Railway cars, stamped “Cereale” on their sides, spilled Ukrainian corn onto underground conveyor belts, sending up billowing dust clouds last week at the terminal operated by the American food giant Cargill. At a quay operated by COFCO, the largest food and agricultural processor in China, grain was being loaded onto a cargo ship from one of the enormous silos that lined its docks. At COFCO’s entry gate, trucks that displayed Ukraine’s distinctive blue-and-yellow-striped flag on their license plates waited for their cargoes of grain to be inspected before unloading.

During a visit to Kyiv last week, Romania’s president, Klaus Iohannis, said that since the beginning of the invasion more than a million tons of Ukrainian grain had passed through Constanta to locations around the world.

But logistical problems prevent more grain from making the journey. Ukraine’s rail gauges are wider than those elsewhere in Europe. Shipments have to be transferred at the border to Romanian trains, or each railway car has to be lifted off a Ukrainian undercarriage and wheels to one that can be used on Romanian tracks.

Truck traffic in Ukraine has been slowed by backups at border crossings — sometimes lasting days — along with gas shortages and damaged roadways. Russia has targeted export routes, according to Britain’s defense ministry.

Romania has its own transit issues. High-speed rail is rare, and the country lacks an extensive highway system. Constanta and the surrounding infrastructure, too, suffer from decades of underinvestment.

Over the past couple of months, the Romanian government has plowed money into clearing hundreds of rusted wagons from rail lines and refurbishing tracks that were abandoned when the Communist regime fell in 1989.

Still, trucks entering and exiting the port from the highway must share a single-lane roadway. An attendant mans the gate, which has to be lifted for each vehicle.

When the bulk of the Romanian harvest begins to arrive at the terminals in the next couple of weeks, the congestion will get significantly worse. Each day, 3,000 to 5,000 trucks will arrive, causing backups for miles on the highway that leads into Constanta, said Cristian Taranu, general manager at the terminals run by the Romanian port operator Umex.

Mr. Mircea’s farm is less than a 30-minute drive from Constanta. But “during the busiest periods, my trucks are waiting two, three days” just to enter the port’s complex so they can unload, he said through a translator.

That is one reason he is less sanguine than Mr. Corbea is about Romania’s ability to take advantage of farming and export opportunities.

“Port Constanta is not prepared for such an opportunity,” Mr. Mircea said. “They don’t have the infrastructure.”

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Europe’s central banks jack up interest rates to fight inflation surge

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  • SNB unexpectedly hikes by half a percent
  • Bank of England raises rates by 25 bps
  • Hungary unexpectedly lifts one-week deposit rate
  • Inflation painfully high and not yet peaking

BERN/LONDON, June 16 (Reuters) – Central banks across Europe raised interest rates on Thursday, some by amounts that shocked markets, and hinted at even higher borrowing costs to come to tame soaring inflation that is eroding savings and squeezing corporate profits.

Fuelled initially by soaring oil prices in the wake of Russia’s invasion of Ukraine, inflation has broadened out to everything from food to services with double digit readings in parts of the continent.

Such levels have not been seen in some places since the aftermath of the oil crisis of the 1970s.

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The Swiss National Bank and the National Bank of Hungary both caught markets off guard with big upward steps, just hours after their U.S. counterpart the Federal Reserve lifted rates by the most in almost three decades. read more

The Bank of England meanwhile lifted borrowing costs by the quarter point markets had expected. read more

The moves come just a day after the European Central Bank agreed plans in an emergency meeting to contain borrowing costs in the bloc’s south so it could forge ahead with rates rises in both July and September. read more

“We are in a new era for central banks, where lowering inflation is their only objective, even at the expense of financial stability and growth,” George Lagarias, Chief Economist at Mazars Wealth Management said.

The day’s biggest moves came in Switzerland where the SNB raised its policy rate to -0.25% from the -0.75%, a step so large, not a single economist polled by Reuters had predicted it.

The first SNB hike since 2007 is unlikely to be the last, however, and the bank could be out of negative territory this year, some economists said.

“The new inflation forecast shows that further increases in the policy rate may be necessary in the foreseeable future,” SNB Chairman Thomas Jordan told a news conference.

The Swiss franc jumped almost 1.8% against the euro on the decision and was headed for the biggest daily rise since January 2015 when the SNB unhooked the franc from its euro peg.

TIGHTROPE

In London, the Bank of England was more cautious but said it was ready to act “forcefully” to stamp out dangers posed by an inflation rate heading above 11%. read more

It was the fifth time that the BoE has raised borrowing costs since December and the British benchmark rate is now at its highest since January 2009.

