Russia/Ukraine War Update - June 22nd, 2022

*** MILITARY SITUATION ***

 

-A fire broke out at an oil refinery in southern Russia’s Rostov Region on Wednesday after it was hit by a Ukrainian drone. The blaze occurred at the Novoshakhtinsky oil refinery, affecting an area of around 50 square meters, and was quickly put out, the emergency services said. There were no injuries or fatalities, they added.

-Russia’s defence ministry said its missiles had struck an airfield near the Ukrainian port city of Odesa, Russian news agencies reported. The strikes were carried out in response to an alleged Ukrainian attack on gas production platforms in the Black Sea, it said.

-Russian troops have captured the frontline village of Toshkivka near the twin cities of Sievierodonetsk and Lysychansk in the Donbas region. The head of the Severodonetsk district military administration, Roman Vlasenko, said the village had not been under Ukrainian control since Monday, adding that the battle for Donbas was “now in full swing”.

-Ukraine’s army said it had launched airstrikes on Zmiinyi Island, also known as Snake Island, causing “significant losses” to Russian forces. In a post on Facebook, the military’s southern operational command said it had used “aimed strikes with the use of various forces” on the island. The military operation “continues”, it said.

-A fire that broke out after Ukrainian forces allegedly attacked oil rigs in the Black Sea off the coast of Crimea is approaching an oil well, according to a pro-Russian official. Three people were wounded and seven people are still reportedly missing. The Russian-backed leader of annexed Crimea, Sergei Aksyonov, blamed Kyiv for the attack.

*** ECONOMIC & POLITICAL ***

-The US needs more money to plan for “the second pandemic,” President Joe Biden said during a press briefing on Tuesday, as he praised his government’s efforts to ensure children under five can get Covid-19 vaccines. Biden also hailed as “a very historic milestone” that the US has become the first country in the world to offer “safe and effective Covid-19 vaccines for children as young as six months old.” When asked about how long the administration could keep up the new vaccine campaign, Biden suggested that the current budget would be enough to “get through at least this year” but stressed that “we do need more money.” He went on to insist that he needed even more money for an unspecified “second pandemic.” “We need more money to plan for the second pandemic. There’s going to be another pandemic,” the president warned, without going into detail about what this new wave might entail.

-A second American citizen killed while fighting on Kiev’s side in Ukraine has been identified by US media this week. Stephen Zabielski, 52, died after reportedly triggering a tripwire while on a mine-clearing mission. Two of his squad mates were seriously injured in the incident, one report said.

-A Ukrainian LGBTQ group has called for the firing of President Volodymyr Zelensky’s top adviser, Alexey Arestovich, on Tuesday after he stated that he considers queer persons “people with deviations.” On June 19, Arestovich was asked during a livestream about his opinion about the LGBTQ community. He replied that he holds a conservative view in regard to the movement but treats its members with sympathy.

-Slovakia has rejected a German offer of 15 Leopard 2A4 tanks in exchange for sending 30 Soviet-era T-72s to Ukraine, the German version of Business Insider reported on Tuesday. The swap was deemed not good enough by Bratislava, the outlet revealed. A comment by the Slovakian defense ministry, cited in the article, complained that similar deals involving other Eastern European nations had far more favorable terms.

-The Russian military is in the process of deploying the S-500, the most advanced air-defense system in the country, President Vladimir Putin said on Tuesday. The Russian leader made the announcements during an address to the graduates of military colleges in Moscow as he described Russia’s plans for fielding advanced weapon systems, which he said “will determine the combat capabilities of the army and the navy for years and decades to come”. Putin stated that the S-500 long-range missile system, which is designed to intercept aircraft and missiles and may have some anti-satellite capabilities, had no equal in the world.

-Taiwanese interceptors took to the air on Tuesday as 29 Chinese fighters, bombers and support aircraft were reported off the southwestern coast of the island, the defense ministry in Taipei said. Six bombers and their fighter escorts flew into the Pacific Ocean through the channel between Taiwan and the Philippines and back again, in the third-largest foray into Taiwan’s air defense identification zone (ADIZ) this year.

-The EU Commission reiterated its support for Lithuania’s decision to heavily restrict the transit of goods to Kaliningrad Region, Russia. At a regular press conference on Tuesday, European Commission chief spokesman Eric Mamer said the country has merely implemented the EU sanctions on Russia rather than imposing an economic blockade.

-Germany is preparing to enter the second phase in its gas emergency plan within five to 10 days, Die Welt reported on Tuesday, citing sources familiar with the matter. The so-called “alarm phase” is triggered when there “is a disruption in the gas supply or an exceptionally high demand for gas which leads to a significant deterioration of the gas supply situation, but the market is still able to cope with this disruption or demand without the need to take non-market based measures,” according to the German Economic Ministry's 3-stage plan. The Federal Association of Energy and Water Industries refused to confirm or deny whether the next step of the emergency plan was due to take effect when asked by Die Welt. If imposed, the measures will allow utilities to pass on gas costs to consumers. While it is unclear how high those price increases will be, one source suggests the average three-person household could face an increase as high as €2,000.

