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Tag: EU-Russia relations

  • Target Crimea

    Target Crimea

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    KYIV — In Crimea, the war is drawing ever closer, and nerves are on edge.

    In conversations via secure communications, people in Crimea describe growing tension across the Black Sea peninsula as they increasingly expect the advent of direct hostilities. They say saboteur and partisan groups are now readying in the territory, which was illegally annexed by Russia in 2014.

    Frustration and panic are surging, over everything from conscription to runaway prices. One person told of anger over an inability to secure hospital places thanks to the numbers of Russian wounded brought in from the fronts, while another said that the fretful Russian elite were trying to sell their glitzy holiday homes, but were finding no buyers.

    When Vladimir Putin launched his all-out invasion of Ukraine in February, few people expected Ukrainian forces would nine months later be threatening to reclaim Crimea. That no longer feels like a military impossibility, however, after Kyiv’s well-organized troops showed that they could drive out Russian forces in offensive operations around Kharkiv in northeastern Ukraine and Kherson in the south.

    Tamila Tasheva, Ukrainian President Volodymyr Zelenskyy’s permanent representative in Crimea, has high hopes the peninsula will end up back in Ukrainian hands. “Yes, of course, it is entirely possible we will get Crimea back,” she told POLITICO.

    “Our goal is the return of all our territory, which of course includes Crimea,” she said in her office in Kyiv. A 37-year-old Crimean Tatar, whose family lives on the peninsula, Tasheva is busy preparing plans for what happens after Crimea is “de-occupied” and is drafting a legal framework to cope with complex issues of transitional justice that will arise. She says while Kyiv would prefer the peninsula to be handed back without a fight, “a military way may be the only solution.”

    “The situation is very different now from 2014. We have a lot of communication with people in Crimea and they’re increasingly angered by the high food prices and shortages in drugs and medicines,” she said. “And there’s been an increase in anti-war protests, especially since the start of conscription and partial mobilization.”

    When asked about people forming anti-Russian partisan groups, she simply commented: “Of course they are.” The difference between 2014 when Russia annexed Crimea and now comes down to the fact, she argues, that Ukraine has a strong army and a determined leadership and that is affecting and fortifying people’s thinking in Crimea. 

    Against the occupiers

    For Putin, Crimea has long been a sacred cause — he called it an “inseparable part of Russia” — and that led many in the West to fear it could be a strategic red line. That sense was hardly helped by nuclear saber-rattler-in-chief, former President Dmitry Medvedev, who issued ominous warnings about any attack on Crimea. “Judgment Day will come very fast and hard. It will be very difficult to take cover,” Medvedev, now deputy chairman of the Security Council of Russia, said earlier this year in comments reported by the TASS news agency.

    Undaunted, the Ukrainians have repeatedly gone after Russian targets in Crimea since August, including airbases and ships.

    Tensions ratcheted up dramatically, however, after the explosion on October 8 that damaged the Kerch Bridge, a vital supply line between Russia and Crimea.

    People pose in front of a postage stamp showing an artist’s impression of the Kerch bridge on fire | Ed Ram/Getty Images

    People in Crimea say the Russians are jittery and on the hunt for pro-Ukrainian sympathizers, fearing more acts of sabotage. Kyiv has never formally claimed responsibility for what was most likely a truck bombing. The people POLITICO talked with can’t be named for their own safety, but they included businessmen, lawyers and IT workers.

    “There was panic afterwards,” said one IT worker. “Since then, officers and soldiers have been moving their families back to Russia. And the rich have been trying to sell their properties worth $500,000 to a million, but the market is dead,” he added.

    “Because of the sanctions, a lot of people have lost their jobs and prices for everything, food especially, have skyrocketed and there isn’t much choice available either. If you were making a $1,000 a month before February, now you need to be around $3,000 to be where you were, and how are you going to do that with the tourism industry dead,” he said. Locals are fuming that they can’t receive medical attention because the peninsula’s hospitals are full of Russian soldiers wounded in the fighting in Kherson and Donetsk.

