Ukraine Latest: US Defense Chief Says Russia Casualties to Mount

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(Bloomberg) -- Russia is likely to continue suffering mounting casualties as it recruits more ill-equipped and ill-trained soldiers into the fight and intensifies attacks in eastern Ukraine, according to US Defense Secretary Lloyd Austin.

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“That’s their strength — they have a lot of people,” Austin told reporters after a two-day NATO meeting in Brussels. “Our goal is to make sure we give Ukraine additional capabilities so they can be decisive on the battlefield in their upcoming offensive.”

German Defense Minister Boris Pistorius signaled that western allies are struggling to assemble two full battalions of Leopard 2 tanks to send to Ukraine as promised, with Germany and Portugal the only nations to pledge high-end A6 models. “We will not reach the size of a battalion,” he said.

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

Key Developments

  • EU Sanctions Seek to Make Banks Divulge Frozen Russian Assets

  • Germany to Lift Defense Spending by Up to €10 Billion Next Year

  • Central Bankers in Bunkers Keep Ukraine’s War Economy Afloat

  • Iranian Drones Hitting Ukraine Struck a Tanker Earlier, US Says

On the Ground

The threat of further Russian air and missile strikes remains high across Ukraine, the latter’s Military Staff said in its update early Wednesday. Russia is making further attempts to gain full control over the Donetsk and Luhansk regions, while focusing its efforts on offensive operations on the Kupyansk, Lyman, Bakhmut, Avdiivka, and Shakhtar axes. The Institute for the Study of War said that Russian forces made marginal territorial gains near Bakhmut and continued ground attacks across the Donetsk region. The Russian army also unsuccessfully attacked Ukrainian positions in the western Zaporizhzhia region while continuing to fortify positions in the area.

(All times CET)

Kyiv’s Trolleys and Trams Move Again After Two-Month Halt (9:42 p.m.)

Kyiv is gradually restoring the capital city’s electric-powered transport operations, after they were halted in late December due to Ukraine’s significant energy deficity, Mayor Vitaliy Klitschko said on Telegram. According to him, first 31 trolleybus and 13 tram routes will be available on Thursday.

The current week became the first within several months without either scheduled or emergency power cuts in Ukrainian capital.

Blinken’s Travels to Include Talks With Turkey (9:17 p.m.)

US Secretary of State Antony Blinken’s travels in coming days will include a visit on Sunday to Turkey, as it copes with the aftermath of a devastating earthquake.

Relief efforts will top the agenda, but Blinken’s visit will occur against a backdrop of Turkish President Recep Tayyip Erdogan’s refusal to sign off so far on NATO membership for Sweden and Finland. Other NATO members have sought to accelerate the two countries’ ascension to NATO to bolster the military alliance’s stance against Russia’s invasion of Ukraine.

After that, the war in Ukraine is likely to be high on the list of topics as Blinken heads to Germany for the Munich Security Conference and then on to Greece to meet senior leaders.

Envoy Calls Notion US Blew Up Pipelines ‘Preposterous’ (7:03 p.m.)

The US can say definitively that it bears no responsibility for the Nord Stream explosions and “any suggestion of that kind is preposterous,” US Ambassador to NATO Julianne Smith said in an interview.

Smith said it’s still not known who was responsible for the blasts that hit the pipelines last fall, and she said that the US wants investigations to continue. Russia embraced the notion that the US was behind the attacks after an American writer made the allegation, citing sources he didn’t identify.

The comments come after a two-day meeting of NATO defense ministers in Brussels, where the topic of protection of subsea critical infrastructure was discussed. NATO Secretary General Jens Stoltenberg earlier said the alliance would establish a “Critical Undersea Infrastructure Coordination Cell” to facilitate engagement between industry, military and civilian stakeholders.

US Senator Revives Bid to Declare Wagner a Terror Group (5:24 p.m.)

Republican Senator Roger Wicker said he is reintroducing legislation to designate the Wagner Group, a Russian mercenary force, as a foreign terrorist organization.

