Ukraine Latest: Russia Tightens Grip on Province as City Falls

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(Bloomberg) -- Ukraine pulled its troops from Lysychansk, ceding control of a key city in the Luhansk region to Russia as President Vladimir Putin’s troops come closer to their goal of capturing the province.

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Extending the city’s defense would have led to “fatal consequences” in the face of Russian advantages in artillery, aviation, ammunition and personnel, Ukraine’s general staff said. Russia earlier declared full control of the city, advancing its goal of taking over Ukraine’s entire Donbas region.

Explosions in Belgorod, Russia, about 40 kilometers (25 miles) north of the Ukrainian border, killed three people and damaged dozens of buildings overnight. Russia blamed Ukraine for the latest in a series of incidents in the border region. Ukraine is set to present a national rebuilding plan that could mobilize hundreds of billions of euros.

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

Key Developments

  • Ukraine to Unveil Massive Rebuilding Plan Even as War Bogs Down

  • Putin’s Media Blitz on Africa Food Crisis Sparks Alarm in Europe

  • Germany Risks a Cascade of Utility Failures, Economy Chief Says

  • JPMorgan Sees ‘Stratospheric’ $380 Oil on Worst-Case Russian Cut

  • The Great European Energy Market Bailout Is Only Getting Started

On the Ground

With Lysychansk in hand, Russia is switching its focus further west into Donetsk. Moscow’s forces shelled Kramatorsk with multiple rocket launch systems on Sunday for a second day, its mayor said. Nearby Slovyansk saw intense shelling, its mayor said. A spokeswoman for Donetsk said six people had been killed and 15 wounded there. Russian defense officials blamed a Ukrainian Tochka-U missile for explosions in Belgorod, north of the Ukrainian border. Russia is attempting to blunt a counteroffensive by Kyiv’s forces in the Mykolaiv area, Ukrainian officials said.

(All times CET)

Russian Warship Sails Near East China Sea Disputed Isles, NHK Says (5:35 a.m.)

A Russian Navy vessel joined a warship from China in sailing near East China Sea islands on Monday morning, Japanese public broadcaster NHK said citing government officials. Japan earlier expressed “grave concerns” to Beijing over one of its warships on Monday passing near the uninhabited islands -- known as Senkaku in Japan and Diaoyu in China -- that are at the center of a territorial dispute between Japan and China.

Read more: How a Few Tiny Islands Put Japan and China in Dispute: QuickTake

In May, Russian and Chinese warplanes conducted a joint drill near the airspace of US allies Japan and South Korea, in a show of power by the long-time partners that came as President Joe Biden wound down an Asian trip to seek support over Putin’s invasion of Ukraine.

Australia to Ban Russian Gold Imports (1:40 a.m.)

Australia will prohibit imports of Russian gold, joining partners including Canada, Japan, the UK and the US in a measure that will reduce Russia’s ability to fund its war, Prime Minister Anthony Albanese’s office said in a statement following his visit to Kyiv on Sunday.

Plans for the four Group of Seven countries to ban imports of new Russian gold were announced before last week’s summit of G-7 leaders in Germany. Australia isn’t part of the group.

Scholz Says Putin Capable of Long War (7:45 p.m.)

Putin “will be able to continue with the war really a long time,” German Chancellor Olaf Scholz said in comments broadcast Sunday.

“The conflict will end when Putin understands that he will not be successful with the idea to conquer part of the territory of his neighbor,” Scholz said in an interview on CBS’s “Face the Nation,” recorded during last week’s NATO summit in Madrid.

Russia Takes Lysychansk, Key Element in Push to Control Donbas (6:30 p.m.)

“After heavy fighting for Lysychansk, the Defense Forces of Ukraine were forced to withdraw from their occupied positions and lines,” Ukraine’s armed forces said in an update. “In order to save the lives of Ukrainian defenders, the decision to leave was made.”

The news came hours after Russia’s Defense Minister Sergei Shoigu told Putin on Sunday that Moscow’s troops had captured the last major city still held by Ukraine in Luhansk province, according to Russian state media. Ukraine initially denied the claim.

The capture puts Russia closer to its goal of controlling of Ukraine’s Donbas region, comprised of Luhansk and Donetsk. Ukrainian forces spent weeks defending Lysychansk and neighboring Sievierodonetsk, on the opposite bank of the Siversky Donets river, from which they withdrew in late June.

Russian Vessel Denied Entry to Turkish Port, Tass Says (5:20 p.m.)

A Russian-flagged vessel carrying grain loaded from Berydansk, an Azov Sea port in Ukraine under Russian occupation, has been denied entry to Karasu in Turkey, Tass reported, citing a person it didn’t identify. The status of the vessel is unclear.

Russia’s Ria Novosti news service cited a Turkish customs official saying the vessel had been detained temporarily.

