Germany Backs ‘Targeted’ Russian SWIFT Removal: Ukraine Update

(Bloomberg) — Support is rising in Europe to ban Russia from the SWIFT payments system, with Italy adding its backing for the proposal. The U.S. is seriously considering a similar move as well as sanctions on Russia’s central bank.

Most Read from Bloomberg

President Volodymyr Zelenskiy posted another video of himself in Kyiv as Ukrainian forces engaged in street battles in the capital against Russian troops on the third day of an invasion ordered by President Vladimir Putin. “We won’t give up any arms. We will defend our country,” he said.

The Kremlin says Ukraine has rejected its proposal for talks and hostilities will resume. Any meeting would likely struggle to find common ground on the question of “neutrality” for Ukraine, which has sought to join NATO and draw closer to Europe.

U.S. President Joe Biden authorized the State Department to provide $600 million in immediate aid to Ukraine, including $350 million in military funding.

Key Developments

• U.S. Weighs Sanctions on Russia’s Central Bank Over Ukraine (1)

• EU Edges Toward Supporting Expulsion of Russia From SWIFT

• Ukraine Claims to Rebuff Russian Forces as Nations Condemn Putin

• War in World’s Breadbasket Leaves Big Buyers Hunting for Grain

• China Distances Itself From Russia, Calls for Halt to Violence

• Russia Invaded Ukraine and Europe Bought More Gas. Here’s Why

All times CET

Germany Wants “Targeted” Removal of Russia from SWIFT (6:01 p.m.)

Germany is working to find “targeted and functional” ways to remove Russia from the SWIFT international payments system, two top officials said.

“We are working flat out on how to limit the collateral damage of decoupling from SWIFT in such a way that it affects the right people,” Foreign Minister Annalena Baerbock and Vice Chancellor Robert Habeck said in a statement.

Story continues

In an historic policy shift, Baerbock and Habeck said Berlin would allow deadly weapons — initially, 400 rocket-propelled grenades — produced in Germany to be exported to Ukraine from the Netherlands. The direct German export of 14 armored vehicles for Ukraine was also approved, along with 100,000 tonnes of fuel.

Pentagon Cites Resistance to Russia (4:35 p.m.)

Ukraine so far appears to have prevented Russia from achieving air dominance inside the country and it continues to face resistance from Ukrainian aircraft and missile defenses, a senior U.S. defense official told reporters Saturday morning.

The Russian military faces stiff resistance from Ukrainian forces across the country, especially in the north, where Russian troops are now within approximately 30 kilometers (19 miles) of the capital, Kyiv, the person said. Russia has yet to take control of any major cities, the person added.

U.S. military assistance has continued to flow to Ukraine in the last couple of days, the person said, even as the country’s airspace has become contested.

KLM Diverts Flights En Route to Moscow, St. Petersburg (4:10 p.m.)

KLM flights from Amsterdam to Moscow and St Petersburg were seen turning back on plane tracking website FlightRadar24. KL903 which was due to land in Moscow at 5 p.m. local time turned back just before it reached Moscow and was diverting to Copenhagen, FlightRadar24 showed. KL1395 that was due to land in St Petersburg at 5:35 p.m. turned back over Estonia, the website showed.

Turkey Denies Closing Black Sea to Russian Warships (3:40 p.m.)

A senior Turkish official with direct knowledge of the matter told Bloomberg that President Recep Tayyip Erdogan did not tell Zelenskiy on Saturday that Turkey is closing or has shut the Black Sea for Russian warship access.

Zelenskiy posted on his Twitter account that Erdogan told him on a call on Saturday that Turkey would ban passage of the ships. Turkish officials have called for an end to the conflict in Ukraine and have offered to mediate the crisis.

France Intercepts Russian Cargo Ship (3:25 p.m.)

French authorities say a navy patrol intercepted a cargo ship sailing in the English Channel under the Russian flag, the Associated Press reported.

The interception of the ship, carrying cars, early Saturday was triggered by financial sanctions levied against Russia for its invasion of the Ukraine. Maritime spokesperson Veronique Magnin said it appeared to be the first such action in the English Channel under the days-old sanctions regime.

U.S. Weighs Sanctions on Russia’s Central Bank (3:15 p.m.)

The U.S. is weighing sanctions on Russia’s central bank, according to people familiar with the matter, a move that would target much of the $643 billion reserves that Putin had amassed ahead of the invasion.

A final decision hasn’t been made but the Biden administration is urgently considering all options in an attempt to deter Putin from further devastation in Ukraine, the people said, speaking on the condition of anonymity. The U.S. aims to make each move in conjunction with allies across Europe for maximum impact, they said. It’s unclear how advanced those discussions are.

