Ukraine Latest: Russia Says UK Involved in Naval Vessel Strike

(Bloomberg) --

Russia’s Defense Ministry said a navy minesweeper received minor damage from a “massive” drone strike on its Black Sea fleet in Crimea, and accused the UK of helping with the attack, without offering evidence. The UK denied any involvement. 

The removal of the remains of 18th century military commander Prince Grigory Potemkin from a tomb in Kherson’s cathedral -- announced by the region’s Kremlin-appointed chief on Russian TV -- is “symbolic” and likely “preempts Russian intent to expedite withdrawal from the area,” the UK said. 

Russia’s central bank cited the inflationary impact of the Kremlin’s recent call-up of reservists to fight against Ukraine in pausing its run of six consecutive interest rate cuts. Defense Minister Sergei Shoigu told Putin that Russia’s call-up of 300,000 reservists is complete. 

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Key Developments

• ‘Terrifying’ Putin Driven by ‘Evil Forces,’ ECB’s Lagarde Says
• Russian Air Travel is Back, But Aircraft Lack Service, Parts
• UK Bans Russian LNG Even Though Imports Have Already Stopped
• Russia Pauses Rate Cuts as War Call-Up Stirs Economic Angst
• UK Bans Russian LNG Even Though Imports Have Already Stopped

On the Ground

An industrial building in Zaporizhzhia was struck by Russia on Saturday, the region’s governor said. No casualties were reported. Ukrainian troops repelled Russian attacks in the Donetsk region around Vodyane, Kamianka and Nevelske over the past day, according to the General Staff of the Armed Forces. Russia also continued to attempt offensive actions in the directions of Bakhmut and Avdiivka. Two Russian Su-25 attack aircraft, one Mi-8 helicopter and a drone were shot down by air defense units. Russian occupation forces continued an evacuation from the southern Kherson region, and are removing equipment and medicines from local hospitals, according to the General Staff report.

(All times CET)

UK Denies Moscow’s Accusation It Helped With Drone Attack (3:30 p.m.)

The UK defense ministry said Russia’s suggestion that its specialist forces helped Ukraine stage a drone attack on Crimea -- and separately, that it was involved in September’s Nord Stream pipeline undersea explosions -- was “peddling false claims on an epic scale.” 

Ukraine hasn’t commented on what Moscow called a “massive” attack by nine drones on its Black Sea fleet. Unconfirmed reports on social media suggested damage was wider than the “minor” impact on a single mine-sweeper announced by Russia. 

New Prisoner Exchange Taking Place, Officials Say (1:50 p.m.)

Russia and Ukraine exchanged about 50 prisoners each on Saturday, Denis Pushilin, the Kremlin-backed head of the self-proclaimed Donetsk People’s Republic, said on Telegram, without giving further details. 

It was the second exchange in four days after Ukraine reported Wednesday that 10 of its servicemen were released. Last week, 108 women returned to Ukraine in a prisoner swap.

Presidential aide Andriy Yermak said 52 Ukrainian prisoners, including officers, medics, sergeants and soldiers, were freed. The swap included two civilians, he said. Some of the prisoners were captured from Azovstal steel plant in Mariupol. 

Russian Ship Damaged in Crimea Drone Attack, Ministry Says, Blaming UK (1 p.m.)

Russia’s Defense Ministry said a Navy minesweeper, the Ivan Golubets, received “minor” damage during an attack involving nine airborne drones and seven unmanned marine vessels against its Black Sea fleet in Sevastopol, Crimea. 

The ministry said ships targeted were involved in ensuring security for the grain corridor allowing safe transit of agricultural goods from Ukrainian ports. It also accused “British specialists” of helping Ukraine’s military carry out the attack, without offering evidence. 

The Moscow-appointed governor in Sevastopol, Mikhail Razvozhayev, said the drone assault on the city, home to a major Russian naval base, was the largest since the Kremlin’s invasion of Ukraine began in February. Nobody was hurt, the news service said.

Kyiv Mayor Makes Urgent Plea for Winter Aid (9:30 a.m.)

“Send blankets and generators or we’ll freeze to death,” Vitali Klitschko, mayor of Kyiv and a former world heavyweight boxing champion, told the UK’s Telegraph. 

The capital, like other parts of the country, is facing regular blackouts after widespread Russian strikes on the energy grid this month seen as a bid to break Ukrainian resolve heading into winter. About 40% of the nation’s energy infrastructure has been damaged by missile and drone attacks. 

“We are doing everything we can do to save the lives of our people and to protect them,” Klitschko said in an interview on Friday. “But this winter will definitely be a huge challenge for us.”  

Ukraine Commander Speaks With Chairman of US Joint Chiefs (9:13 a.m.)

Valeriy Zaluzhnyi, commander-in-chief of Ukraine’s armed forces, spoke by phone with General Mark Milley, chairman of the US Joint Chiefs of Staff, he said on Telegram. 

Kyiv’s forces “are concentrating their efforts on liberating of Ukrainian territory and preventing the capture of new areas,” Zaluzhnyi said. “Thanks to the courage and professionalism of Ukrainian soldiers and officers, our positions remain unchanged.” 

Germany Threatens to End Swiss Arms Purchases in Dispute Over Ammo (8:10 a.m.)

Germany is pressing on with a request for approval from Switzerland to allow a blocked supply of ammunition to Ukraine. The bullets were manufactured in Switzerland decades ago, and require a permit for re-export.

Switzerland’s Federal Council refused the request in June, citing the nation’s law of neutrality. Now German members of the Bundestag are openly threatening not to buy any more armaments in Switzerland if it doesn’t allow the deliveries.