    With the situation worsening, more partisan cells are forming, they say. “My group of patriots know each other well: We studied and worked together for years and trust each other — we are preparing, and we understand secrecy will determine the effectiveness of our actions,” said a former banker, who claimed to be leading a seven-man cell.

    Inspired by the Kerch Bridge blast, his cell is planning to sabotage military facilities using rudimentary explosives made from ammonium nitrate and diesel fuel.

    “There are many provocateurs around and the Russians are anxious, so we’re vigilant. We know other partisan groups, but we don’t actively communicate for security reasons,” he said. “We’ve a deal with a police chief who understands Russia is losing and is worried — he’ll give us key to his arsenal when needed with our promise that we will put in a good word for him later,” he added.

    Whether such cells represent any kind of serious threat remains to be seen and POLITICO can’t verify the claims of would-be saboteurs, but retired U.S. General Ben Hodges, a former commanding general of the United States Army Europe, says he had expected partisan cells to form, encouraged by Kyiv and otherwise.

    “I would have assumed this. Both locals as well as saboteurs who have been infiltrated into Crimea. Remember the Ukrainians, of course, did this to the German Wehrmacht throughout World War II. There’s a tradition of sabotage and insurgency,” he said.

    “I would hate to be a Russian truck driver on a convoy somewhere, anywhere in the area these days. I think when it does come time for decisive action, it will be a combination of local partisans and infiltrated saboteurs,” he added.

    ‘Crimea is Ukraine’

    Ukraine’s recent victories in northeastern and southern Ukraine are fueling confident talk in Kyiv about Crimea, and since Russian forces retreated from Kherson city, 130 kilometers from the northernmost part of the peninsula, the chorus has only been growing louder, as more of the peninsula comes into rocket and missile range of the Ukrainians.

    After seizing Crimea, the Kremlin harbored ambitions to turn it into another glittering seaside Sochi — or showcase it as a Black Sea rival to France’s Côte d’Azur. Construction of condos started apace with plans to make Sevastopol a major Russian cultural center. A new opera house, museum and ballet academy were to be completed next year. Around 800,000 Russians may have moved to the peninsula since 2014. The war has ruined construction schedules.

    People take part in celebrations marking the eighth anniversary of Russia’s annexation of Crimea in Simferopol on March 18, 2022 | Stringer/AFP via Getty Images

    Top Ukrainian officials have been taunting Russia, saying Crimea will soon be under Ukrainian control — by year’s end even or early next year. Zelenskyy has returned repeatedly to the theme: in October telling European and American parliamentary leaders: “We will definitely liberate Crimea.” His top adviser, Andriy Yermak, told POLITICO during the Halifax International Security Forum earlier this month: “I am sure that the campaign to return Crimea will take place.”

    Ukrainian officials told POLITICO that Western European leaders had been the most jittery about pushing on to Crimea. America’s top general, Mark Milley, chairman of U.S. Joint Chiefs of Staff, has cast doubt about Ukraine’s ability to reclaim the peninsula militarily, suggesting it would be overreach. At a Pentagon press conference on November 16, he said: “The probability of a Ukrainian military victory, defined as kicking the Russians out of all of Ukraine to include what they defined, or what they claim as Crimea, the probability of that happening anytime soon, is not high, militarily.”

    But the White House hasn’t walked back President Joe Biden’s February 26 remarks when he made Washington’s position clear: “We reaffirm a simple truth: Crimea is Ukraine.”

    Raising the pressure

    Ukrainian forces have been increasing the tempo of military activity in and near Crimea using both aerial and innovative marine drones to swarm and strike in October and last Tuesday Russian warships stationed at Sevastopol, the home base of the Russian navy in the Black Sea. The Russian-installed governor of Sevastopol, Mikhail Razvozhaev, said in a social media post after Tuesday’s attack that a couple of drones had been intercepted, later adding another three had been downed by Russian warships.

