Russia/Ukraine War Update - June 25th, 2022

 *** MILITARY SITUATION ***

-Russian forces have established full control over the Ukrainian city of Sievierodonetsk and the nearby town of Borivske, a senior defense ministry official said in a statement on Saturday.

-Russian forces have fully occupied Sievierodonetsk, the mayor of the eastern Ukrainian city said, confirming Ukraine’s biggest battlefield setback for more than a month, after weeks of some of the bloodiest fighting of the war. Pro-Russian separatists said Moscow’s forces were now attacking the last major Ukrainian-held bastion in eastern Luhansk province, Sievierodonetsk’s twin city Lysychansk on the opposite bank of the Siverskyi Donets river. The Ukrainian military said its troops had withdrawn from the strategic frontline city of Sievierodonetsk.

-Ukraine is regrouping its forces from the rubble of the city of Sievierodonetsk to higher ground in neighbouring Lysychansk to gain a tactical advantage over Russia, the head of Ukraine’s military intelligence agency said. Kyrylo Budanov told Reuters that Ukrainian forces would continue their defence of that front from Lysychansk in eastern Ukraine and that it was no longer possible to hold the line in Sievierodonetsk.

-Russian missiles have hit military infrastructure in northern Ukraine, local officials have said. Reuters reports that Vitaliy Bunechko, governor of the Zhytomyr region in the north of the country, said strikes on a military target killed at least one soldier.

-Russia has been replenishing forces with reservists as part of a covert mobilisation and it is pointless to hope Moscow will simply run out of troops in this war, Kyrylo Budanov told Reuters. The 36-year-old head of the Defence Ministry’s shadowy Main Directorate of Intelligence spoke in a rare interview in Kyiv hours before Russia claimed full control of the city of Sievierodonetsk where Ukrainian forces had been bombarded for weeks.

*** ECONOMIC & POLITICAL ***

-Russia will send missiles capable of carrying nuclear warheads to Belarus in the next few months, Russian president Vladimir Putin said on Saturday while hosting Belarusian leader Alexander Lukashenko. In the coming months, we will transfer to Belarus Iskander-M tactical missile systems, which can use ballistic or cruise missiles, in their conventional and nuclear versions,” Putin said. He also offered to upgrade Belarus’ warplanes to make them capable of carrying nuclear weapons, amid soaring tensions with the West over Ukraine. Lukashenko has previously asked Putin to “adapt” the planes. Many Su-25 (aircrafts) are in service with the Belarusian military. They could be upgraded in an appropriate way,” Putin said, adding, “This modernisation should be carried out in aircraft factories in Russia and the training of personnel should start in accordance with this,” he added. “We will agree on how to accomplish this,” Putin said. Lukashenko said last month that his country had bought Iskander nuclear-capable missiles and S-400 anti-aircraft anti-missile systems from Russia.

-The US has announced that it will provide 18 patrol boats to Ukraine as part of the 13th security package promised on Thursday. “Included in the package announced Thursday are two 35-foot, small-unit riverine craft; six 40-foot maritime combat craft; and ten 34-foot, Dauntless Sea Ark patrol boats,” the Department of Defense said on Thursday. A senior defense official at the Pentagon said, “These are largely to protect the riverways and to enable Ukraine to maintain its control of the riverways. They can also be used in ... close-in coastal areas.”

-The European Union has this week accused Russia of planning "rogue moves" regarding lowering natural gas flows to Europe, or in other words continuing to 'weaponize' its energy, to which the Kremlin has consistently responded with variations of 'our gas, our rules'. This after Moscow has reduced Nord Stream 1 gas flows by 40% last week while citing technical issues, leading to a four- to sixfold rise in market prices, based on German energy officials. However, Berlin isn't buying that needed maintenance on the key pipeline is all that's happening here, instead seeing in it an underhanded Russian ploy to ramp up the pressure on Europe, giving way to fears that the saga could end in Russia halting its pipeline altogether. "Gas is now a scarce commodity in Germany," economy minister Robert Habeck said at a Thursday press conference while warning that his country is now approaching crisis supply levels which could see authorities turn to gas rationing. Habeck confirmed that the last days have seen a "significant deterioration of the gas supply situation" - following Gazprom’s Nord Stream 1 also having to now undergo what the Russian energy company has scheduled as "annual maintenance" for a period of ten days, from July 11 to July 21.

-When Russia's re-branded McDonald's restaurants opened in Moscow earlier this month, they smashed sales records set when the locations were adorned with golden arches, according to a Reuters interview with the firm's chief executive. If it wanted to harken back to the earlier days of its predecessor, new brand Vkusno & Tochka could have posted a sign saying "Over 120,000 Served" after just one day in operation. In the first wave, 50 locations opened in Moscow on June 12 and 13, including the firm's flagship location on Moscow's Pushkin Square. "We have never seen such daily turnover in the whole time McDonald's has worked in Russia," Vkusno & Tochka CEO Oleg Paroev said.

