Ukraine Update: Biden Aims to End Russia Preferred Trade Status

(Bloomberg) --

President Joe Biden is set to call for an end to normal trade relations with Russia, while the Senate approved a $1.5 trillion federal funding bill that includes aid to help Ukraine respond to the Kremlin’s military invasion of its territory.

About 40,000 civilians were able to leave combat zones on Thursday, Ukraine’s President Volodymyr Zelenskiy said in a video address, adding Russian attacks are preventing evacuations from southern cities including Mariupol. The mayor of Kyiv said almost half the capital’s citizens have fled since Russia began attacking the city two weeks ago. 

China reiterated its support for cease-fire talks without criticizing the invasion ordered by Russian President Vladimir Putin that has drawn international condemnation. European Union leaders meeting in France remained split over how quickly Ukraine’s membership process should advance, with several eastern members asking for a stronger declaration in support of Kyiv’s bid.

Key Developments

• Biden Set to Call for End of Russia’s Preferred Trade Status
• Sony, Uniqlo Join Global Brands Disappearing From Russia
• Von Der Leyen Eyes Ending EU’s Russian Energy Reliance by 2027
• Biden Rallies Democrats as Crises Threaten the Party’s Majority
• Russia Atomic Curbs Weighed by Biden Threaten Industry Upheaval
• Russia Devises Plan to Seize Firms Abandoned in Foreigner Exodus

All times CET:

Biden Set to Call for End of Russia’s Preferred Trade Status (4:44 a.m.)

Biden is set to call on Friday for an end to normal trade relations with Moscow, clearing the way for increased tariffs on Russian imports, according to people familiar with the matter.

His announcement to revoke the trade privileges will come alongside the Group of Seven nations and European Union leaders, the people said. The president can’t unilaterally change Russia’s trade status because that authority lies with Congress, where Democratic and Republican lawmakers have called for the revocation.

Suspending normal trade relations with the U.S., which other countries call most-favored nation status, would put Russia in the company of countries nations such as Cuba and North Korea.

U.S. Passes Funding Bill With Ukraine Aid (3:18 a.m.)

The Senate passed a full-year $1.5 trillion federal funding bill that wards off a possible government shutdown and provides Ukraine with aid to respond to the Russian invasion. 

A bipartisan sense of urgency to approve the $13.6 billion for humanitarian and security aid in response to Russia’s attack led to an overwhelming 68 to 31 vote on the legislation. The measure, which passed the House on Wednesday, now heads to Biden’s desk for his signature. 

U.S. Senate Passes $1.5 Trillion Funding Bill with Ukraine Aid

China Reaffirms Support for Cease-Fire Talks (3:17 a.m.)

Premier Li Keqiang reiterated China’s support for cease-fire talks between Russia and Ukraine, while continuing to avoid criticizing the invasion ordered last month by Putin. 

China has sought to avoid taking a clear side in the war, urging talks and protecting civilians while abstaining from UN resolutions and voicing support for the “legitimate security concerns” cited by Putin to justify the assault. 

EU Leaders Say Ukraine Belongs in ‘European Family’ (3:13 a.m.)

EU leaders issued a joint statement saying they would support Ukraine “in pursuing its European path” and that it belongs in the “European family,” but stopped short of mentioning any special or accelerated candidacy status.

The Baltic nations and Poland had been pushing for a more fulsome blessing for Ukraine’s interest in joining the EU, but Germany and the Netherlands argued there was no way to circumvent or speed up the accession process.

EU leaders will reconvene later Friday morning for the second day of their informal summit at Versailles near Paris.

Biden Rallies Democrats (2:51 a.m.)

President Joe Biden in a speech to the Democratic National Committee presented an optimistic vision of the party’s prospects in November’s midterm elections despite the Russian invasion of Ukraine and inflation continuing to slice into Americans’ purchasing power.

His remarks come as the two greatest crises of his presidency -- the coronavirus pandemic and Russia’s invasion of Ukraine -- have converged to drive up prices that Americans, already rattled by rising inflation, are paying for gasoline, food and housing. 

Biden is scheduled to meet with House Democrats for a strategy session in Philadelphia on Friday, as he tries to revive a legislative agenda that has fractured with a razor-thin majority in Congress.

Russia May Seize Assets of U.S. Firms, Psaki Says (2:50 a.m.)

White House Press Secretary Jen Psaki, in Twitter post, said U.S. is aware of reports that Russia may be considering seizing assets of U.S., international companies that have announced plans to suspend operations in the country.

“Any lawless decision by Russia to seize the assets of these companies will ultimately result in even more economic pain for Russia. It will compound the clear message to the global business community that Russia is not a safe place to invest and do business,” Psaki said.

Stocks Fall on Inflation, War Angst (1:46 a.m.)

Equities in Asia fell as the fastest U.S. inflation in 40 years drove Treasury yields higher and raised expectations for steeper interest-rate hikes. 