    Kyiv has not commented on that attack, but last week, Ukraine’s top security official confirmed Israeli press reports that 10 Iranian military advisers in Crimea were killed by Ukrainian drones. “You shouldn’t be where you shouldn’t be,” said Oleksiy Danilov, secretary of Ukraine’s defense council, in an interview with the Guardian. The Ukrainians say Iranian technicians and operators have been assisting the Russians with the Shahed-136 armed drones supplied by Tehran.

    The attacks appear to be unnerving the Russian military — especially those carried out by maritime drones. The October attack involved half a dozen radio-operated marine drones equipped with jet-ski engines. Some of the nearly six-meter-long drones are thought to have damaged two ships, a minesweeper and more importantly the Admiral Makarov, a frigate. On November 18, the Ukrainians repeated the exercise further afield with an attack on warships in the port at Novorossiysk, a Black Sea city in southern Russia.

    One Crimea resident told POLITICO that the drone strikes appear to have forced Russian naval commanders to rethink the positioning of their ships. “A group of Russian warships were until recently regularly off the coast near my house. I used to watch them and if they fired missiles, I’d contact my family in various cities in Ukraine to warn them rockets were on their way. But now the warships have moved away, they were too vulnerable where they were.” he said.

    The Russians are fortifying their defenses, especially in the Dzhankois’kyi district, the northern part of the Crimean steppe near Syvash Bay, according to Andrii Chernyak of the main intelligence directorate of the ministry of defense of Ukraine.

    Hodges, the former general, disagrees with General Milley and says an offensive “is possible and I believe they will be working to be in place to begin this in a deliberate way as early as January.”

    “Between now and then, they will continue to isolate Crimea by going after the Kerch Bridge again and also the land bridge that originates in Rostov and runs along the northern coast of the Sea of Azov down through Mariupol and Melitopol and on to the peninsula. The Ukrainians are going to be looking to pound away at the bridge and the land link, a form of eighteenth-century siege tactics,” he added.

    Those siege tactics, he says, will be accompanied by daring use of high-tech weapons. “The U.S. navy has put a lot of development effort into unmanned maritime systems and to see what the Ukrainians have been doing with swarm attacks by drones has really impressed me,” he said.

    The Ukrainians, he predicts, will attempt “to fight their way across the isthmus when the conditions are right,” adding: “This is going to come down to a test of will and a test of logistics.”

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    Jamie Dettmer

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  • NATO countries must ramp up arms production for battles ahead, Ukraine says

    NATO countries must ramp up arms production for battles ahead, Ukraine says

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    NATO countries urgently need to boost weapons production, Ukrainian Foreign Minister Dmytro Kuleba warned ahead of a meeting of the alliance’s ministers this week.

    In an interview with POLITICO late Monday, the Ukrainian politician said it would not be possible to win on the battlefield in the longer term without investing in making more weapons.

    “While we are fighting the battles of today, we have to think how we will be fighting the battles of tomorrow,” Kuleba said.

    Sitting at a table in a small train compartment in Ukraine, the minister said that NATO countries must “begin the production of necessary weapons today.”

    If this does not happen, he cautioned, “we won’t be able to win — as simple as that.”

    POLITICO is withholding the train’s precise location for security reasons.

    NATO ministers are set to hold talks on Tuesday and Wednesday in Bucharest, with the agenda expected to include how to better support Ukraine.

    “The last time I attended [a] NATO ministerial, I came with three words: weapons, weapons, and weapons,” Kuleba recalled. “This time, while this request remains absolutely acute, I will specify it by saying that we need air defense, tanks and production lines.”

    The Ukrainian minister said officials need to be realistic — and less reliant on fickle partners.

    “We also have to face one fact: There are countries in the world who have what Ukraine needs but who are not going to sell it in sufficient quantities for political reasons,” he said. 

    “Instead of counting on them and spending months on trying to convince them, production has to be launched so that … we do not fall dependent on the whims of the third countries who have stuff in stocks but who are not willing to share it.”

