Ukraine Latest: Annexation Votes Start; Russian Draft Exemptions

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(Bloomberg) -- On the eve of the war’s seven-month mark, voting began in four Moscow-occupied territories on whether to join Russia. Ukraine’s government and its allies have slammed the referendums as shams, reminiscent of a similar ballot in Crimea in 2014 ahead of annexation.

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The ballots in the Donetsk and Luhansk regions, as well as in Kherson and Zaporizhzhia, mark an escalation in Russia’s plans to annex swaths of its neighbor. They follow recent military setbacks by Russian troops and President Vladimir Putin’s move to call up as many as 300,000 reservists to fight in Ukraine.

The draft triggered protests around the country, the biggest since the early days of the war, and conscription-age men rushed to find ways to flee. Workers in some industries will be exempt, authorities said.

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Key Developments

  • Putin’s Conscripts Won’t Win His War But May Drag It Out

  • Russia Stages ‘Referendums’ to Annex Occupied Ukraine Lands

  • EU Rushes to Agree on an Oil Price Cap After Putin’s Threats

  • Russia’s Lavrov Scorns West by Arriving Late at UN, Walking Out

  • Abramovich Met Saudi Prince for Russia-Ukraine Prisoner Exchange

  • Wheat Rises to Two-Month High as War Again Threatens Black Sea Deal

On the Ground

Ukraine’s General Staff said Russian forces continue to suffer losses, including among leadership, including a Major General wounded in a recent strike at Svatove in Luhansk region. The claim can’t be verified. Nataliya Humenyuk, spokeswoman for Ukraine’s southern military command, said Kyiv’s forces are gradually taking ground in their counteroffensive campaign. Russia overnight struck the city of Zaporizhzhia with missiles, regional governor Oleksandr Starukh said. A loud blast was heard in Melitopol, also in the Zaporizhzhia region, early Friday. Over the past day Ukrainian forces repelled Russian attacks near eight settlements, including in the vicinity of Donetsk and in the Kharkiv region.

(All times CET)

Finland to ‘Significantly’ Limit Entry of Russians (6:10 p.m.)

The decision by the president and key ministers came after Russia’s order of partial mobilization. Officials cited “harm to Finland’s international standing.” Foreign Minister Pekka Haavisto is set to announce details later on Friday.

Toyota Decides to End Vehicle Production in Russia (3:40 p.m.)

Manufacturing at the Saint Petersburg plant was suspended since March 4 due to the interruption in supply of key materials and parts. Six months later, the company still has not been able to resume normal activities and sees no indication that it can re-start in the future.

Russia Punishing Crimean Tatars, Envoy Says (2:44 p.m.)

Draft notices are being handed to Crimean tatars as a way of punishing them for a lack of support in Russia’s war, Volodymyr Zelenskiy’s representative to the occupied peninsula Tamila Tasheva said on Facebook.

Crimean Tatar men have received at least 1,000 mobilization notices across the Russia-seized peninsula, Tasheva said, describing this as a “catastrophe” for the indigenous ethnic group.

“They want to use mobilization in order to annihilate Crimean tatars,” she wrote.

Abramovich Met MBS for Prisoner Exchange (1:04 p.m.)

Russian billionaire Roman Abramovich met Saudi Crown Prince Mohammed bin Salman in Riyadh in August for talks that led to Russia and Ukraine swapping prisoners of war, said three people familiar with the matter.

In the swap this week, Ukraine turned over 55 captives, including pro-Russian tycoon Viktor Medvedchuk. Russia handed over 215 prisoners, the majority of whom were involved in the defense of Ukraine’s Azovstal steel plant in Mariupol.

Saudi Arabia said Wednesday that the crown prince was involved in mediation efforts that led to the release of ten prisoners, without giving further details on the process.

Russia Exempts Workers in Some Sectors From Military Draft (12 p.m.)

Russia’s Defense Ministry announced that workers in certain segments would be excused from the draft ordered Wednesday by President Vladimir Putin.

The exemptions apply to people working for IT companies, information and communications services, media, and organizations responsible for the stability of the national payment system and financial market infrastructure. Companies and organizations in these industries should submit lists of employees to apply for exemptions, the ministry said in a Telegram post.

It earlier said university students also won’t be called up. The announcement comes amid signs some Russians are rushing to flee the country or otherwise avoid the prospect of being sent to join the war in Ukraine.

China Says It’s Committed to Promoting Peace Talks (11:55 a.m.)

China’s Foreign Minister Wang Yi told his Ukrainian counterpart that the sovereignty and territorial integrity of all countries should be respected, when the two met at the UN General Assembly in New York, Xinhua reported.

Beijing always stands on the side of peace and continues to play a constructive role in the Ukraine conflict, the minister said, without offering details.

Earlier, Wang Wenbin, a Foreign Ministry spokesman sidestepped a question at a regular press briefing in Beijing about Russia’s “referendums” in areas of Ukraine it occupies.

Baltics Fear Blackouts if Russian Disconnects Them From Grid (10:02 a.m.)

Estonian Premier Kaja Kallas said Russia delayed plans to test disconnecting its exclave of Kaliningrad from the electricity system on Saturday. Such a move could be a precursor to desynchronizing the three Baltics countries and potentially lead to blackouts.

“This doesn’t mean that they will not do it on another day and pick a worse time for us, be it winter, Dec. 24, or something like that,” Kallas told Estonia’s public broadcaster.

“We have been preparing for desynchronization, or the disconnection of power grids from Russia’s frequency range, for years, but if Russia does this abruptly, we may have blackouts,” Kallas said.

Russia Stages ‘Referendums’ to Annex Occupied Lands (9:40 a.m.)