U.S. futures turned lower, suggesting caution remains after a selloff Thursday as the war in Ukraine showed no sign of easing. European contracts also slid. Oil’s spectacular rally eased and crude is set for the biggest weekly loss since November. 

Russia Asks for Security Council Meeting (1:28 a.m.)

Russia said Thursday that it had asked for a United Nations Security Council meeting to discuss its disputed claims of “military biological activities of the U.S.” in Ukraine. While Russia has the standing in the Security Council to call for the meeting, U.S. and Ukrainian officials have called the allegations part of a possible false-flag operation. 

White House Press Secretary Jen Psaki said Thursday that the Russians “not only have the capacity, they have a history of using chemical and biological weapons.” In London, British Prime Minister Boris Johnson said he feared that Russia will use such weapons and “they have a fake story ready to go.”  

Zelenskiy Says 40,000 More Civilians Evacuated (11:30 p.m.)

More than 40,000 civilians were able to leave combat zones Thursday, bringing the total number of those evacuated since humanitarian corridors were opened to about 100,000, Zelenskiy said in a video address.

He said the southern cities of Mariupol and Volnovakha remain fully blocked off by Russian forces, with attacks persisting near what is supposed to be a corridor.

IAEA Can’t Confirm Reports Power Restored at Chernobyl (10:30 p.m.)

The International Atomic Energy Agency hasn’t yet confirmed reports of energy restoration at Chernobyl amid a loss of communication with the nuclear power plant. Ukraine’s nuclear regulator had told the IAEA that diesel generators were powering systems important for safety.

At the Zaporizhzhya nuclear power plant, also under the control of Russian forces, it’s not currently possible to deliver necessary spare parts, equipment and specialized personnel to carry out planned repairs. Maintenance has been reduced to minimum levels, the IAEA said.

IMF Warns of Russian Debt Default (9:15 p.m.)

The International Monetary Fund joined a growing chorus that’s warning of a risk that Russia will default on debt obligations following its invasion of Ukraine.

A Russian default is no longer “an improbable event,” IMF Managing Director Kristalina Georgieva told reporters Thursday.

Disney Halts Russia Business (9:12 p.m.)

Walt Disney Co. said it would pause all business activity in Russia, including content and product licensing, the Disney Cruise Line and National Geographic magazine, as well tour operations. Last week the company was the first major Hollywood studio to stop releasing films in Russia.

EU Eyes Ending Russian Energy Reliance by 2027 (8:58 p.m.)

European Commission President Ursula von der Leyen is seeking the political green light from European Union leaders to propose in May measures to phase out dependencies on Russian fossil fuels by 2027.

Von der Leyen outlined her plan to heads of government at their informal summit in Versailles on Thursday, according to a post on Twitter. The commission earlier this week published an overhauled energy strategy aiming to cut reliance on Moscow following President Vladimir Putin’s invasion of Ukraine.

JPMorgan Unwinding Its Russia Business (8:51 p.m.)

JPMorgan Chase & Co. is joining Goldman Sachs Group Inc. in pulling its business back in Russia in response to the country’s invasion of Ukraine. JPMorgan, the biggest U.S. bank, is currently engaging in limited activities, the New York-based company said in a statement Thursday.

MSCI Removing Russian Securities From Corporate Bond Indexes (7:59 p.m.)

MSCI Inc. said it’s removing companies from its bond indexes that are based in developed markets but are owned by Russian companies, such as certain units that issue bonds. 

It’s removing the companies from its MSCI Corporate Bond indexes at the end of March 11.

OMV Cancels EuroChem Deal on Sanctions (7:20 p.m.)

Austrian fossil-fuel company OMV AG canceled plans to sell its nitrogen business to EuroChem Group AG due to sanctions against the company’s Russian founder. The two companies had entered a binding agreement last month valued at 455 million euros ($500 million).

Xi ‘Unsettled’ by Ukraine War, CIA Chief Says (6:31 p.m.)

CIA director William Burns told a U.S. Senate hearing that leaders of the Chinese Communist Party, including President Xi Jinping, are “unsettled” by Putin’s actions in Ukraine, which Burns said are destabilizing the world economy and making it harder to drive a wedge between the U.S. and its European allies.

“What’s unfolded in Ukraine, the ugliness of it, the flawed assumptions that underpinned it from the point of view of President Putin, have unsettled the Chinese leadership a little bit,” the U.S. spy chief said. “They’re concerned about the way in which President Putin is driving Europeans and Americans closer together.”

Yellen: China Moves Aren’t Diluting Russia Sanctions Sting (5:52 p.m.)

Chinese financial institutions that deal in dollar and euro transactions are behaving in a “risk-averse” manner, and trying to avoid violating sanctions, U.S. Treasury Secretary Janet Yellen said in an interview webcast on Washington Post Live. “So I don’t think what China is doing is meaningfully offsetting or lessening the pressure from the sanctions that we’ve put in place.”