Three of nine rate setters however voted for a bigger, 50 basis point increase, suggesting that the bank will be under pressure to keep raising rates, even as economic growth slows sharply.

“Central bankers are teetering along a tightrope, with the biggest concern that raising rates too quickly could tip economies into recession,” Maike Currie, Investment Director for Personal Investing at Fidelity International said.

“Monetary policy tightening is a very blunt tool to manage a very precarious situation.”

Despite the hike, sterling fell sharply as some in the market had bet on a bigger move given the Fed’s 75 basis points hike the previous evening. The weaker currency, however, means higher imported inflation and further pressure to raise rates. read more

The pound was last at $1.2085 against the dollar, down three quarters of a percent on the day.

In Budapest meanwhile, the Hungarian central bank unexpectedly raised its one-week deposit rate by 50 basis points to 7.25% at a weekly tender, also to tame stubbornly rising inflation now running in double-digits.

Barnabas Virag, the bank’s deputy governor said the increase far was from the last and the bank would continue its rate hike cycle with “predictable and decisive” steps until it sees signs that inflation is peaking, probably in the autumn.

The hike also comes as the nation’s currency has lost close to 7% of its value this year, increasing inflation further via higher import prices.

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Writing by Balazs Koranyi in Frankfurt; Additional reporting by William Schomberg in London, Krisztina Than in Budapest, Mike Shields and Silke Koltrowitz in Zurich; Editing by Toby Chopra

Our Standards: The Thomson Reuters Trust Principles.

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In Ukraine, Some Ethnic Hungarians Feel Ambivalence About the War

TRANSCARPATHIA, Ukraine — Beneath dark clouds unleashing a summer rain, officials in a southwestern Ukrainian border village gathered silently, slowly hanging wreaths on branches to commemorate the destruction of a nation.

The wreaths were not decorated with the yellow and blue of the Ukrainian flag; they were laced, instead, with the red, white and green of Hungary’s. And the nation they honored this month was not their besieged country, but a homeland from their collective history, torn up more than 100 years ago.

Transcarpathia — now a hardscrabble region of Ukraine bordering Hungary — has been home to as many as 150,000 ethnic Hungarians who, through the complex horse-trading, conquests and boundary adjustments of over a century of European geopolitics, ended up within Ukraine’s borders.

war with Russia, the yearnings of Ukraine’s Hungarian minority were mostly brushed off as benign nostalgia for a time when they lived in one nation with other ethnic Hungarians. Now, divided loyalties within the tiny community — which has soaked up Hungary’s ambivalence toward Russia’s invasion — are being seen as something more worrisome by their fellow Ukrainians, some of whom fear they are susceptible to pro-Russia propaganda from Hungary.

Viktor Orban, is able to cause for his neighbors, in this case by playing on ethnic Hungarians’ feelings of discrimination by their government. And it adds another layer of complexity for Ukraine’s leaders as they try to keep their sprawling, multiethnic country united in the face of a brutal Russian invasion, even as they struggle to win allegiance from minorities including ethnic Russians and Hungarians.

tensions have risen as Mr. Orban has increasingly sought to bring ethnic Hungarian enclaves in Ukraine and elsewhere under his sway. Among other things, he has encouraged Hungarians beyond the country’s borders to claim citizenship, which allowed him to win over new voters to keep him in power.

In this poor region of Ukraine, along the Hungarian border, he doled out funding to run schools, churches, businesses and newspapers, winning gratitude — and helping fan resentments. The ceremony for a lost homeland did not exist before Mr. Orban came to power.

The feelings of otherness intensified as Ukraine, under constant threat by Russia, passed a law that mandates more classes be taught in Ukrainian in public schools. The law was mainly meant to rein in the use of the Russian language, but for the conservative Hungarian community where many still learn, and pray, almost exclusively in Hungarian, the law was seen as an unfair infringement on constitutional rights.

tried to block European Union sanctions on Russian energy imports, on which Hungary relies. And he declined to give weapons to Ukraine, or even allow them to be shipped across Hungary’s borders.

That wariness has seeped into the ethnic Hungarian community, fed by Hungarian television channels close to Mr. Orban’s governing party that broadcast into Hungarian-Ukrainian homes along the border. Hungarian broadcasters cast doubt on Ukraine’s position that Russia invaded to steal Ukrainian land, instead sharing Moscow’s perspective that it invaded to protect Russian speakers — a minority with a different language, not unlike the ethnic Hungarians.

“I think this is the main reason for the war, not what Ukraine says,” said Gyula Fodor, a vice rector at the Transcarpathian Hungarian Institute, chatting over traditional plum schnapps after the ceremony for the lost homeland. The institute, a private college, has received Hungarian funding, and Mr. Orban attended its ribbon-cutting.