    And while praising Ukraine’s partners for their contribution to Ukraine’s defenses, Kuleba was also blunt about the changes he would like to see in Western decision-making regarding support for Kyiv.

    Ukrainian officials, as well as some of Kyiv’s closest allies, have been critical of some Western governments’ tendencies over the past few months to first express reluctance to extend certain types of support and then gradually shift policies as outrage grows over Russia’s behavior.

    “We wasted too much time — and too many lives, and too many square kilometers of our land. So I think — I hope — that the wisdom will prevail, that everything should be done on time, and we should not wait for another tragedy to unfold in order for someone to be able to overcome the psychological barriers of making one or another decision about Ukraine,” Kuleba said.

    Asked about those who would like to see Ukraine consider negotiating with Russia, the minister said reports of pressure are overstated. 

    “I have to say that this notion of soft pressure on Ukraine is largely exaggerated,” Kuleba said.

    “I wouldn’t say it doesn’t exist, but it has not taken a form of — even of a soft pressure,” he said, adding: “I would call it just a discussion on what’s next, how are we going to handle it together.” 

    Kuleba also addressed Ukraine’s troubled relationship with its neighbor Hungary.

    Hungarian Prime Minister Viktor Orbán, he said, “is playing his own game with the European Union — and sometimes uses Ukraine as a hostage of that relationship.”

    And the minister sent a message to ordinary Hungarians: “Whatever you read in your official media, Ukrainians do not have any animosity towards Hungarians.

    “We were friends, we are friends, and we will be friends,” he said. “But we need to win this war, and it is in the best interest of Hungary that Ukraine wins.”

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    Lili Bayer

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  • Why cheap US gas costs a fortune in Europe

    Why cheap US gas costs a fortune in Europe

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    The EU is under immense pressure to cap the price of imported natural gas to contain energy costs — but many of the companies making a fortune selling cheap U.S. gas to the Continent at eye-watering markups are European.

    The liquefied natural gas (LNG) loaded on to tankers at U.S. ports costs nearly four times more on the other side of the Atlantic, largely due to the market disruption caused by a near-total loss of Russian deliveries following the invasion of Ukraine.

    The European Commission has come under fierce pressure to sketch out a gas price cap plan, but some countries, led by Germany, worry such a measure could prompt shippers to send gas cargoes elsewhere. The Commission is also reluctant, and its proposal issued Tuesday sets such demanding requirements that they weren’t met even during this summer’s price emergency.

    But a large part of the trade is in European hands, according to America’s biggest LNG exporter.

    “Ninety percent of everything we produce is sold to third parties, and most of our customers are utilities — the Enels, the Endesas, the Naturgys, the Centricas and the Engies of the world,” said Corey Grindal, executive vice president for worldwide trading at Cheniere Energy, rattling off the names of big-name European energy providers.

    Cheniere, which this year saw 70 percent of its exported LNG sail to Europe, sells its gas on a fix-priced scheme based on the American benchmark price, dubbed Henry Hub, which is currently at about $6 per million British thermal units.

    On average, the price across all Cheniere contracts is 115 percent of Henry Hub plus $3, Grindal said. That works out to about €33 per megawatt-hour. For comparison, the current EU benchmark rate, dubbed TTF, is €119 per MWh.

    It’s a big markup for whoever is reselling those LNG cargoes into Europe’s wholesale market, profiting from fears that there may not be enough gas to last the winter.

    Despite fears that any EU cap will send gas to higher bidders in Asia and result in bloc-wide shortages, Grindal gave a resounding “no” when asked if a cap would have any impact on how Cheniere does business with European companies.

    “Our balance sheet is underpinned by those long-term contracts,” he added.

    Translation: If buyers choose to trade their precious cargoes away for higher profits beyond Europe once they receive them, that’s their decision.

