Russia Signals Limiting Military Operation’s Scope to ‘Liberation of Donbas’

In what’s looking like a hugely significant first sign that Russia could be pulling back on the scope of its Ukraine operations, Bloomberg reports Friday that the Kremlin may be limiting its key military objectives to taking full control over the Donbas region. This despite multiple parts of the county, including outside the capital of Kiev, still witnessing intense fighting and shelling.

The hugely important Friday Bloomberg report says that “After a month of fighting that’s yielded limited territorial gains, the Russian military said it’s focusing efforts on taking full control of Ukraine’s Donbas region, potentially a sign it’s backing away from hopes of taking larger swathes of the country.”

The Russian military’s first deputy chief of the General Staff Sergei Rudskoi said the following as quoted in Interfax: “Our forces will focus on the main thing – the complete liberation of Donbas.”

Bloomberg writes further of the Russian commander’s surprising words, “Rudskoi claimed Russian troops have surrounded several major cities but deliberately didn’t seek to take them, instead aiming to pin Ukrainian troops down. His comments were the most detailed official accounting of Russian military performance since the Feb. 24 invasion.”

And against some Western claims that Russia has lost as many as 15,000 troops, amid Ukraine’s fierce resistance which is said to have stalled Russia’s initial battle plans and pace, Bloomberg reports of a fresh casualty count from Russia’s military, “Rudskoi put losses at 1,351 killed and 3,835 wounded, the first official accounting since March 2. He said Russian forces control 93% of the Luhansk People’s Republic and 54% of the Donetsk one.” However, many believe the true count to be much higher.

Earlier in the day Turkey’s President Erdogan said that Russia and Ukraine have reached “an understanding” on 4 out of 6 key contentious issues. However, hours later Russian officials were cited in Interfax news a saying “no progress” has been made. Both sides continue blaming the other for lack of significant breakthroughs, and so far only temporary humanitarian corridors have been briefly established in major zones of fighting.

The Kremlin’s chief negotiator Vladimir Medinsky was cited in Interfax as saying that “Russia sees no progress on key issues in talks with Ukraine.” This even after Ukraine’s Zelensky has in recent weeks appeared to back off public statements expressing desire for a “path” to NATO membership. He’s recently said he’s “cooled” on the issue and is ready to discuss neutrality.

Update(10:18ET): Coming the day after the emergency NATO summit in Brussels, where Jens Stoltenberg vowed that Russia will pay “severe costs” for “years to come” over its Ukraine invasion, and with Joe Biden now visiting Poland to highlight the refugee crisis, Russian Foreign Minister Sergey Lavrov on Friday hit back at US and Western sanctions, calling them tantamount to an act of “total war” on Russia

He called the sum total of isolation measures against Russia being pushed under US leadership “a real hybrid war” and said that “total war was declared on us,” according to the The Associated Press.

As The Hill writes further of the fresh remarks, “The international sanctions have clearly hurt the Russian economy, though Lavrov emphasized that many states will decline to join that effort.”

Lavrov said: “We have many friends, allies, partners in the world, a huge number of associations in which Russia is working with countries of all continents, and we will continue to do so” – which at the very least includes China, India, Brazil and others – which make up an outsized portion of the global economy. Meanwhile…

With newsflow out of Ukraine nothing less than a firehose (of often fake news), with market moving headlines firing every other minute on average, traders can be forgiven if they have just given up following the narrative. To help out, here is a snapshot of all the latest market-moving news out of Ukraine from the last few hours courtesy of Newsquawk:

Defense/Military

  • “There is progress in ceasefire negotiations with Russia,” according to Ukrainian President Advisor cited by Sky News Arabia; expresses “cautious optimism” about talks with Russia; There is a possibility of a diplomatic breakthrough in talks with Russia
  • Turkey President Erdogan says Russia and Ukraine can reach compromise on four of six issues discussed, but territorial disputes remain.
  • Russian military will submit a proposal to Russian President Putin on how best to respond to NATO beefing up its Eastern flank, according to the Kremlin
  • US Pentagon senior official said Russia is running out of precision-guided munitions for the war in Ukraine and that the Ukraine war makes Russia a strategic burden for China.
  • US Pentagon’s new strategy will describe Russia as an acute threat but one that cannot pose a long-term systemic challenge, while Russia will emerge from the Ukrainian war weaker militarily and politically.

Energy/Economic Sanctions

  • EU joint statement noted the EU demands that Russia stop committing war crimes in Ukraine and EU is prepared to close loopholes in Russian sanctions.
  • US President Biden said US, EU coming together to reduce the bloc’s dependency on Russian energy; we should not subsidise Russia President Putin’s attack on Ukraine
  • Australia announced new sanctions on Russia and Belarus including Belarusian President Lukashenko and members of his family.
  • Russia is mulling selling its oil and gas for Bitcoin as sanctions intensify, according to CNBC.
  • US DoJ charged four Russian government workers over hacking campaigns that targeted the global energy sector, according to FT.

Dedollarization

  • Indian Government is expected to formally announce a INR-RUB payment arrangement next week which would allow the bypassing of US sanctions, according to Sputnik.

Other

  • North Korea confirmed Thursday’s launch was a ‘new-type’ Hwasong-17 and that its leader Kim directly guided the ICBM test, while Kim sees the new ICBM as an important deterrent against nuclear war. Kim also stated the new weapon shows the might and modernity of North Korea’s strategic force and that they are preparing for a long confrontation with US imperialism. Furthermore, he said North Korea’s strategic force is ready to check and contain any military attempt by the US, while he warned whoever attempts to infringe on North Korea’s security will pay dearly.
  • US imposed sanctions on five entities and individuals in Russia, North Korea and China for weapons proliferation, according to the State Department.
  • Indian Foreign Minister said military talks with China have made progress, but issues are not sorted out, according to Reuters.

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