As the war has dragged on, relations between Mr. Orban and President Volodymyr Zelensky of Ukraine have grown increasingly frosty.

In the border towns, suspicion is in the air. Some ethnic Ukrainians claimed during interviews that in the first days of Russia’s invasion Hungarian priests had urged the faithful to hold out hope that their region would be annexed to Hungary after Kyiv, the capital of Ukraine, fell, though there is no documentary evidence to substantiate those assertions.

In towns with ethnic Hungarian majorities, some people reported being harassed with mysterious text messages in Ukrainian: “Ukraine for Ukrainians. Glory to the nation! Death to enemies!” They said the messages ended with a threat using another word for ethnic Hungarians: “Magyars to the knives.”

Ukrainian intelligence officials publicly claim the texts came from a bot farm in Odesa using Russian software, and labeled it a Russian attempt to destabilize Ukraine, but they did not provide evidence.

Tensions in Transcarpathia erupted publicly after Moscow’s annexation of Crimea in 2014. Right-wing nationalists marched through the streets of Uzhhorod in recent years, sometimes chanting “Magyars to the knife.”

And a Hungarian cultural center in the city of Uzhhorod was set ablaze twice in 2017. In both cases, authorities said the perpetrators had pro-Russian links. Dmytro Tuzhankskyi, the director of the Institute for Central European Strategy in Uzhhorod that promotes Ukraine’s alignment with the West, says he believes Moscow was behind other local provocations. Moscow would like to sow discord between Hungary and Ukraine, he alleged, as a way of causing more trouble for the Western alliance that has lined up against Mr. Putin.

Hungarian and local officials, he worried, could unwittingly fall prey to such designs: “They might think: One more little provocation — it means nothing. That’s a very dangerous mind-set.”

Yet for many ethnic Hungarians, Ukraine is not blameless.

László Zubánics, the leader of the Hungarian Democratic Union of Ukraine, said locals watch Hungarian television partly because no Ukrainian cable channels reach the border areas, something he saw as a form of political neglect. But he acknowledged that ethnic Hungarians often choose to tune into Hungarian, and not Ukrainian, satellite channels.

Many ethnic Hungarians say they are only able to afford to stay in the region of family vineyards and farms because of Hungarian funding. That makes many ethnic Hungarians skeptical of Ukraine’s claims that it wants to help integrate them into society, Mr. Zubánics said: “Most kids and parents say, ‘Why do I need the state language? I don’t see my place here in this country.’”

Although the Soviets repressed and exiled Hungarian nationalists, some ethnic Hungarians have started to look back on Soviet rule as a time of relative cultural freedom as well. It was a time, according to Mr. Zubánics, when Hungarians recall holding prominent official positions, unlike in modern Ukraine.

Nostalgia for Soviet times stirs the ire of local right-wing nationalists such as Vasyl Vovkunovich, once a political ally of Hungarian nationalists in the final days of the Soviet Union. In 2017, he said he led a march of supporters down the streets of Berehove, ripping down Hungarian flags raised over many churches and buildings.

“These Hungarians are not worthy,” he said. “Their ancestors would roll over in their graves if they knew Hungary was siding with Russia.”

For local residents like Zoltan Kazmér, 32, the present feels more complicated. He feels loyal to Ukraine, he said. But it was Hungarian funding that allowed him to turn his family’s century-old winemaking tradition into a business.

“When we go to Hungary, we feel like Ukrainians,” he said. “When we are in Ukraine, we feel like Hungarians.”

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Global Growth Will Be Choked Amid Inflation and War, World Bank Says

For large and small nations around the globe, the prospect of averting a recession is fading.

That grim prognosis came in a report Tuesday from the World Bank, which warned that the grinding war in Ukraine, supply chain chokeholds, Covid-related lockdowns in China, and dizzying rises in energy and food prices are exacting a growing toll on economies all along the income ladder. This suite of problems is “hammering growth,” David Malpass, the bank’s president, said in a statement. “For many countries, recession will be hard to avoid.”

World growth is expected to slow to 2.9 percent this year from 5.7 percent in 2021. The outlook, delivered in the bank’s Global Economic Prospects report, is not only darker than one produced six months ago, before Russia’s invasion of Ukraine, but also below the 3.6 percent forecast in April by the International Monetary Fund.

Growth is expected to remain muted next year. And for the remainder of this decade, it is forecast to fall below the average achieved in the previous decade.

poorer, hungrier and less secure.

Roughly 75 million more people will face extreme poverty than were expected to before the pandemic.