    Blame game

    “The United States is a producer of cheap gas that they are selling us at a high price … I don’t think that’s friendly,” said French President Emmanuel Macron | Ludovic Marin/AFP via Getty Images

    The difference between U.S. and EU gas prices hasn’t gone unnoticed by European politicians — but most of the finger-pointing has been at American producers rather than the resellers closer to home.

    “In today’s geopolitical context, among countries that support Ukraine there are two categories being created in the gas market: those who are paying dearly and those who are selling at very high prices,” French President Emmanuel Macron told a group of industrial players last week. “The United States is a producer of cheap gas that they are selling us at a high price … I don’t think that’s friendly.”

    Macron’s dig conveniently ignored that the largest European holder of long-term U.S. gas contracts is none other than France’s own TotalEnergies.

    At the company’s latest earnings call last month, TotalEnergies CFO Jean-Pierre Sbraire trumpeted the fact that the firm’s access to more than 10 million tons of U.S. LNG annually “is a huge advantage for our traders, who can arbitrage between the U.S. and Europe.”

    “And now, given the price of LNG, each cargo represents something like $80 million, even $100 million. So, when we are able reroute or to arbitrage between the different markets, of course, it’s a very efficient way to maximize the value coming from that business,” Sbaire added. “Cash flow generation of this order of magnitude marks the start of a new era for the company.”

    Spain’s Naturgy — which has some 5 million tons of U.S. LNG a year from Cheniere under contract — has also earned nearly five times more trading gas so far this year compared with 2021 thanks to “the increased spread between [Henry Hub] and TTF,” it wrote in its half-year report.

    Long-term contracts with the U.S. weren’t always so profitable. In fact, from 2016 to at least 2018, buyers were mostly losing money on the fixed deals, leading some to sell them off.

    In 2019 Spain’s Iberdrola, for example, pawned off its 20-year Cheniere contract to Asian trader Pavilion Energy, which is now benefiting from selling into a high-priced global market.

    In the U.K, Centrica tried — and failed — to sell off its LNG portfolio in 2020 when government-ordered lockdowns drove real-time prices through the floor. That included a 20-year fixed Cheniere contract set to run through 2038.

    Now that real-time prices have shot back up, Centrica — part of Shell-owned British Gas — is reaping the rewards and eagerly snapping up more long-term contracts, most recently a 15-year deal with U.S. LNG exporter Delfin beginning in 2026.

    “This is a really important profit stream for us,” Centrica CFO Chris O’Shea told investors on a Friday trading update call.

    Unlike some producers — for example in the Middle East — which restrict the final destination of the LNG to consumers in Asia and prevent it being sold onward at a higher price, American gas changes ownership the minute it’s loaded onto a ship and comes with no strings attached.

    That leaves buyers free to redirect the precious supply wherever it’s most profitable — sometimes at the expense of their downstream clients, if it’s cheaper to break those pre-existing domestic delivery commitments.

    “We can only control what we can control,” said Cheniere’s Grindal. “U.S. LNG is destination-free.”

    But as far as getting it on the ship at previously agreed prices, “our focus is being that reliable supplier, being committed to the obligations that we’ve made to our customers, and we’re committed to doing everything that we can to help the EU in this situation.”

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    America Hernandez

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  • Russia’s retreat from Kherson hailed by the West

    Russia’s retreat from Kherson hailed by the West

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    Western officials welcomed Russia’s retreat from the Ukrainian city of Kherson, labeled a “big moment” by the White House and “another strategic failure” for Moscow by the U.K.

    Ukrainian troops on Friday entered Kherson, the only provincial capital to be taken by Russia in its invasion. The Russian Defense Ministry confirmed in a video that Moscow’s troops had been withdrawn from the Ukrainian city and other territories on the western bank of the Dnipro River, in a huge blow to President Vladimir Putin’s war effort.

    “It has broader strategic implications as well,” U.S. National Security Adviser Jake Sullivan said, “because being able to push the Russians across the river means that the longer-term threat to places like Odesa and the Black Sea coastline are reduced from where they were before.”

