Ukraine Latest: Putin Says Drills With Belarus to Continue

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(Bloomberg) -- President Vladimir Putin said Russia and Belarus have agreed to continue joint military exercises as he made his first visit to the neighboring country in more than three years.

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As the meeting between the leaders of Russia and Belarus got under way on Monday, European nations reached a deal to cap natural gas prices at €180 ($190) per megawatt hour, ending months of political wrangling over whether to intervene in an energy crisis that’s risked pushing the region into a recession.

Ukrainian President Volodymyr Zelenskiy urged the leaders of the UK and other countries to provide more air defense and weapons after drones had attacked Kyiv earlier in the day.

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

Key Developments

  • Putin Says Russia-Belarus Drills to Go On as Ally Hints on Arms

  • EU Agrees to Cap Gas Prices at €180 Temporarily to Ease Crisis

  • Canada to Pursue $26 Million in Assets From Russia’s Abramovich

  • Europe’s $1 Trillion Energy Bill Only Marks Start of the Crisis

  • Putin’s Ambitions Put Finland’s Troops and Tanks Back In Vogue

On the Ground

The city of Kherson, liberated by Ukrainian forces in November, is under permanent Russian fire, including from S-300 missiles, Halyna Luhova, the head of the southern city’s military administration, said at a briefing. Ukraine shot down 23 out of 28 drones launched by Russia over the past 24 hours as well as two Russian helicopters, the Ukrainian General Staff said.

(All times CET)

Russia, Belarus Agree to Continue Military Drills (8:21 p.m.)

Russia and Belarus will “continue the practice of regular joint exercises,” Putin said at a press conference in Minsk after negotiations with Belarus President Alexander Lukashenko. The two nations will also ensure deliveries of weapons and the joint production of military hardwire, he said.

Belarus has been testing aircraft in Russia that are “capable of carrying special weapons,” Lukashenko said, without giving an indication of what sort of weapons he meant. “We are now, together with the Russians, preparing crews capable of operating these aircraft, supporting specific armaments.”

Kremlin Says Gas Price Cap Violates Market Pricing (6:41 p.m.)

The Kremlin branded the European gas price-cap a violation of market pricing, Interfax reported. Russia needs time to consider thoroughly the pros and cons of the measure to draft its response, the news service cited spokesman Dmitry Peskov as saying.

EU Agrees to Cap Gas Prices at €180 (4:41 p.m.)

European officials had been seeking an agreement on the cap before the arrival of severe winter weather drives up demand for heating and electricity.

The so-called gas market correction mechanism, designed to prevent extreme price swings, will apply from Feb. 15. It’s significantly lower than an earlier proposal by the European Commission, which wouldn’t have prevented the spikes that the region saw this year as Russia limited gas supplies.

Zelenskiy Says Russia Attacked Kyiv With Iranian Drones (3:14 p.m.)

Ukraine’s capital was attacked early Monday by drones from a new batch of such weapons that Russia got from Iran, Zelenskiy said at a meeting of the leaders of the United Kingdom’s Joint Expeditionary Force.

Russia constantly uses missiles and drones for strikes, primarily on the Ukrainian energy sector, he said. US intelligence has accused Iran of supplying Russia with drones used to target Ukrainian cities and critical infrastructure, something the Kremlin denies.

Zelenskiy Calls on UK, Nordics to Provide Air Defense (12:53 p.m.)

Zelenskiy called on the leaders of the UK, as well as of the Nordic and Baltic countries, to provide air defense and weapons to fight against Russian missiles.

“Please maintain the same level of cooperation,” he said in a video address. “I call on you to do everything to accelerate the defeat of the occupiers.”

Russian Defense Industry Intensified Production, Official Says (12:53 p.m.)

Factories are working around the clock to meet the Russian military’s demand for tanks and munitions, Vladimir Artyakov, first deputy CEO of the state defense corporation Rostec, said in an interview on Rossiya 24.

Production of tanks grew significantly and of ammunition “tens and hundreds of times,” Artaykov said, without providing any data. Russia boosted output of its Iskander short-range missile systems, he said.

Russia has also stepped up production of drones, Artyakov said, adding that the military had too few of them when it started the invasion of Ukraine “and they were not particularly given importance.”

Ukraine Sees Significant Electricity Shortages (11:30 a.m.)

Ukraine has been facing a “significant” shortage of electricity since Sunday, as low temperatures have raised pressure on the power grid, which is already under strain from Russian attacks according to the CEO of its operator NPC Ukrenergo Volodymyr Kudrytskyi.

The country faced another drone attack from Russia early in the morning, following a large-scale missile attack last week that further damaged the nation’s infrastructure, which affected electricity, heating and water supplies all over the country.

But Russia failed to destroy the grid and Ukraine’s power engineers are still able to fix damages relatively quickly, Kudrytskyi said.

Ukrainian Energy Is Affected by Drone Hits, Ukrenergo Says (11:30 a.m.)

The Ukrainian energy system is in a difficult condition after Russian drones have been attacking grid infrastructure across the country, the energy company Ukrenergo said on Telegram.

Most problems with power supply were in the country’s central and eastern regions as result of some drones hitting their targets and Russian shelling near the front line. Despite the damage, the Ukrainian energy system continues to function at a stable frequency and in sync with the European continental grid.

Germany’s Rheinmetall Expands Ammunition Output (11:30 a.m.)

German defense contractor Rheinmetall AG is expanding ammunition production to ease supply bottlenecks created by the government’s support for Ukraine.

The decision to invest more than €10 million ($10.6 million) in a new production line in Unterluess near Hamburg is the latest sign that Russia’s war on Ukraine is reshaping Europe’s defense industry. The facility is expected to produce ammunition for the 30 “Gepard” self-propelled, anti-aircraft guns that Germany agreed to supply to Ukraine’s armed forces.

Austria Probes Suspected Russian Spy (11:30 a.m.)

Austrian authorities are investigating the son of a former Russian secret-service official for suspected espionage.

The intelligence service in Vienna said the 39-year-old Greek citizen met foreign officials several times, passing on information on Austrian foreign and security policy, as well as its potential reaction to Russia’s war on Ukraine. They seized surveillance equipment and devices used to detect wire-tapping, as well as phones, tablets and laptops, the Interior Ministry said in a statement.

New Strikes Further Damage Kyiv’s Crucial Infrastructure (7:35 a.m.)

Russian drone attacks on Monday morning further damaged crucial infrastructure of Ukraine’s capital Kyiv, according to Mayor Vitali Klitschko. He said that maintenance workers are already trying to stabilize the situation with electricity supplies and heating.

Sirens first blared at 2 a.m. local time, continuing for hours in a city still confronting power and water shortages, with temperatures below zero.

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