Per capita income in developing economies is also expected to fall 5 percent below where it was headed before the pandemic hit, the World Bank report said. At the same time, government debt loads are getting heavier, a burden that will grow as interest rates increase and raise the cost of borrowing.

“In Egypt more than half of the population is eligible for subsidized bread,” said Beata Javorcik, chief economist at the European Bank for Reconstruction and Development. “Now, that’s going to be much more expensive for government coffers, and it’s happening where countries are already more indebted than before.”

stock market’s woes. The conflict has caused​​ dizzying spikes in gas prices and product shortages, and is pushing Europe to reconsider its reliance on Russian energy sources.

“Insecurity and violence continue to weigh on the outlook” for many low-income countries, the World Bank said, while “more rapid increases in living costs risk further escalating social unrest.” Several studies have pointed to rising food prices as an important trigger for the Arab Spring uprisings in 2011.

In Latin American and the Caribbean, growth is expected to slow to 2.5 percent from 6.7 percent last year. India’s total output is forecast to drop to 7.5 percent from 8.7 percent, while Japan’s is expected to remain flat at 1.7 percent.

The World Bank, founded in the shadow of World War II to help rebuild ravaged economies, provides financial support to low- and middle-income nations. It reiterated its familiar basket of remedies, which include limiting government spending, using interest rates to dampen inflation and avoiding trade restrictions, price controls and subsidies.

Managing to tame inflation without sending the economy into a tailspin is a difficult task no matter what the policy choices are — which is why the risks of stagflation are so high.

At the same time, the United States, the European Union and allies are struggling to isolate Russia, starving it of resources to wage war, without crippling their own economies. Many countries in Europe, including Germany and Hungary, are heavily dependent on either Russian oil or gas.

The string of disasters — the pandemic, droughts and war — is injecting a large dose of uncertainty and draining confidence.

Among its economic prescriptions, the World Bank underscored that leaders should make it a priority to use public spending to shield the most vulnerable people.

That protection includes blunting the impact of rising food and energy prices as well as ensuring that low-income countries have sufficient supplies of Covid vaccines. So far, only 14 percent of people in low-income countries have been fully vaccinated.

“Renewed outbreaks of Covid-19 remain a risk in all regions, particularly those with lower vaccination coverage,” the report said.

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What Happened on Day 99 of the War in Ukraine

As the war in Ukraine approaches its 100th day, President Volodymyr Zelensky said on Thursday that Russian forces now control one-fifth of the country, a blunt acknowledgment of the slow but substantial gains that Moscow has made in recent weeks.

Though battered, depleted and repulsed from their initial drive to capture the Ukrainian capital of Kyiv, Russian troops have used their superior artillery power to grind closer to their goal of taking over the eastern regions of Luhansk and Donetsk, known collectively as the Donbas, where Kremlin-backed separatists have been fighting Ukrainian troops since 2014.

Mr. Zelensky said Russia had expanded its control of Ukrainian territory from an area roughly the size of the Netherlands before the invasion began to an area now greater than the Netherlands, Belgium and Luxembourg combined. Seizing that swath of land could give President Vladimir V. Putin of Russia huge leverage in any future talks to end the war, as well as a base of operations to launch further attacks inside Ukraine.

Yet momentum in the war can shift quickly and unpredictably. As Russia has pounded targets in the east, Ukrainian forces have regained control of 20 small towns and villages in a counteroffensive in the south of the country, a regional official, Hennadiy Lahuta, said on national television.

Credit…Finbarr O’Reilly for The New York Times

Fighting was raging, Mr. Zelensky said, along a roughly 620-mile-long, crescent-shaped front that stretches from around the northeastern city of Kharkiv to the outskirts of Mykolaiv, near the Black Sea, in the south.

“If you look at the entire front line, and it is, of course, not straight, this line is more than a thousand kilometers,” Mr. Zelensky said in a video address to the Parliament of Luxembourg. “Just imagine! Constant fighting, which stretched along the front line for more than a thousand kilometers.”

Amid intense battles and heavy losses suffered by both the Russian and Ukrainian armies, the arrival of more sophisticated and powerful weapons from Western nations could alter the dynamic on the battlefield.

President Biden this week promised to send Ukraine advanced rocket systems that can target enemy positions from nearly 50 miles away, and Chancellor Olaf Scholz of Germany pledged to ship a sophisticated air defense system and a tracking radar capable of pinpointing Russian artillery.

For now, Moscow’s main military target is Sievierodonetsk, the last major city in the Luhansk region that is not in Russian hands. Russian forces have shelled the area for weeks, reducing much of the city to depopulated rubble.

Russia controls about 70 percent of the city, although a regional official said on Thursday that Ukrainian troops had forced Russian soldiers back from several streets amid fierce urban combat.