    “And so this is a big moment. And it’s certainly not the end of the line, but it’s a big moment,” the top White House official told reporters while flying to a Southeast Asian summit in Cambodia, according to a readout published online.

    French President Emmanuel Macron called it a “critical step towards the restoration of [Ukraine’s] sovereign rights.”

    U.K. Defense Secretary Ben Wallace said Russia’s retreat “marks another strategic failure for them. In February, Russia failed to take any of its major objectives except Kherson,” according to a statement.

    The Ukrainian military said it was overseeing “stabilization measures” around Kherson to make sure it was safe, the Associated Press reported on Saturday. Kyiv was making speedy but cautious efforts to make the city liveable after months of occupation, as one official described it as “a humanitarian catastrophe,” the news outlet said.

    “We will restore all conditions of normal life – as much as possible,” Ukrainian President Volodymyr Zelenskyy said in his nightly address. “Our defenders are immediately followed by policemen, sappers, rescuers, energy workers,” he said. “Medicine, communications, social services are returning.’

    Roman Holovnya, an adviser to Kherson’s mayor, said humanitarian aid and supplies had begun to arrive, but that many residents still lacked water, medicine, food and electricity, the AP reported.

    “The occupiers and collaborators did everything possible so that those people who remained in the city suffered as much as possible over those days, weeks, months of waiting” for Ukraine’s forces to arrive, Holovnya said. “Water supplies are practically nonexistent,” he said.

    “I am moved to tears to witness freedom returning to Kherson,” Estonian Prime Minister Kaja Kallas tweeted on Saturday. “Ukrainians hugging their soldiers, and blue and yellow flags raised.”

    Ukrainian Foreign Minister Dmytro Kuleba on Saturday said that the “war goes on” after the Ukrainian army’s success. Ahead of a meeting with U.S. Secretary of State Antony Blinken in Cambodia, Kuleba also thanked Washington for helping Kyiv against Moscow’s invasion.

    “It’s only together that we will be able to prevail and to kick Russia out of Ukraine. We are on the way. This is coming, and our victory will be our joint victory — victory of all peace-loving nations across the world,” Kuleba said.

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    Laura Kayali

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  • UK slams Russian claim British Navy  had part in Nord Stream blasts

    UK slams Russian claim British Navy had part in Nord Stream blasts

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    The British Navy stands accused by the Russian government, without evidence, of blowing up the Nord Stream natural gas pipeline under the Baltic Sea, a claim the U.K. rejected as “false.”

    “According to available information, representatives … of the British Navy took part in the planning, provision and implementation of a terrorist attack in the Baltic Sea on September 26 this year — blowing up the Nord Stream 1 and Nord Stream 2 gas pipelines,” the Russian Defense Ministry said on Saturday, according to media reports.

    The accusation did not include any further information or evidence to support claims of state sabotage. The Russian government also said that U.K. operatives helped plan a drone attack on its fleet at the Black Sea port of Sevastopol in Crimea on Saturday.

    The U.K. Defense Ministry quickly denied Moscow’s claim.

    “To detract from their disastrous handling of the illegal invasion of Ukraine, the Russian Ministry of Defense is resorting to peddling false claims of an epic scale,” the British ministry said in a tweet. “This invented story says more about arguments going on inside the Russian government than it does about the West.”

    Russia had already blamed the West in general terms for undersea explosions that damaged the Nord Stream pipes last month. Those blasts have likely rendered the energy infrastructure unusable, according to the German government.

    An investigation by Danish and Swedish authorities is ongoing into the explosions, which took place inside the two countries’ exclusive economic zones close to the Baltic Sea island of Bornholm.

    Russia had already stopped gas transit through the pipeline sparking concerns earlier this year that it would use gas supply to blackmail Europe as its brutal war on Ukraine continues.

    While the first phase of Nord Stream had been operating for nearly 11 years, the second phase of the project — dubbed Nord Stream 2 — had not yet been brought into commercial operation.