Russia on Friday began staging UN-condemned “votes” on annexing the roughly fifth of neighboring Ukraine it occupies in a step that marks a new escalation in the spiraling conflict between President Vladimir Putin and the US and its allies.

State media reported overwhelming support for accession to Russia in the four regions that its troops partially control. In Moscow, officials vowed to move quickly to finalize the absorption of the territories.

United Nations Secretary-General Antonio Guterres called the votes a “violation of the UN Charter and international law.”

Putin’s Conscripts May Merely Drag Out His War (9:31 a.m.)

Russian President Vladimir Putin’s move to draft in 300,000 reservists to reinforce his troops in Ukraine is likely to extend the war rather than influence its outcome.

Still, it could buy him time to execute a wider strategy -- including exacerbating Europe’s energy crisis and threatening a nuclear strike on unspecified targets -- aimed at undermining foreign military and financial support for Kyiv’s war effort.

Read more: Putin’s Conscripts Won’t Win His War But May Drag It Out

Putin Loyalist Criticizes Prisoner Swap With Ukraine (9:23 a.m.)

Chechen leader Ramzan Kadyrov added to domestic criticism over Russia’s exchange of prisoners of war with Ukraine announced on Wednesday. “The whole situation is incomprehensible,” he wrote on Telegram to his 2.6 million followers, while being careful to declare that “any order” by President Vladimir Putin must be implemented.

Kadyrov also indicated he had no plans to round up reservists following Putin’s order for partial mobilization, claiming volunteers in the largely Muslim southern Russian republic had already “over-fulfilled by 254%” its quota before the call-up was announced.

The Chechen, regime has been accused of repeated human rights abuses, has become increasingly critical of the conduct of Russia’s war recently, while declaring total loyalty to Putin.

Zelenskiy Said Russia’s Votes, Mobilization ‘Bury’ Peace Prospects (8:30 a.m.)

Moscow was “burying” the prospects of talks with Kyiv with this week’s actions, Ukraine President Volodymyr Zelenskiy said in an address to the nation on Thursday.

“Russia declares that it supposedly wants negotiations, but announces mobilization,” Zelenskiy said. Ukraine’s position on the impossibility of diplomacy after “sham referenda” was clear, he said.

Putin’s new draft also meant the war in Ukraine “for the majority of Russian citizens is not something on TV or on the internet, but something that has entered every Russian home,” he said.

Read more: Russia Hurries to Tighten Grip on Occupied Ukraine, Ups Stakes

Among EU, Only Hungary Held Bilateral Talks With Russia at UN (8:20 a.m)

Hungary’s Peter Szijjarto was the sole EU foreign minister to hold talks with Russia’s Sergei Lavrov on the sidelines of the UN General Assembly in New York, underscoring the special relationship between Budapest and Moscow.

The pair discussed Hungary’s reliance on Russian energy, Szijjarto said after the meeting. Russia has cut gas supplies to much of the continent in retaliation for EU sanctions for Moscow’s invasion of Ukraine.

Hungary, whose Prime Minister Viktor Orban this week called for the withdrawal of trade restrictions against Russia, has been rewarded with additional gas volumes on top of contracted amounts.

Putin’s Mobilization Will Take Time, Won’t Solve Problems, US Says (9:46 p.m.)

Putin’s mobilization of as many as 300,000 reservists won’t happen quickly and won’t solve problems of morale and weak command that have hobbled Russian troops in Ukraine, according to the Pentagon.

“It would take time for Russia to train and prepare and equip these forces,” Brigadier General Pat Ryder, the Defense Department’s spokesman, told reporters at the Pentagon. “While in many ways this may address a manpower issue for Russia, what is not clear is whether or not it could significantly address the command-and-control, the logistics, the sustainment and importantly the morale issues that we have seen Russian forces in Ukraine experience.”

Russia’s Lavrov Scorns West by Arriving Late at UN, Walking Out (9 p.m.)

The UN Security Council gave Russia’s Foreign Minister Sergei Lavrov an icy reception when he went before it to defend his nation’s invasion of Ukraine. The veteran diplomat made sure he didn’t stick around to hear the criticism.

In a show of defiance toward Western condemnation, Lavrov arrived well after the council opened a special meeting to discuss the Ukraine conflict on Thursday. He gave his speech -- accusing the West of forcing Russia to invade to protect itself -- and then walked out.

EU Rushes to Agree on an Oil Price Cap After Putin’s Threats (8:36 p.m.)

European Union member states are racing to clinch a political agreement within weeks that would impose a price cap on Russian oil.

The push has gained steam since Putin announced a “partial mobilization” of troops in an escalation of Russia’s war in Ukraine and will likely feature as part of a new a package of sanctions to be proposed by the European Commission, according to people familiar with the matter. A cap would align the EU with a US effort to keep the cost of crude from soaring and to hit Moscow’s revenue.

Despite the new effort from the commission, the EU’s executive arm, and some member states, the plan faces many hurdles and a positive outcome is not a given, said the people, who asked not to be identified because the discussions are private.

EU Rushes to Agree on an Oil Price Cap After Putin’s Threats

Russia Outlines Reduced Gas Flows Over Next Three Years (5:32 p.m.)

Russia set out just how much its gas flows to the global market will fall in the next three years -- and the numbers underscore the scale of the challenge facing Europe’s energy consumers.

Annual pipeline gas exports are set to drop by almost 40% to 125.2 billion cubic meters in 2023-2025, according to the nation’s three-year draft plan, seen by Bloomberg News. Pipeline gas exports is estimated at 142 billion cubic meters this year, the draft showed.

Read more: Russia Sets Out How Much It’s Going to Cut Gas Flow Through 2025

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