“Vladimir Putin is a thug who will stop at nothing to win, and the Wagner Group is among his favorite and most vicious tools,” said Wicker, who is also a ranking member of the US Helsinki Commission. “The US should call this shadow army what it is: a foreign terrorist organization.”

Wicker and a bipartisan group of senators introduced the bill in the last Congress, but it failed to become law. The Biden administration has resisted the idea and instead labeled the Wagner Group a transnational criminal organization last month.

Ukraine to Receive Fewer Battle Tanks Than Promised (5:12 p.m.)

Poland has assembled about 30 units of the older A4 version of the Leopard 2, which is almost enough for the standard Ukrainian battalion of 31, but many of them are in poor condition and need repairs before they can be deployed, Pistorius said in Brussels.

Those tanks will only get to Ukraine at the end of April, he added. The comments mark a setback in the bid by western allies to help the Ukrainian army deal with an expected intensification of fighting in the coming weeks.

Read More: Ukraine to Receive Fewer Battle Tanks From Allies Than Promised

Sweden Isn’t Ruling out Fighter Jet Deliveries (3:35 p.m.)

During a visit to Kyiv, Swedish Prime Minister Ulf Kristersson said his government won’t rule out supplying fighter jets to Ukraine as long as it was part of a joint effort with allies.

“This is not the time to exclude anything, but at the same time we should acknowledge that we need an international coalition to take further steps,” Kristersson said at a briefing with Ukrainian President Volodymyr Zelenskiy.

Ukrainian Air Defense Says Russian Balloons Seen Over Kyiv (1:23 p.m.)

Objects seen floating in the sky over the region surrounding the Ukrainian capital were Russian military balloons, air defense spokesman Yuriy Ihnat said in a televised interview. A total of six balloons were detected, most of which were shot down, the military said earlier.

Ihnat characterized the objects as primitive balloons carrying pieces of metal, which were picked up by radar and triggered an air-raid alert in the Kyiv region. The balloons were designed to fool air defenses and possibly mask reconnaissance drones that might be flying nearby, Ihnat said.

Swiss Say Confiscating Russian Assets Would Undermine Law (1:17 p.m.)

Switzerland said confiscating frozen Russian assets and providing them for the reconstruction of Ukraine would go against the constitution, in a move likely to be welcomed by the country’s banks.

A working group led by the Swiss Federal Office of Justice concluded that the “confiscation of private Russian assets would undermine the Federal Constitution and the prevailing legal order,” the government said in a statement on Wednesday. Support for Ukraine will continue, it said, regardless of this conclusion.

Germany to Lift Defense Spending (1 p.m.)

Germany is poised to increase its defense budget by as much as €10 billion ($10.7 billion) next year to help fund additional spending needs triggered by Russia’s war on Ukraine, according to people familiar with the plans.

Defense Minister Pistorius is pushing for the extra cash in the 2024 finance plan, which would lift the total allocated to €60 billion, said the people, who asked not to be identified discussing confidential information.

Germany Slams Swiss Over Ammunition (1 p.m.)

German Vice Chancellor Robert Habeck criticized Switzerland over the country’s decision last year to reject a request to allow the re-export of Swiss-made ammunition for the Gepard anti-aircraft gun from Germany to Ukraine.

“Some countries still have ammunition but are reluctant to supply it to Ukraine for historical reasons,” Habeck was quoted as saying by weekly newspaper Die Zeit. “We are in talks with Switzerland, and I have to say very clearly: I cannot understand why Switzerland does not provide Gepard ammunition,” he told the paper.

EU Sanctions Aim to Make Banks Divulge Frozen Russian Assets (11:58 p.m.)

The European Union is poised to force banks to report information on Russian Central Bank assets as part of the bloc’s latest sanctions package targeting Moscow for its war in Ukraine, according to draft proposals seen by Bloomberg News.

Getting a handle on the scale of central bank and other sanctioned state-backed assets that have been immobilized in the EU is seen as a first step to exploring options to potentially using those funds to contribute to Ukraine’s reconstruction.