-A United States airman is in military custody for suspected involvement in an insider attack on an American base in Syria earlier this year, the Pentagon said, noting that the man is likely to be charged in the coming weeks. Air Force spokeswoman Ann Stefanek announced the arrest on Tuesday, telling CNN the soldier, who has not been publicly identified, was placed in custody earlier this month at the behest of his commander.

-NATO member Lithuania became the flashpoint of tensions between Russia and the military alliance on Saturday when it banned the transit of EU-sanctioned goods through its territory to and from the Russian exclave Kaliningrad. The Kremlin described the move as “openly hostile” and warned it will take action if the ban is not lifted “in the near future”. The Russians are absolutely furious, and they are strongly warning Lithuania to back down… The Lithuanian chargé d’affaires in Moscow was told that unless cargo transit was resumed in the near future, Russia reserves the right to act to protect its national interests.

The Russian foreign ministry said: ‘We consider provocative measures of the Lithuanian side which violate Lithuania’s international legal obligations, primarily the 2002 Joint Statement of the Russian Federation and the European Union on transit between the Kaliningrad region and the rest of the Russian Federation, to be openly hostile.’

-Israel and Iran are rapidly approaching an inflection point over Tehran’s nuclear program, and what was the atomic equivalent of a controlled clash between the two countries is now devolving into an unconstrained chain reaction. In late May, the International Atomic Energy Agency (IAEA), the United Nations agency tasked with globally overseeing nuclear technology and use, reported that Iran possesses enough fissile material to construct a nuclear bomb. Jerusalem’s long-feared specter of Tehran becoming an existential threat to Israel is now very real and imminent.

Prime Minister Naftali Bennett acknowledged on June 12 Iran is “dangerously close to getting their hands on nuclear weapons.” Earlier, Jerusalem — in an atypical disclosure for Israel — declared it has sufficiently extended the range of its U.S.-supplied Lockheed Martin F-35I Adir stealth fighter-bombers to complete any missions tasked to them in Iran. Israel’s message to the ayatollahs was loud and clear: Israel can reach deep inside Iran and exit Iranian air space unseen. Either abandon pursuit of nuclear weapons or risk getting hit.

Jerusalem’s planning must anticipate Hezbollah, Hamas and other Tehran-backed militias aggressively responding in kind if Israel launches a raid into Iran. In all likelihood, before Israel’s air forces could return to Israeli airspace, massive volleys of rocket fire would be hitting the country from Lebanon, Gaza and Syria — and possibly even from Iran itself. Striking Iran’s nuclear facilities would be only the beginning, not the end, of a hot war between Israel and Iran.

-A U.S. Navy warship fired a warning flare to wave off an Iranian Revolutionary Guard speedboat coming straight at it during a tense encounter in the strategic Strait of Hormuz, officials said Tuesday. The incident on Monday involving the Guard and the Navy comes as tensions remain high over stalled negotiations over Iran’s tattered nuclear deal with world powers and as Tehran enriches uranium closer than ever to weapons-grade levels under decreasing international oversight. Meanwhile, the United Nations’ nuclear watchdog said Iran now plans to enrich uranium through a second set of advanced centrifuges at its underground Fordo facility amid the standoff. The Cyclone-class patrol ship USS Sirocco and Spearhead-class expeditionary fast transport USNS Choctaw County found themselves in the close encounter with three Iranian fast boats while coming through the Strait of Hormuz to enter the Persian Gulf, the Navy said.

-The US disagrees “vigorously” with the Russian position that captured Americans are not covered by the Geneva conventions, a state department official said. The official’s remarks came after the Kremlin spokesperson, Dmitry Peskov, said two Americans detained in Ukraine while fighting were mercenaries who endangered the lives of Russian servicemen and should face responsibility for their actions. The US has conveyed its stance on the issue to the Russian government, the US state official added.

-Ukraine’s defence minister, Oleksii Reznikov, said German self-propelled howitzers have “finally” arrived in Ukraine, in the first delivery of heavy weapons promised by Berlin. Reznikov tweeted that the Panzerhaubitze 2000 “are finally part of 155 mm howitzer arsenal of the Ukrainian artillery” and thanked his German counterpart, Christine Lambrecht. The Panzerhaubitze 2000 is one of the most powerful artillery weapons in Bundeswehr inventories and can hit targets at a distance of 40km (25 miles). Germany pledged last month to send seven self-propelled howitzers to Ukraine, adding to five such artillery systems the Netherlands has promised.