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    Joshua Posaner

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  • China’s COVID lockdowns spell relief for Europe’s energy security worries

    China’s COVID lockdowns spell relief for Europe’s energy security worries

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    China’s President Xi Jinping has some good news for Europe — his country’s draconian zero-COVID policies aren’t likely to be dropped.

    That’s a relief for European buyers of liquefied natural gas, as China’s economic slowdown has freed up LNG cargos crucial to replacing the Russian gas that used to supply about 40 percent of European demand.

    “Regardless of what you think about the Chinese zero-COVID policy, simply looking at it only from the perspective of European gas supplies, it would be very helpful if China continued this policy,” said Dennis Hesseling, head of gas at the EU’s energy regulator agency ACER.

    Xi took to the stage Sunday to kick off the week-long 20th Communist Party congress, and he doubled down on the zero-COVID approach, calling it a “people’s war to stop the spread of the virus.” 

    The once-in-five-year summit is “mostly a political meeting for within the party itself” but it does send crucial signals, said Jacob Gunter, a senior analyst at the China-focused MERICS think tank. So far it indicates China plans to “stick with [zero-COVID] for a while,” he said, adding that’s partly because government pandemic messaging has so spooked the population that lifting it would cause “chaos,” while Chinese vaccine hesitancy also remains high.

    Since the outbreak of the pandemic in 2020, China has ruthlessly pursued its policy of crushing the coronavirus, involving snap lockdowns of entire cities accompanied by mass testing, surveillance and border closures. The slowdown in growth and depressed demand led to China’s LNG imports sinking by one-fifth, or 14 billion cubic meters, year-on-year for the first eight months of 2022, according to Jörg Wuttke, president of the EU Chamber of Commerce in China.

    China and the EU each imported around 80 million tons of LNG in 2021, but China’s imports will fall to 64 million tons this year, according to data by market intelligence firm ICIS. That’s helping the EU buy gas on the global market and using it to fill the Continent’s storages ahead of the winter heating season.

    “Europe is lucky that China has a severe economic downturn which will last well into 2023,” said Wuttke, adding that the drop in demand from China — historically the world’s largest LNG importer — is “roughly equivalent to the entire annual LNG imports of Britain.”

    2023 worries

    China’s President Xi Jinping | Anthony Wallace/Pool/AFP via Getty Images

    With EU gas storage now over 90 percent full, the conversation in Brussels has already begun to shift to securing enough supplies for next year. At last week’s summit of EU energy ministers, International Energy Agency chief Fatih Birol warned that “next winter may well be even more difficult.”

    As things stand, Beijing’s LNG imports are likely to rise back to 2021 levels next year, according to senior ICIS gas analyst Tom Marzec-Manser, with deliveries typically increasing around the winter season and then likely to ramp up again next summer.

    China has already ordered its state-owned gas importers to stop reselling LNG to the EU to preserve stocks for the winter season at home.

    But if the zero-COVID policy is scrapped, that could lead “to a step-change in growth again,” said Marzec-Manser.

    European countries are well aware of this risk.

    In a presentation given by ACER during last week’s informal Energy Council, ministers were told that “China’s COVID-driven demand decline in LNG volumes is currently being absorbed” by the bloc. “This raises questions as to when China’s LNG demand may turn back towards normal growth rates,” it added.

    Although Russian shipments have fallen to less than 9 percent of EU demand, some Kremlin gas is still getting through. But “that may not be available at all next year,” said ACER’s Hesseling, adding that if there is no Russian gas and Chinese demand comes roaring back, more radical energy-saving measures would be needed in the EU.

    EU leaders will meet later this week to discuss further measures to tackle sky-high energy prices in Europe, including measures for next year such as joint gas purchasing.

    According to one senior EU diplomat, “competition from Asia [is] mentioned constantly,” adding that “it’s quite evident” a change in Beijing’s lockdown policy “may raise global demand and raise prices.”

    “China is indeed a competitor and that needs to be taken into account whatever we might be doing,” they said.