Medvedev Sees ‘Good Opportunity’ to Reinstate Death Penalty (2:50 p.m.)

Dmitry Medvedev, the former Russian president who oversaw a brief liberalization after Putin’s first two terms, wrote on Facebook today that his country’s suspension from the Council of Europe offered a “good opportunity” to end a moratorium on capital punishment.

Medvedev, who holds a special post Putin created for him as deputy head of Russia’s Security Council, also called for foreigners’ assets to be seized in Russia in response to sanctions against Russians abroad.

The “monstrous” limitations being imposed against Russia won’t have any effect on Russia’s resolve to continue “conducting the military operation to protect Donbas,” Medvedev wrote.

EU Edges Toward Supporting Russian Expulsion From SWIFT (1:55 p.m.)

Italy has moderated its previous concerns and is now publicly backing the proposal to ban Russia from SWIFT, if such a move is endorsed by the rest of the bloc.

The European Central Bank and the European Commission are assessing the impact the measure will have on the domestic economy to allow member states to make a decision on the measure. Blocking Moscow from the system would require unanimity among the 27 EU countries.

SWIFT, which delivers secure messages among more than 11,000 financial institutions and companies, is central to the global financial system and an inability to access it could cause significant economic damage.

EU Edges Toward Supporting Expulsion of Russia From SWIFT System

Kremlin Says Ukraine Refused Talks, Military Operations Resume (1:50 p.m.)

Russia has resumed military operations in Ukraine after Kyiv refused to conduct negotiations, Kremlin spokesman Dmitry Peskov said on a conference call.

Peskov said President Vladimir Putin had ordered Russian troops to stop their advance Friday as the two sides discussed the possibility of negotiations, but had failed to reach agreement on a format or location.

EU NATO Members Donate More Weapons to Ukraine (1:41 p.m.)

The Netherlands will send 200 Stinger anti-aircraft missiles to Ukraine as soon as possible, the Dutch government said in a statement. Belgium has also agreed to send fuel and 2,000 small arms to Ukraine, according to Prime Minister Alexander De Croo.

The Czech Republic will send machine guns, sniper rifles, handguns and ammunition worth about $9 million, Defense Minister Jana Cernochova said. Last month the Czechs agreed to send 4,000 artillery shells. Slovakia will send artillery shells and fuel, Defense Minister Jaroslav Nad told journalists. Germany said it would deploy troops to fellow NATO member Slovakia to set up a Patriot anti-aircraft missile system on its territory.

EU Energy Ministers Plan to Meet Monday (1:25 p.m.)

EU energy ministers will convene Monday in Paris for an extraordinary meeting following “Russia’s aggression against Ukraine,” the French ministry of ecological transition said in a statement. France currently holds the EU’s presidency.

Hungary Says It’s No Holdout in Sanctions Discussion (1:15 p.m.)

Hungary isn’t opposing any sanctions proposal the EU would accept against Russia, according to Peter Szijjarto, the country’s foreign minister.

“It should be clear, we have not ever spoken up against any sanctions proposal, have not blocked and we’re not blocking anything,” Szijjarto said on Facebook post, following reports that Hungary wouldn’t back a SWIFT ban on Russia.

Draghi Says Italy Supports EU Position on Russia, Including SWIFT (12:43 p.m.)

Prime Minister Mario Draghi said Italy fully supports the EU’s line on sanctions against Russia, including those within the SWIFT financial framework.

“President Draghi reiterated to President Zelensky that Italy supports and will fully support the European Union’s line on sanctions against Russia, including those within the SWIFT framework,” the Italian prime minister’s office said in a statement on its website, following Draghi’s call with Ukrainian President Volodymyr Zelenskiy on Saturday.

Italy’s position appears to leave Germany as the main holdout against removing Russia from the SWIFT payments system, as Ukrainian officials have repeatedly urged.

Zelenskiy Says Support is Growing For Russian SWIFT Ban (11:47 a.m.)

President Volodymyr Zelensky says Ukraine has almost full support from EU members to ban Russia from the SWIFT international payments system.

“I hope that Germany and Hungary will have enough courage to support this decision,” Zelenskiy said at a briefing. He also tweeted that Italian premier Mario Draghi supported Russia’s disconnection.

Russian Warns Media Against Showing Civilian Casualties (9:39 a.m.)

Russia’s media regulator ordered ten mostly independent news outlets to remove reports of alleged civilian casualties and attacks on cities by Moscow’s forces in Ukraine, as the Kremlin seeks to control the narrative at home about its invasion.