“We need to know where these are located and how much they are worth,” Commission President Ursula von der Leyen said in a video statement.

Read More: EU Sanctions Aim to Make Banks Divulge Frozen Russian Assets

War in Eastern Ukraine Is Compared to World War I (9:40 a.m.)

UK Defense Secretary Ben Wallace compared the war in the east of Ukraine to the trench warfare of World War I. He said an attack on the mining village of Soledar in eastern Ukraine had resulted in 1,000 Russian deaths in two days.

“I think what Russia is doing is trying to advance. It’s doing so, in a sort of way, almost First World War-levels of attrition,” and with success rates in “a matter of meters rather than kilometers,” Wallace told BBC radio. He said Russian President Vladimir Putin and his generals are either suffering from “a gap in reality” or “no regard for human life.”

EU’s Borrell Says Sanctions are Hurting Russia (9:20 a.m.)

The EU’s sanctions are starting to make a real impact on Russia’s economy, limiting its revenues and constraining its trade, the bloc’s foreign policy chief Josep Borrell told the European Parliament.

“The sanctions are a slow-action poison, a little bit like arsenic,” he said. “It takes time to take an effect.” He noted that Russia’s oil and gas revenues were 46% lower in January this year compared to the same month last year. He added that the country’s plane and car plants have lost 80% of their capacity, thanks in part to the EU’s trade restrictions.

Finland Hopes for NATO Membership With Sweden ‘Quite Soon’ (9 a.m.)

Finnish Defense Minister Mikko Savola said he hoped Finland and Sweden would become NATO members “quite soon,” adding “we are ready to join.”

Asked whether Finland would wait for Sweden to join, Savola said “of course, it’s better for Finland, it’s better for Sweden and also for NATO that we both come to members of NATO as soon as possible,” adding this was better for defense planning. “We have really close bilateral cooperation with Sweden, Sweden is our closest partner,” he said.

Estonian Defense Minister Hanno Pekvur said he didn’t believe Finland’s and Sweden’s bids to join NATO would be separated. “Finland and Sweden will join together to NATO, this is very important for us to secure the Baltic Sea,” he told reporters.

Sweden Concedes Finland May Join NATO First Amid Turkey Spat

Germany Says NATO 2% Goal for Defense Spending Should be Floor (8:30 a.m.)

NATO members should spend a minimum of 2% of GDP on defense and simply aiming to get close to the target won’t be sufficient, Germany’s Pistorius said in Brussels as the alliance’s defense ministers met.

Pistorius said Denmark and Sweden would join the German-led anti-missile shield project for Europe, which already has at least 15 countries signed up. Germany, the UK and Canada agreed on a joint paper outlining how to best protect the three Baltic states as nations leading NATO battle groups in those countries, he added.

Germany will miss the 2% goal again this year and is likely to reach it only in 2025.

NATO Struggles to Meet Spending Goals as It Mulls Higher Target

Training Started on Four Leopard 2A4 Tanks, Canada Says (8:20 a.m.)

Canada’s four Leopard 2A4 tanks have arrived in Poland where training is taking place with Ukrainian soldiers, Canadian Defense Minister Anita Anand told Bloomberg TV, adding her country was also ensuring the delivery of trainers, ammunition and spare parts.

“We as a country will join all other NATO allies in searching and making sure we’re procuring the aid that is necessary for Ukraine to fight and win this war,” she said. The minister added that Canada has trained more than 35,000 Ukrainian soldiers since 2015 and that has continued in England.

Russian Parliament to Hold Unscheduled Meeting Feb. 22: RIA (7:45 a.m.)

Houses of the Russian parliament, the State Duma and the Federation Council, will hold an unscheduled meeting Feb. 22, RIA Novosti reported, citing an unidentified official from the Federation Council. The meeting will focus on the adoption of laws on the legal integration of the annexed regions of Ukraine, RIA reported, citing senator Vyacheslav Timchenko.

Russian President Vladimir Putin is scheduled to address the parliament on Feb. 21.

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