Credit…Finbarr O’Reilly for The New York Times

Russian forces have renewed assaults to the west of the city in an effort to sever a Ukrainian supply line along a highway and side roads that the Ukrainians have called the “road of life,” the Institute for the Study of War, a Washington research group, said in an assessment.

“The Russian army is trying to break through the defenses of the armed forces of Ukraine,” Serhiy Haidai, the military governor of the Ukrainian-controlled portions of the Luhansk region, wrote on Telegram.

“Now, the main goal for them is Sievierodonetsk, but they had no success overnight,” he wrote.

Military analysts have viewed the Ukrainian army’s decision to hold out in the city as a risky maneuver. It allows the Ukrainians to inflict casualties on Russian troops but could also result in heavy losses for Ukrainian soldiers, who have been besieged by relentless artillery fire.

Mr. Zelensky said that more than 14,000 Ukrainian civilians and service members had been killed in conflict with Russia since 2014, when it seized Crimea. More than 8 million Ukrainians have been internally displaced since Russia’s invasion in February, and more than 6.5 million have fled to other countries as refugees, according to the United Nations.

In his nightly address to the nation Thursday, Mr. Zelensky said that more than 200,000 children had been deported since the invasion began. He called the deportations “one of Russia’s most heinous war crimes.”

“These are orphans from orphanages. Children with parents. Children separated from their families,” Mr. Zelensky said. “The Russian state disperses these people on its territory, settles our citizens, in particular, in remote regions. The purpose of this criminal policy is not just to steal people, but to make deportees forget about Ukraine and not be able to return.”

Credit…Maciek Nabrdalik for The New York Times

Russia has denied that people are being forced to leave Ukraine, saying that the 1.5 million Ukrainians now in Russia were evacuated for their own safety. On Thursday, the Russian Defense Ministry said that over the past 24 hours, 18,886 people had been evacuated from eastern Ukraine, including 2,663 children.

American officials have rejected Russia’s claims that it has been offering Ukrainians humanitarian relief by moving them to Kremlin-controlled territory.

“As many eyewitness accounts have described in detail, Russia is subjecting many of these civilians to brutal interrogations in so-called filtration camps,” Michael Carpenter, the United States ambassador to the Organization for Security and Cooperation in Europe, said in a speech this month in Vienna.

Raising the issue again this week, he said: “Local residents who try to escape Russia’s reign of fear and brutality risk abduction and forced deportation to Russia or Russia-held areas.”

Russia has not released casualty figures for its troops since late March, when it said 1,351 soldiers had died. Mr. Zelensky said Ukrainian officials believe that at least 30,000 Russian troops have been killed. In late March, NATO estimated that 7,000 to 15,000 Russian troops had been killed.

In an effort to isolate and punish Mr. Putin and his allies for having launched the invasion, the Biden administration on Thursday announced a new set of sanctions aimed at freezing the shadowy network of international assets that Mr. Putin and members of his inner circle use to hide their wealth.

Among the targets were four yachts linked to the Russian leader: the Shellest, the Nega, the Graceful and the Olympia. Mr. Putin has used some of the vessels for ocean excursions, including one outing last year on the Black Sea with Aleksandr G. Lukashenko, the strongman leader of Belarus, who has supported the invasion of Ukraine, the administration said.

Credit…Nicole Tung for The New York Times

The sanctions also targeted several prominent members of the Russian elite, including Sergei Roldugin, a cellist, conductor and artistic director of the St. Petersburg Music House, whom the administration called a close Putin associate, godfather to one of Mr. Putin’s daughters and custodian of the Russian president’s offshore wealth.

Mr. Roldugin was added to the European Union’s sanctions list in late February, days after Russia’s invasion of Ukraine. He has been described as “Putin’s wallet.”

Following a drop in Russian oil exports caused in part by Western sanctions, a group of oil-producing nations known as OPEC Plus agreed on Thursday to raise production levels in July and August. The agreement followed months of lobbying by the White House, but analysts said it was too slight to ease high gas prices that have posed a political challenge for Democrats in the midterm elections.

OPEC Plus, which includes Russia, Saudi Arabia and other major oil producers, announced the plan to increase production just days after the European Union agreed to ban most imports of Russian oil, imposing a harsh penalty on Moscow that also threatened to drive European energy costs higher.

As E.U. negotiators finalized the details of the oil embargo and other sanctions against Russia, they made a change at the insistence of Hungary, removing from the sanctions list Patriarch Kirill I, the leader of the Moscow-based Russian Orthodox Church, who has been accused of offering spiritual cover for the invasion of Ukraine.