The regulator alleged the reports contained “inaccurate information about shelling of Ukrainian cities and the deaths of civilians as a result of the actions of Russian forces,” and warned that access to the media outlets would be restricted if the material wasn’t removed.

Russian authorities have banned anything but the use of official information about the war. Moscow denies its forces are targeting civilians and cities, despite video and photo evidence from Ukraine. Amnesty International monitors accused Russia of indiscriminate attacks on hospitals and other targets banned under the laws of war.

Polish Leader to Discuss SWIFT Sanctions With Germany’s Scholz (9:31 a.m.)

Polish Prime Minister Mateusz Morawiecki will meet German Chancellor Olaf Scholz on Saturday in Berlin to press the case for Russia to be excluded from the SWIFT financial messaging system, his spokesman told Bloomberg.

“Fortunately, the last 24 hours have seen a shift in attitudes in a number of previously skeptical governments,” said the spokesman, Piotr Muller.

Hungary Offers Budapest for Russia-Ukraine Talks (9:23 a.m.)

Hungary has offered its capital, Budapest, as a potential site for talks between Russian and Ukrainian officials, Foreign Minister Peter Szijjarto said on Facebook.

Szijjarto said he made the offer to his Russian counterpart, Sergei Lavrov, and Ukrainian presidential adviser Andriy Yermak.

“Budapest could be secure for both the Russian and Ukrainian delegations,” Szijjarto said. “Neither of them said no outright.”

EU Home Affairs Ministers to Hold Emergency Meeting (9:08 a.m.)

The EU’s 27 home affairs ministers will hold an extraordinary gathering on Sunday to discuss humanitarian support for Ukraine and the refugee situation. They’ll also talk about how to manage the bloc’s external borders and related security issues.

United Nations agencies forecast as many as 4 million refugees will flee Ukraine to neighboring countries if the Russian invasion continues.

Poland Border Guard figures showed that 47,500 people arrived from Ukraine on Friday, about five times the daily average from last year. Some 10,000 crossed back into Ukraine.

Russian Bank VTB’s London Foothold Hit by Sanctions (8:22 a.m.)

The sanctions leveled by the U.K. against Russia’s second-largest bank took an immediate toll this week, potentially dealing a knockout blow to its slowly fading plans to be a major player in the City of London.

The London Stock Exchange suspended VTB’s membership on Friday, meaning it can no longer trade there. The bank has also lost access to the London Bullion Market Association, where it traded precious metals along with its Russian peer, Sovcombank.

VTB’s London decline has been under way for years, as the bank shifted more of its operations to Frankfurt and to Zug, Switzerland. Now other lenders are racing to cut ties with VTB after the U.K. Treasury froze its assets, and some competitors have urged British officials to issue a wind-up order so they can unravel their ties with the Russian bank.

Ukraine, Russia Each Issue Updates on Fighting (7:55 a.m.)

Russia’s Defense Ministry said it struck various sites overnight, including using what it called long-range cruise missiles, hitting 14 military airfields, 19 communications stations and 24 anti-aircraft complexes, Interfax reported. It added Russian forces had taken control of the city of Melitopol in the southeast. The ministry said Russia had downed 7 military planes, 7 helicopters and 9 drones, Interfax reported.

Ukraine’s military said on Facebook that a missile had shot down a Russian helicopter and a Su-25 military jet, and that transport aircraft had been destroyed. It said there was continued fighting in Kyiv. The mayor of southern city of Kherson said Ukrainian troops had retaken control.

None of the reports could be independently verified.

Expelling Russia From SWIFT Back on Table (4:35 a.m.)

Biden administration officials are now debating whether to push for a directive from the European Union needed to ban Russia from SWIFT, though a U.S. and EU decision is not imminent, according to people familiar with the situation. Officials are discussing the matter with the Federal Reserve, which sits on SWIFT’s oversight body, two of the people said. Another person said talks have commenced with the European Commission.

The discussions by the U.S. mark a change in course after Biden said he was holding off because European allies had voiced concerns over the risk such a move posed to their economies.

Russia, Ukraine’s Credit Ratings Cut by S&P (3 a.m.)

Russia’s long-term foreign currency debt rating was cut by S&P Global Ratings to BB+, one level below investment grade. Ukraine’s rating was downgraded one notch to B-.

Russia’s military assault poses risks to Ukraine’s economic growth, financial stability and public finances, while the sanctions imposed on Russia could have significant effects on the economy, trade and financial stability, S&P said.

Earlier, both Russia and Ukraine had their ratings placed on review for downgrade by Moody’s Investors Service, and Fitch Ratings slashed Ukraine’s score.

Most Read from Bloomberg Businessweek

©2022 Bloomberg L.P.