“China does buy Russian oil, but I think that our sanctions are limiting Russia’s ability to sell to China and other countries,” she added.

Russian Official’s Remarks Deepen Leased-Jet Puzzle (5:49 p.m.)

Off-the-cuff remarks made by a Russian air-safety official, quickly disavowed by the nation’s industry watchdog, have added to the uncertainty over the fate of some $10 billion in foreign-owned aircraft being held in the country.

Valery Kudinov, who heads airworthiness maintenance at Russia’s Federal Air Transport Agency, outlined to reporters in Moscow on Thursday what appeared to be a plan taking shape for the aviation sector to continue flying after Russia was sanctioned over its invasion of Ukraine.

News outlets picked up the comments, which suggest Russia’s airlines will keep a portion of the planes to use and return others to lessors. The Air Transport Agency said Kudinov’s statements “do not correspond to reality” and pointed out he isn’t authorized to speak officially on its behalf.

EU Leaders Split on Ukrainian Membership (5:36 p.m.)

Dutch Prime Minster Mark Rutte said the EU should focus on Ukraine’s short-term needs rather than its efforts to join the bloc. “There is no such thing as a fast track” for membership, Rutte said. “EU accession of Ukraine is something for the long term, if at all.”

Kyiv Mayor Says Half City’s Citizens Gone (3:49 p.m.)

Almost half the capital’s citizens have fled since Russia began attacking the city two weeks ago, shrinking the population to fewer than 2 million, according to Mayor Vitali Klitschko.

“The Russians’ main goal is to capture Kyiv, to encircle it, to advance further, to topple the government,” Klitschko said on national television. “Their plans are not being fulfilled as our guys are fighting” in towns near the capital, he added, describing Kyiv as a “fortress.”

Ukraine Says It Lost $100 Billion in Assets (3 p.m.)

Russia’s invasion has resulted in about $100 billion worth of Ukrainian assets and infrastructure being lost or destroyed, according to Zelenskiy’s chief economic adviser.

“Around 50% of our businesses are not operating, and those which are still operating” are doing so below capacity, Oleg Ustenko said during a virtual event hosted by the Peterson Institute for International Economics. He called for a full, global embargo of Russia’s oil and gas industry, saying that the proceeds are “real blood money.”

Civilian Deaths, Injuries Continue to Rise: OHCHR (2:30 p.m.)

There have been at least 1,506 civilian casualties since the start of Russia’s invasion Feb. 24, including 549 killed, though the actual numbers are likely to be considerably higher, according to the Office of the United Nations High Commissioner for Human Rights.

“Most of the civilian casualties recorded were caused by the use of explosive weapons with a wide impact area, including shelling from heavy artillery and multi-launch rocket systems, and missile and air strikes,” the OHCHR said in an emailed statement.

Ukraine Steps Up Civilian Evacuations (12 p.m.)

Buses bound for Mariupol to evacuate civilians have left Zaporizhzhia and will join up with a convoy of vehicles delivering humanitarian aid to the city, which is encircled by the Russian troops, the Ukrainian government said in a statement.

The evacuation is happening as Russian troops continue to bombard residential areas, Mariupol city council said on Telegram. Twenty eight buses were also heading to Bucha, north west of Kyiv, to evacuate civilians.

Ukraine Says Russia Indicated Attacks to Continue (11 a.m.)

Russia indicated it will continue attacks until its goals are met, Ukrainian Foreign Minister Dmytro Kuleba said after the 90-minute meeting with Lavrov in Turkey.

“The broad narrative he conveyed to me is that they will continue their aggression until Ukraine meets their demands, and the least of these demands is surrender,” Kuleba told reporters.

Western Europe Must Take in More Refugees, Czechs Say (10:35 a.m.) 

The Czech Republic has taken in 200,000 Ukrainians and its capacity to provide shelter and support is already stretched, Social Affairs Minister Marian Jurecka said. “If more millions are coming, countries like us, Poland or Slovakia, simply cannot manage on our own,” he said.

U.K. Will Freeze Assets of Chelsea Owner Abramovich (10:29 a.m.)

The U.K. government added seven more prominent Russians to its sanctions list, freezing their assets, including Roman Abramovich, owner of Chelsea Football Club. Oleg Deripaska, who has stakes in En+ Group, and Rosneft chief executive Igor Sechin were among those named. The U.K. said the sanctions are worth an estimated 15 billion pounds ($20 billion).

It’s a significant move by Boris Johnson’s administration, which has faced criticism over the slow pace at which it’s targeted Russian billionaires. Opposition politicians have focused on Abramovich, who put Chelsea up for sale in anticipation of being sanctioned. His assets are now frozen in the U.K.  

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