Reporting was contributed by Matina Stevis-Gridneff, Julian E. Barnes, Michael Forsythe, Stanley Reed and Andrew E. Kramer.

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What Happened on Day 96 of the War in Ukraine

BRUSSELS — The European Union on Monday agreed to ban most imports of Russian oil, the harshest economic penalty yet imposed on Russia for its invasion of Ukraine, and potentially the biggest sacrifice by Europe, itself.

The deal is the latest and most far-reaching demonstration that over more than three months of war, in reaction to mounting Russian aggression and atrocities, European leaders have grown willing to take steps they considered too extreme when the invasion began. They have already barred imports of Russian natural gas, cut off Russian banks from global financial networks, frozen Russian assets and sent advanced weaponry to Ukraine.

After weeks of intense wrangling, E.U. leaders meeting in Brussels endorsed an embargo on Russian oil delivered by tankers, the primary method, with commitments to reduce imports by pipeline, according to a draft agreement seen by The New York Times. The deal was announced in a late-night tweet by Charles Michel, president of the European Council, though many details remain to be hashed out.

The endorsement came as a multipronged Kremlin assault closed in on the easternmost Ukrainian-controlled city, Sievierodonetsk. Russian forces continued their pattern of bombarding cities and towns, including civilian areas, reducing them to depopulated wastelands before attempting to seize control.

Credit…Finbarr O’Reilly for The New York Times

At the same time, Ukraine’s military mounted a counteroffensive to retake the strategic southern city of Kherson. And a car bombing in another Russian-held city, Melitopol, hinted at the kind of fierce resistance the occupiers may face.

President Vladimir V. Putin’s war machinery is financed by Russia’s sales of crude and refined petroleum and natural gas, which account for most of the country’s export revenue, collected primarily by state-controlled energy companies. With the war driving up prices, the European Union countries alone have been paying $23 billion a month for Russian oil.

Analysts say that Russia, offering discounts compared to the prices on world markets, will continue to find some buyers for its oil, but that sales volume and profits are likely to drop significantly once the embargo takes effect.

Europe relies heavily on Russian fuels — 27 percent of the crude oil imported to the European Union comes from Russia — and while E.U. countries are scrambling for alternatives, officials have warned that the financial cost to them will be high. Other sources are expected to be more expensive, if they can be arranged; gas and oil shortages are a real possibility.

The debate over an oil embargo has also exposed the potential vulnerability of the European bloc, just as Sweden’s and Finland’s requests to join NATO have shown fractures within that alliance. Diplomats express confidence that such differences can be resolved, but they offer reminders that the unity the United States and its allies have shown so far in opposing Russia is not guaranteed.

Hungary’s strongman leader, Viktor Orban, whose country depends more than Western Europe on Russian energy, had held up any agreement on an oil embargo, calling it an “atomic bomb” to the Hungarian economy.

The dispute illustrates how the E.U. practice of requiring unanimity among the 27 member nations for major decisions can become a weakness — particularly if Mr. Orban, who has a friendly relationship with Mr. Putin, is called on to take further steps to isolate Russia.

Credit…Johanna Geron/Reuters

The limited embargo that European leaders endorsed was tailored to win Mr. Orban’s support. Prohibiting Russian oil deliveries aboard tankers would eliminate two-thirds of E.U. imports, while having no effect on Hungary, a landlocked nation. Arriving at the E.U. summit meeting on Monday, Mr. Orban said of the pipeline exemption, “It’s a good approach.”

Slovakia, the Czech Republic and Germany, which also receive Russian oil by pipeline, were expected to commit to weaning themselves from that source; Hungary is not expected to give any such assurance.

In NATO, which also operates by consensus, Turkey has blocked the admission of Finland and Sweden, which have been sufficiently alarmed by Russia’s war on Ukraine to abandon their long-held neutrality. Western diplomats predict that President Recep Tayyip Erdogan of Turkey, who has been as contentious a partner to NATO as Mr. Orban has been to the European Union, will wring concessions from the allies but ultimately accede.

On the battlefields of the eastern Donbas region, where Russia is focused on seizing more territory, the most intense combat is around the battered, adjacent cities of Sievierodonetsk and Lysychansk, among the most important remaining pockets of Ukrainian control. After weeks of shelling, Russian forces have fought their way into “the northeastern and southeastern outskirts” of Sievierodonetsk, the Ukrainian defense ministry said in a statement, adding that Russia had funneled still more war matériel from Russia into the Donbas.

Fighting across Donbas reached “maximum intensity,” said Col. Oleksandr Motuzyanyk, the defense ministry spokesman. He added, “Russian invaders shelled the entire front line, trying to hit our deep defensive positions with artillery fire.”