-Russia has demanded that Lithuania immediately lift a ban on the transit of goods on an EU sanctions list across its territory to the Russian exclave of Kaliningrad. The secretary of the security council of the Russian Federation, Nikolai Patrushev, said the consequences of the ban “will have a serious negative impact on the population of Lithuania”.

-Mass mobilisation is “about to happen” in Russia with the Kremlin recruiting people in poorer regions to fight in Ukraine, according to western officials. Officials also said there was “more chatter” about Vladimir Putin’s health and “more speculation” about who would replace him in Russia. However, there does not appear to be an “immediate threat” to the Russian president’s position from the elite or the general population, they said.

-Estonia has summoned the Russian ambassador to protest the violation of its airspace by a Russian helicopter on 18 June.

-After April's bloodbath in new home sales (and existing and pending to a lesser extent), May's housing data deluge is about to kick off with what analysts expect to be a 3.7% MoM drop in existing home sales. In fact - and rather surprisingly - home sales 'only' fell 3.4% MoM in May (April data was revised slightly lower). This is the 4th straight monthly decline (and 5th drop in the last 6 months) in existing home sales and the lowest SAAR since June 2020. “Further sales declines should be expected in the upcoming months given housing affordability challenges from the sharp rise in mortgage rates this year,” Lawrence Yun, NAR’s chief economist, said in a statement. “Nonetheless, homes priced appropriately are selling quickly and inventory levels still need to rise substantially – almost doubling – to cool home price appreciation and provide more options for home buyers.” The median selling price rose 14.8% from a year earlier, to a record $407,600. First-time buyers accounted for 27% of US sales last month, down from 31% a year ago, and underscoring the affordability challenges that have been pricing many Americans out of the market. And bear in mind, this is May's data - before mortgage rates really started to accelerate higher.

-Ukrainian authorities have banned the country’s main opposition party and seized all its assets, once again undermining the narrative that President Zelensky is presiding over a beacon of democracy. The country’s Ministry of Justice announced the move via Facebook, revealing that the Opposition Platform — For Life had been shut down and its assets, money and property transferred to the state. The party had previously had its operations suspended in March after it was accused of being complicit with Russia and being “anti-Ukrainian.” The ban means that Zelensky’s main political opposition has been eliminated. The OPPL was the second largest party in the country and its popularity surpassed that of Zelensky’s Servant of the People party last year.

-CNN economic analyst Rana Foroohar follows a bizarre line of thinking in an interview with The Ezra Kline Show, suggesting that inflation is needed in order to pave the way for a carbon credit based economy.  She argued:

“...This is something that I think, unfortunately, no politician, particularly the Democrats right now in advance of midterms or a presidential election want to land on, which is some of the transitions to a kinder, gentler, I believe more stable, and ultimately more resilient economy, are going to be inflationary in the short to medium term. What’s the cost of something if you actually have a real price on carbon, and then you have to tally in how much it costs to tote it over tens of thousands of miles from the South China Seas? What’s the cost if you have proper environmental and labor standards?  ...This is the conversation happening right now. And once you start pricing all those costs in, and you start really thinking of the economy in a different way, then yeah, it is certainly is inflationary..."  

Foroohar then called on the U.S. and Europe to "put a price on carbon."

-On Monday, David Beasley, director of the UN World Food Programme (WFP), released a statement detailing "the heartbreaking decision to cut food rations for refugees who rely on us for their survival." "As global hunger soars way beyond the resources available to feed all the families who desperately need WFP's help, we are being forced to make the heartbreaking decision to cut food rations for refugees who rely on us for their survival," Beasley said. Beasley pointed out that WFP already "significantly reduced" rations across its operating areas, indicating cuts up to 50% are affecting 75% of all refugees supported by WFP in Eastern Africa, including Ethiopia, Kenya, South Sudan, and Uganda. He said "severe funding constraints" has forced WFP to "significantly reduce rations for refugees living in Burkina Faso, Cameroon, Chad, Mali, Mauritania, and Niger."

-The US attorney general, Merrick Garland, is in Ukraine to discuss efforts to prosecute individuals involved in war crimes during Russia’s invasion, a justice department official said. Garland met with Ukraine’s prosecutor general, Iryna Venediktova, and announced a War Crimes Accountability team that will work to identify and prosecute anyone who committed war crimes in Ukraine.

-Turkey should be cautious about delivering more weapons to Ukraine, the head of Turkey’s weapons production agency said. Remarks by Ismail Demir to the Wall Street Journal show how Ankara is increasingly playing both sides of Russia’s war in Ukraine in contrast to other Nato allies, just months after Turkish-made drones played a critical role in Kyiv’s defence against Russia’s invasion.