governor reported street fighting between Russian and Ukrainian forces in Sievierodonetsk.

Zelenskiy said Russian forces had launched an “openly barbaric blow” with missiles and mortars on the Sumy region in northern Ukraine, far from the main Donbas front. He also said “good news” was likely from Ukraine’s allies on new military aid.

Russian Corridor Offer Shows Sanctions Are Biting, UK Says (7:30 a.m.)

The bid by Moscow to allow humanitarian corridors for Ukrainian grain shipments in exchange for a lifting of Western economic actions “highlights the stresses sanctions are placing on the regime,” the UK defense ministry said on Twitter.

Lithuanians Raise $5.4 Million to Buy Combat Drone for Ukraine (12 a.m.)

Lithuanians donated more than 5 million euros ($5.4 million) over three and a half days to buy a Bayraktar unmanned aerial combat drone for Ukraine.

The private crowdfunding initiative, which received a green light from both the Lithuanian and Turkish defense ministries, aimed to raise the amount within three weeks to buy the Turkish-made drone and ammunition. Lithuanian defense ministry officials plan to head to Turkey next week to complete the deal.

EU Embargo Plan Exempts Russian Pipeline Oil (11:25 p.m.)

The European Union proposed banning seaborne oil from Russia while delaying restrictions on imports from a key pipeline, seeking to satisfy Hungarian objections and unlock its next set of sanctions on Russia.

The European Commission sent a revised proposal to the EU’s national governments on Saturday that would spare shipments of oil through the Druzhba pipeline, Hungary’s main source of crude imports, according to people familiar with the matter.

Even as Europe is looking to end its purchases of Russian oil, Asia is stepping up.

Read more: More Russian Oil Than Ever Before Is Heading for China and India

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