Amid reports of Russian war crimes against civilians, Ukraine’s deputy prime minister, Iryna Vereshchuk, issued a call to residents of Russian-occupied territory to flee however they can to Ukrainian-controlled areas, as millions already have. It is hard and dangerous, she conceded, but “ultimately, it is a question of your safety and that of your children.”

Credit…Finbarr O’Reilly for The New York Times

A French journalist was killed on Monday near Lysychansk when a shell exploded near the evacuation bus he was riding in, according to Ukrainian and French officials, and his employer, the television news channel BFM TV. The journalist, Frédéric Leclerc-Imhoff, suffered a lethal shrapnel wound to the neck, said Serhiy Haidai, the Ukrainian governor of the Luhansk region, who said the shell was fired by Russian forces.

At least seven other journalists have been killed while covering the conflict, according to Reporters Without Borders.

The sheer weight of Russia’s military and the brutality of its tactics have yielded territorial gains in the east, but it has suffered heavy losses, and Western analysts say it is running short of ready resources.

“Russia has likely suffered devastating losses amongst its mid and junior ranking officers,” the British defense ministry said on Monday in the latest intelligence update it has made public. Battalions that the Russians are cobbling together “from survivors of multiple units are likely to be less effective.”

Perhaps most ominous for Moscow, the British cited “multiple credible reports of localized mutinies amongst Russia’s forces.”

Hoping to spread Russian forces thinner than they already are, Ukraine over the weekend launched a counteroffensive more than 300 miles away from Sievierodonetsk, aimed at retaking Kherson, a strategic port on the lower Dnipro River in south-central Ukraine. It was the first major city to fall to the Russians, less than a week after the invasion.

Credit…Associated Press

“The Ukrainian counterattack does not appear likely to retake substantial territory in the near term,” the Institute for the Study of War in Washington said in an assessment released on Sunday, but it will disrupt Russian operations across the south, “and potentially force Russia to deploy reinforcements to the Kherson region, which is predominantly held by substandard units.”

In Melitopol, the Kremlin-appointed regional administration said a car bombing had injured two aid workers and called it “a terrorist attack aimed at destabilizing the peaceful life of the city.” People have protested the occupation in Melitopol, where Russian forces have kidnapped local officials and replaced them.

Ivan Fyodorov, the mayor of Melitopol — who was abducted by Russian forces and then returned to Ukraine in a prisoner swap — said he did not know who was responsible for the bombing, but predicted that “the ground will burn” in Melitopol until Russians leave the city.

Russian forces have held onto most of the areas they conquered in the south early in the war. But one band of fighters held out for weeks in a steel mill complex in the southern city of Mariupol, tying down significant Russian forces before the survivors surrendered this month.

And in the first weeks of the war, Russian offensives in the north aimed at Kyiv, the capital, and Kharkiv, the second-largest city, became hopelessly bogged down. Moscow gave up on those campaigns, at least temporarily, to concentrate on Donbas, and Ukrainians have retaken some of the lost territory.

The failure of those offensives and the resistance in Mariupol contributed to a shift in Russian tactics to a slower, more grinding approach, with little apparent concern for civilian casualties or physical destruction.

Describing the constant shelling of Sievierodonetsk, President Volodymyr Zelensky of Ukraine said in a video posted online on Sunday night, “They don’t care how many lives they will have to pay.”

Matina Stevis-Gridneff reported from Brussels and Richard Pérez-Peña from New York. Reporting was contributed by Matthew Mpoke Bigg and Marc Santora from Krakow, Poland, Valerie Hopkins from Kyiv, Neil MacFarquhar from Istanbul, Cassandra Vinograd and Stanley Reed from London, Carlotta Gall from Druzhkivka, Ukraine, Aurelien Breeden from Paris, and Monika Pronczuk from Brussels.

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Ukraine says Russian advances could force retreat in part of east

  • Russian forces advance in east, shifting momentum
  • EU eyes deal on banning oil shipments from Russia
  • Putin says food crisis can be solved by lifting sanctions

KYIV, May 28 (Reuters) – Ukrainian forces may have to retreat from their last pocket in the Luhansk region to avoid being captured, a Ukrainian official said, as Russian troops press an advance in the east that has shifted the momentum of the three-month-old war.

A withdrawal could bring Russian President Vladimir Putin closer to his goal of capturing eastern Ukraine’s Luhansk and Donetsk regions in full. His troops have gained ground in the two areas collectively known as the Donbas while blasting some towns to wastelands.