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    Victor Jack

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  • Kyiv vows Russian troops will ‘simply be exterminated’ after Putin annexes Ukrainian territory

    Kyiv vows Russian troops will ‘simply be exterminated’ after Putin annexes Ukrainian territory

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    KYIV — Russia’s annexation of four Ukrainian regions, announced by President Vladimir Putin on Friday, will not affect Kyiv’s resolve to free them with military force, said an adviser to Ukrainian President Volodymyr Zelenskyy.

    “For our plans, [Russia’s annexation] doesn’t matter,” Mykhailo Podolyak told POLITICO, speaking before the signing ceremony in Moscow orchestrated by Putin. The Russian leader railed at the United States and the West, denounced the Ukrainian government, and warned: “We will protect our land using all our forces.”

    The annexation comes on a day when Ukrainian soldiers have reportedly encircled thousands of Russian troops near the city of Lyman in eastern Ukraine, and a couple of weeks after a successful counteroffensive that pushed Russian forces from the region near Kharkiv — the country’s second city.

    The nation “should liberate all its territories,” Podolyak said.

    Ukrainian troops have “likely nearly completed” the encirclement of Russian troops in Lyman in the Donetsk region, according to the Institute for the Study of War, a Washington-based think tank.

    “Virtually all approaches, logistics routes of the enemy, through which it delivered ammunition and manpower, are already under our fire control,” Serhiy Cherevatyi, a spokesman for the Ukrainian eastern military grouping, told Ukrainian television.

    Moscow has not commented on the situation.

    Podolyak also shrugged off Putin’s announcement of a “partial” mobilization of reservists last week, with thousands called up and thousands more fleeing the country.

    “The mobilization shows that Russia has run out of a professional army,” Podolyak said, adding: “This army is being replaced by absolutely untrained people. A living resource has been thrown onto the front lines, and it will simply be exterminated.”

    “This may sound paradoxical, but it’s actually to our advantage that Russia has announced this mobilization,” he said. “This shows the people of Russia that the country really is at war, that it’s not doing very well in this war, and that the Russians themselves will be the ones to pay the price.”

    The mobilization is prompting Kyiv to call for more weapons from its Western allies.

    “For example, 100 more 155mm-caliber missiles would solve the problem, if you will excuse me for putting it that way, of additional human resources being utilized by Russia on the field of battle,” Podolyak said. 

    Russian President Vladimir Putin annexed four Ukrainian territories after holding sham referendums | Kay Nietfeld/Pool/AFP via Getty Images

    On Wednesday, U.S. authorities announced a $1.1 billion arms package for Ukraine, including 18 additional High Mobility Artillery Rocket Systems (HIMARS).

    “Russia now has one card left to play in this war: nuclear weapons. Against a non-nuclear nation. That’s absurd,” Podolyak said.

    The worry is how Putin will react to Ukraine’s efforts to liberate the territories seized by Russia, and if the Kremlin will see that as an attack on Russia itself. However, Ukrainian attacks on Crimea and even strikes into Russia proper over the course of the seven-month war have not led to such a retaliation.

    Last week, Putin warned: “We doubtlessly will use all weapons resources at our disposal … This is not a bluff.”

    U.S. President Biden has warned Putin of the consequences of using nuclear or chemical weapons. Podolyak wants those warnings to be “clearly communicated” to Moscow and for “very tough retaliation measures aimed at the destruction of Russia’s defense infrastructure” to follow.

    “For instance, Russia’s naval forces in the Black Sea could be completely destroyed,” he said. “This would be a proportionate response to Russia’s attempt to launch a tactical nuclear strike against the combat positions of the Ukrainian army.”

    Meanwhile, Ukraine “will keep doing its job” to liberate its territory, he said.

    “We have no other options when it comes to ending the war properly. We can’t leave some enclave [under Russian occupation] or create a new dividing line,” he said, referring to the frozen conflict that followed Russia’s annexation of Crimea in 2014 and the Donbas war in 2014-2015.

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    Sergei Kuznetsov

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