Ukraine and Germany justify the renewed call for help with the fact that the ammunition is primarily used to secure grain exports from the port city of Odesa, turning it into a humanitarian action. Switzerland has yet to respond to this new argument.

Potemkin Remains Theft From Kherson ‘Symbolic,’ UK Says (8 a.m.)

Russia’s removal of the remains of Prince Grigory Potemkin from a tomb in Kherson’s cathedral is “symbolic,” the UK defense ministry said, and along with the civilian exodus from the region “likely preempts Russian intent to expedite withdrawal from the area.” 

“In the Russian national identity, Potemkin is heavily associated with the Russian conquest of Ukrainian lands in the 18th century, and highlights the weight Putin almost certainly places on perceived historical justification for the invasion,” the ministry said in a Twitter update. 

Potemkin’s remains were held in a crypt in the cathedral, including a small bag containing his “skull and bones, carefully numbered,” the New York Times reported. 

Lagarde Says Putin’s War Has ‘Reunited’ Ukrainians (5 a.m.)

Putin’s assault on on Ukraine is his attempt to “cause chaos and to destroy as much of Europe as he can,” European Central Bank chief Christine Lagarde said Friday on Irish national broadcaster RTE’s . “Anyone who is behaving in that way must be driven by evil forces.”

Lagarde called Putin a “terrifying person” in referring to her past meetings with the Russian leader, adding “he was not as sick as he is today.” Even so, Putin’s actions have “reunited” the Ukrainian people, she said.  “He has rejuvenated NATO and he has certainly brought the Europeans together.”

After expressing her view, Lagarde stressed that she’s “just a central banker,” so “shouldn’t be saying all these things.” 

Zelenskiy Scoffs at Russia Saying Mobilization is Finished (8:41 p.m.)

Zelenskiy dismissed Russia’s announcement that it has completed its call-up of 300,000 reservists to beef up its fight in Ukraine.

“We feel completely different on the battlefield,” the Ukrainian president said in his nightly address. “Russia is trying to increase pressure on our positions, using mobilized people, but their training and equipment are so poor that it allows us to assume that soon Russia will need a new wave of sending people to the front.”

Commenting on rolling blackouts, Zelenskiy said about 4 million Ukrainians now have a limited supply of electricity, underscoring his frequent calls for allies to “strengthen our air defenses.”

Ukraine Freezes Electricity Prices Through Winter (7:04 p.m.)

Ukraine’s government approved a decree to keep electricity prices for households unchanged for the winter heating season through March.

“Today, despite the war and massive shelling of energy infrastructure, a decision was made to keep tariffs for households unchanged to avoid additional financial burden on our citizens,” Energy Minister Herman Halushchenko said in an emailed statement.

Russia has intensified shelling of Ukrainian energy infrastructure since Oct. 10, damaging at least 30% of electricity production facilities. Ukraine was forced to introduce power supply limits across its regions and the capital Kyiv may face an electricity shortage of as much as 50%, Mayor Vitali Klitschko said.

Pentagon to Tap Inventories 24th Time for $275 Million in Weapons (6:29 p.m.)

The US Defense Department said it will provide Ukraine with an additional $275 million in weapons, the 24th such drawdown from existing inventories.

The batch will include an additional 500 precision-guided 155mm artillery rounds as well as 2,000 more 155mm rounds of Remote Anti-Armor Mine Systems that dispense tank-busting munitions. It also provides for transferring 250 M1117 Armored Security Vehicles and more than 2.75 million rounds of small arms ammunition.

One new element is four satellite communications antennas. Pentagon spokeswoman Sabrina Singh said the “off-the-shelf” antennas are separate from equipment for Elon Musk’s Starlink satellite system.

Canada to Issue ‘Ukraine Sovereignty Bonds’ (5:30 p.m.)

The five-year bonds are among the measures Ottawa is putting in place to help Ukraine’s government.

The securities will help Ukraine with essential services including paying pensions and purchasing fuel before winter, Prime Minister Justin Trudeau said in an statement. Equivalent proceeds will be sent to Ukraine through the IMF’s administered account.

The bonds will be offered via financial institutions. Investors will be, in effect, purchasing a regular top-rated Government of Canada five-year bond. Zelenskiy later tweeted his appreciation.

Shoigu Tells Putin ‘Partial Mobilization’ Complete (4:29 p.m.)

Russia’s “partial mobilization” -- calling up 300,000 reservists to fight in Ukraine -- is complete and won’t be extended, Defense Minister Sergei Shoigu said in a televised meeting with President Vladimir Putin.

The call-up, Russia’s first since World War II, shocked many citizens and led more than 350,000 to flee the country amid widespread reports of ineligible candidates being drafted and new troops getting inadequate equipment and poor treatment.

Putin on Friday ordered Shoigu to “modernize” Russia’s draft system to ensure such problems aren’t repeated. Shoigu said 218,000 of the mobilized forces are still in training, while the remainder have already been deployed to Ukraine.

Russia Holds Rates Steady on Impact of Partial Mobilization (13:40 p.m.)

Russia’s central bank held interest rates for the first time since the immediate aftermath of the attack on Ukraine, as risks of higher inflation intensify following the Kremlin’s call-up of reservists to fight in the war.

“While the partial mobilization may mainly create disinflationary pressure in the coming months due to subdued consumer demand, its subsequent effects will be pro-inflationary as it adds to supply-side restrictions in the broader economy,” policy makers said.

Read more: Russia Pauses Rate Cuts as War Call-Up Stirs Economic Angst 

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