Luhansk’s governor, Serhiy Gaidai, said Russian troops had entered Sievierodonetsk, the largest Donbas city still held by Ukraine, after trying to trap Ukrainian forces there for days, though adding that Russian forces would not be able to capture the Luhansk region “as analysts have predicted”.

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“We will have enough strength and resources to defend ourselves. However, it is possible that in order not to be surrounded we will have to retreat,” Gaidai said on Telegram.

Gaidai said 90% of buildings in Sievierodonetsk were damaged with 14 high-rises destroyed in the latest shelling.

Speaking to Ukrainian television, Gaidai said there were some 10,000 Russian troops based in the region and they were “attempting to make gains in any direction they can”. read more

He said several dozen medical staff were staying on in Sievierodonetsk but that they faced difficulty just getting to hospitals because of the shelling.

Reuters could not independently verify the information.

President Volodymyr Zelenskiy said Ukraine was protecting its land “as much as our current defence resources allow”. Ukraine’s military said it had repelled eight attacks in Donetsk and Luhansk on Friday, destroying tanks and armoured vehicles.

“If the occupiers think that Lyman and Sievierodonetsk will be theirs, they are wrong. Donbas will be Ukrainian,” Zelenskiy said in an address.

‘PERFORMED POORLY’

The General Staff of Ukraine’s armed forces said on Saturday Ukrainian forces had repelled eight assaults in the Donetsk and Luhansk regions in the previous 24 hours. Russia’s attacks included artillery assaults in the Sievierodonetsk area “with no success”, it said.

Analysts at the Institute for the Study of War, a Washington-based think tank, said while Russian forces had begun direct assaults on built-up areas of Sievierodonetsk, they would likely struggle to take ground in the city itself.

“Russian forces have performed poorly in operations in built-up urban terrain throughout the war,” they said.

Russian troops advanced after piercing Ukrainian lines last week in the city of Popasna, south of Sievierodonetsk. Russian ground forces have captured several villages northwest of Popasna, Britain’s defence ministry said.

Reached by Reuters journalists in Russian-held territory on Thursday, Popasna was in ruins. The bloated body of a dead man in combat uniform could be seen lying in a courtyard.

Resident Natalia Kovalenko had left the cellar where she was sheltering in the wreckage of her flat, its windows and balcony blasted away. She said a shell hit the courtyard, killing two people and wounding eight.

“We are tired of being so scared,” she said.

Russia’s eastern gains follow the withdrawal of its forces from approaches to the capital, Kyiv, and a Ukrainian counter-offensive that pushed its forces back from Ukraine’s second city, Kharkiv.

Russian forces shelled parts of Kharkiv on Thursday for the first time in days killing nine people, authorities said. The Kremlin denies targeting civilians in what it calls its “special military operation”.

Ukraine’s General Staff said on Saturday while there was no new attack on the city, there were multiple Russian strikes on nearby communities and infrastructure.

In the south, where Moscow has seized a swath of territory since the Feb. 24 invasion, including the port of Mariupol, Ukrainian officials say Russia aims to impose permanent rule.

STRUGGLING TO LEAVE

In the Kherson region in the south, Russian forces were fortifying defences and shelling Ukraine-controlled areas, the region’s Ukrainian governor told media. Another official said Russian forces had shelled the town of Zelenodolsk.

On the diplomatic front, European Union officials said a deal might be reached by Sunday to ban deliveries of Russian oil by sea, accounting for about 75% of the bloc’s supply, but not by pipeline, a compromise to win over Hungary and clear the way for new sanctions. read more

Zelenskiy has accused the EU of dithering over a ban on Russian energy, saying the bloc was funding Russia’s war and delay “merely means more Ukrainians being killed”.

In a telephone call with Austrian Chancellor Karl Nehammer, Putin stuck to his line that a global food crisis caused by the conflict can be resolved only if the West lifts sanctions.

Nehammer said Putin expressed readiness to discuss a prisoner swap with Ukraine but added: “If he is really ready to negotiate is a complex question.”

Both Russia and Ukraine are major grain exporters, and Russia’s blockade of ports has halted shipments, driving up global prices. Russia accuses Ukraine of mining the ports.

Russia justified its assault in part on ensuring Ukraine does not join the U.S.-led NATO military alliance. But the war has pushed Sweden and Finland, both neutral throughout the Cold War, to apply to join NATO in one of the most significant changes in European security in decades.

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Reporting by Natalia Zinets, Conor Humphries, Pavel Polityuk in Kyiv, Vitaliy Hnidyi in Kharkiv and Reuters journalists in Popasna; Writing by Rami Ayyub and Robert Birsel; Editing by Grant McCool and William Mallard

Our Standards: The Thomson Reuters Trust Principles.

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