-A close Putin political ally and reservist general has called for London to be hit first in a World War Three. MP Andrey Gurulyov, 54, a member of Russian parliament’s defence committee, advocated the Russian invasion of the NATO Baltic countries. On state TV’s Channel 1 he said there was no other way to prevent the West blockading Russian exclave Kaliningrad. Such a move would trigger NATO’s clause five and spark World War Three. “We’ll destroy the entire group of enemy’s space satellites during the first air operation,” said Lt-Gen Gurulyov, a senior commander who now represents United Russia, the main pro-Putin political party. “No-one will care if they are American or British, we would see them all as NATO. “Second, we’ll mitigate the entire system of anti-missile defence, everywhere and 100 per cent. “Third, we certainly won’t start from Warsaw, Paris or Berlin. “The first to be hit will be London. “It’s crystal clear that the threat to the world comes from the Anglo-Saxons.” Like other Moscow hardliners, he believes the West - especially on continental Europe - has no stomach for a real war. “As part of the operation to destroy critically important sites, Western Europe will be cut off from power supplies and immobilised. “All power supply sites will be destroyed. “And in the third stage, I shall see what the USA will tell Western Europe on continuing their fight in the cold, without food and electricity.

-The European Council on Friday has approved 9 billion euros of financial aid to Ukraine.

-An oil refinery in the south of Russia that was hit by a drone attack earlier this week has resumed operations, according to reports. The Novoshakhtinsk oil refinery in Rostov said the first of two drones flying from the direction of Ukraine struck on Wednesday morning, hitting a crude distillation unit and triggering a blast and ball of fire.

-Following the disappointing tumble in existing home sales (to 2 year lows), analysts expect a modest drop in new home sales in May of just 0.2% MoM (after April's 16.6% MoM plunge). Instead, new home sales spiked 10.7% MoM (from an updwardly revised -12% MoM print in April) - despite soaring mortgage rates. New home sales SAAR bounced from near COVID lockdown lows to 696k from an upwardly revised 629k. Earlier this month, the average rate for a 30-year loan posted its largest one-week increase since the 1980s. It’s risen even further since then. The pickup in sales may also reflect some buyers locking in their mortgage rate in anticipation of even higher borrowing costs.

-Ukraine’s president, Volodymyr Zelenskiy, addressed crowds at Glastonbury festival and asked them to “spread the truth about Russia’s war” and “prove that freedom always wins”.

-Ukraine is running out of shells for the majority of its artillery in part because of an eight-year-long clandestine Russian campaign of bullying and sabotage, according to Ukrainian experts. Russia spent years targeting Ukrainian and other eastern European ammunition storage facilities and suppliers before launching its invasion of Ukraine on 24 February, the Washington Post reports.

-At least 71,000 Ukrainians have entered the US since March, with Joe Biden’s pledge to welcome 100,000 people fleeing the Russian invasion on track to be met over the summer.

-Ukraine will need at least a decade to clear all the mines and explosives from its land and territorial waters after the war, a spokesperson for Ukraine’s State Emergency Service said. So far, Ukraine has managed to clear 620 square kilometres of land that were littered with thousands of explosive devices, including 2,000 bombs dropped from the air, Oleksandr Khorunzhiy said.

-Russia has condemned the European Union’s decision to accept Ukraine and Moldova as membership candidates. Maria Zakharova, spokeswoman for the Russian foreign ministry said, “With the decision to grant Ukraine and Moldova the status of candidate countries, the European Union has confirmed that it continues to actively exploit the CIS on a geopolitical level, to use it to ‘contain’ Russia,” referring to Russia’s sphere of influence within the Commonwealth of Independent States consisting of former Soviet states. Although it could take years for the countries to join the European bloc, the decision to accept them as candidates is a symbol of the EU’s intention to reach deep into the former Soviet Union.

-Ukraine stands with Moldova amid threats from Moscow, the country’s foreign minister has said. “We stand with the people and the government of friendly Moldova amid renewed threats coming from Moscow. All Russia has left is spitting out threats at other states after decades of failed policies based on aggression, coercion, and disrespect. This only shows Russia’s weakness,” Dmytro Kuleba tweeted.

-Norway raised its terror alert to the highest level of "extraordinary" Saturday after a gunman in Oslo opened fire in a bar district popular with the LGBTQ community, killing two and leaving more than 20 wounded, AP reports.