The Ukrainian chief prosecutor’s office had earlier asked Turkey to detain the Zhibek Zholy and confiscate its cargo, saying the 7,000 tons of grain loaded last week had been stolen by Russia.

Australian PM Offers New Aid During Ukraine Visit (5:05 p.m.)

Australia will provide Ukraine an additional A$100 million of military support, including drones and equipment for border guards, Prime Minister Anthony Albanese said in Kyiv. Australia also will deliver 14 armored personnel carriers and 20 Bushmaster protected mobility vehicles, Albanese’s office said in a statement.

Albanese met President Volodymyr Zelenskiy after visiting three towns near the capital ravaged by Russia’s occupation in the spring, including Bucha.

Zelenskiy said the pair discussed the “food crisis, provoked by Russia” along with the need for more sanctions on Moscow and economic support for Ukraine.

Putin Isn’t Ready for Peace Talks, Kirby Says (3:56 p.m.)

President Putin “has shown no indication that he’s interested in negotiated talks” to end the war with Ukraine, said John Kirby, a senior National Security Council spokesman at the White House.

Ukraine’s president “gets to determine how victory is decided and when and on what terms,” Kirby said on Fox News. “And we’re going to continue to make sure that he can succeed on the battlefield so that he can succeed at the table.”

Zelenskiy, he said, “will tell you that the time is not now for those discussions.”

Ukraine Can’t Get NATO-Level Guarantees: Scholz (3:30 p.m.)

Germany is in talks with allies about the security guarantees it can offer Ukraine once Russia’s war ends, said Chancellor Scholz -- but not being a member of the NATO alliance means there are limits.

“What is clear is that this will not be the same as if someone were a NATO member,” Scholz said in an interview with public broadcaster ARD on Sunday. “There it is clear that no matter what happens, we will defend the Baltics with our own troops.”

“This is now being carefully prepared in the diplomatic sphere for the day that we hope to see soon, which is when the war is over,” Scholz said regarding the security guarantees.

Israeli Court Lifts Quota for Ukrainians (2:40 p.m.)

Israel’s High Court of Justice ruled the government isn’t authorized to restrict the number of Ukrainians who can enter the country on short stays of up to three months.

While citizens of Ukraine aren’t generally required to obtain a visa, the Interior Ministry, due to the war, had set a limit of 5,000 entries. The quota was in addition to Ukrainians of Jewish descent who are eligible for Israeli citizenship, and those with Israeli relatives, who could enter in unlimited numbers.

Czechs to Deploy Air Force to Protect Slovakia (2:29 p.m.)

Czech Prime Minister Petr Fiala said his government will approve an air force deployment to help protect neighboring Slovakia, a fellow NATO member.

Slovakia, which borders Ukraine, requested the mission in June after it decided to stop using Russian-made MiG-29 fighter jets and a delivery of 14 US-made F-16s was delayed.

Zelenskiy Says Rebuilding Plan to Create ‘New Basis for Our Life’ (9:12 a.m.)

President Zelenskiy said the rebuilding plan that Ukraine plans to unveil in Lugano, Switzerland, starting Monday will be “reconstruction in the broadest sense of the word.”

“It is necessary not only to restore everything that the occupiers destroyed, but to create a new basis for our life, for Ukraine -- safe, modern, convenient, barrier-free,” Zelenskiy said Saturday in his nightly address to the nation. That requires “by attracting international opportunities,” he said.

The plan runs about 2,000 pages, according to people familiar with the outline. European Union officials have said the EU will contribute the bulk of financial assistance, which could surpass 500 billion euros ($523 billion).

UK’s Truss Warns Against ‘Poorly Designed Peace Agreement’ (9 a.m.)

UK Foreign Secretary Liz Truss said anything short of a “clear victory” for Ukraine would allow Russia to regroup and attack again.

“We can’t allow ourselves a new Minsk agreement,” she told the French weekly Journal du Dimanche. “Ukraine needs a clear victory that gives it back its security. All of the allies agree on that goal.”

EU Officials Discuss New Sanctions Authority: FT (8:30 a.m.)

Senior officials in Brussels are in talks on the creation of an EU-wide sanctions authority with enforcement powers similar to the US Treasury’s Office of Foreign Assets Control, the Financial Times reported.

Another option would be to give increased power to the EU’s planned Anti-Money Laundering Authority, the newspaper said. The goal would be to address uneven enforcement of sanctions across the bloc’s 27 member states.

Europe Alarmed by Putin Media Blitz on Africa Food Crisis (8 a.m.)

European governments have been alarmed by a Russian disinformation campaign that seeks to deflect criticism that Putin’s war with Ukraine risks leaving millions of people in Africa facing famine.

Moscow’s diplomats have persistently push the narrative that Western sanctions, rather than Russian blockades, have caused food shortages in Africa -- and EU and UK officials say the message is gaining traction.

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