Russia said it downed 11 drones over Crimea and six near Bryansk, north of the Ukrainian border. Russia also said it destroyed a Ukrainian naval drone.  

The Biden administration announced almost 100 sanctions on Russia’s elites, its financial institutions and its supply chains in a major new effort to squeeze Russian President Vladimir Putin’s war machine. Beyond Russian companies and people, the new round also targets a Finland-based network that ships foreign electronics to Russia and two Turkish companies, among others. Russia expelled two US diplomats it accused of “illegal activities”.

Putin accepted North Korean leader Kim Jong-un’s invitation to visit Pyongyang “at a convenient time,” the official Korean Central News agency reported. Kremlin spokesperson Dmitry Peskov confirmed that Putin plans to visit at an unspecified time. Ahead of this week’s Putin-Kim talks, North Korea has been sending ammunition to Russia for a month, including missiles for multiple launch rocket systems and shells for tanks, said the head of Ukraine’s military intelligence agency. 

Latest developments

• Ukraine says it hit Russian missile unit in western Crimea 
• Cargill sells stake in Russian grain terminal to local company
• Strong-arming Ukraine would backfire for West, says Czech envoy
• Putin is gathering the enemies of the West: Marc Champion
• EU energy chief calls for curbs on rising Russian LNG imports
• Smart bombs ‘fairly effective’ against Russia, says US general

Ukraine says it hit Russian missile unit in western Crimea

Ukraine said it destroyed a Russian air defence compound on the western coast of Crimea, stepping up military pressure alongside efforts to cut off Moscow’s land route to resupply the strategic peninsula it annexed in 2014.

Ukraine’s Security Service and the country’s navy targeted a Russian S-400 “Triumph” missile complex overnight, a person with knowledge of the joint operation said on Thursday.

Ukrainian drones first damaged radars and antennas for the air defence unit near Yevpatoriya, a city on the western coast of Crimea. Then two Neptune cruise missiles destroyed the launching units, the person said.

The air defence complex may have cost as much as $1.2-billion, according to the person. 

Read more: Russia says Ukraine hit Crimean shipyard in missile strike

Russia reported downing 11 drones over Crimea during the night, even as its officials didn’t mention the attack on the missile compound. Local social media channels circulated videos of a large illuminated plume of smoke and powerful explosions, apparently in the area near Yevpatoriya. 

Strong-arming Ukraine would backfire for West, says Czech envoy 

Any peace initiative imposed on Ukraine without Kyiv’s acceptance would backfire for the West by failing to draw a line under “Russian imperialism”, the Czech Republic’s top envoy said.

As Ukraine’s grinding counteroffensive makes halting progress and winter approaches, Foreign Minister Jan Lipavsky urged Ukraine’s allies to maintain their resolve even if Kyiv doesn’t make a quick breakthrough. The “real enemy” was Russia’s expansionary ambitions, he said.

“If Ukraine is forced into a solution it doesn’t accept, the West will lose it — and we’ll have a nation of 40 million at our borders feeling betrayed,” Lipavsky said in an interview in Prague. “We don’t want to just defer the war. We want to end Russia’s ability to expand in eastern Europe by force.”  

In the meantime, a counteroffensive that’s stretched for more than three months has been slowed by Russian forces dug in along a vast frontline. Despite reports of a breakthrough, notably in Ukraine’s southeast, the prospect of a prolonged conflict has worried Ukraine’s allies, raising the potential for political difficulties in sustaining aid and worries that some allies may be tempted to nudge Kyiv into negotiations. 

Lipavsky insisted that support among Nato and European Union allies is stronger than ever. The Czech Republic has been one of the staunchest backers of Kyiv, supplying it with tanks, ammunition and other military equipment, as well as having sheltered more than 500,000 Ukrainians fleeing the war.   

Russia expels two US diplomats in row over ex-consulate employee

Russia expelled two US diplomats it accused of “illegal activities” and contact with a consulate worker Moscow has accused of collecting sensitive information.

Russia’s Foreign Ministry summoned US Ambassador Lynne Tracy on Thursday to declare the two diplomats “persona non grata” for activities incompatible with their diplomatic status.

Russia’s domestic security service, known as the FSB, earlier sought to question the two employees of the US Embassy’s political department, Jeffrey Sillin and David Bernstein, in the case of a former US consulate employee who pleaded guilty to gathering confidential information, the state-run Tass news service reported.

The FSB accused Robert Shonov, who used to work at the consulate in Vladivostok, of carrying out assignments for Sillin and Bernstein, according to Tass.

Even before Russia’s February 2022 invasion of Ukraine, Washington and Moscow carried out several rounds of diplomatic expulsions as relations between the two countries deteriorated. Since the war, the US and its allies have imposed sanctions against Moscow aimed at isolating the country over its aggression.

The ministry said Sillin and Bernstein had seven days to leave the country.

Bank of Russia boxed in on rates by rouble and economy

Russia’s emergency interest rate hike a month ago hasn’t taken another increase off the table at the central bank’s regularly scheduled meeting this week.

The decision will likely come down to just how much pain the Bank of Russia is willing to inflict on the economy, after the odds of recession rose sharply following its 3.5 percentage-point move in August. Tighter policy remains warranted as the rouble is under pressure and the inflation outlook is deteriorating.

Economists polled by Bloomberg are almost evenly split over what the central bank might do on Friday, with most predicting the key rate will stay at 12%. But a sizeable minority that includes ING DiBa, MUFG Bank and Bloomberg Economics expect a hike of between half a percentage point and 150 basis points. 

Ukraine presses ahead with rate cuts as war-time inflation eases

Ukraine’s central bank trimmed borrowing costs for a second consecutive meeting, pressing ahead with monetary easing after inflation dropped into single-digit territory. 

Policymakers in Kyiv cut the benchmark interest rate by two percentage points to 20% on Thursday, according to a statement. The National Bank of Ukraine reduced the rate by three percentage points in July for the first time since Russia’s invasion prompted central bankers to ratchet borrowing costs up to 25% in June 2022.

Ukraine’s economy has been battered as the Russian attacks devastated a swathe of the country’s infrastructure, throttled grain exports and squeezed demand. But fears of spiralling inflation have been kept in check by ebbing commodity prices globally, tight monetary policy and a stable hryvnia. 

“Looking ahead, the NBU plans to continue its key policy rate cutting cycle, while balancing the cuts against the need to maintain the attractiveness of hryvnia assets,” the central bank said in a statement. 

Consumer prices confounded expectations in August, rising by 8.6% annually after economists had predicted more than 10%. The figure was 11.3% in July. 

The bank’s board lowered interest rates on overnight deposit certificates by two percentage points to 16% — and two points to 22% for refinancing loans.

EU energy chief calls for curbs on rising Russian LNG imports

European Union Energy Commissioner Kadri Simson called for reducing imports of Russian liquefied natural gas (LNG) after shipments of the fuel to the bloc rose over the past seven months.

“It may well remain this year as high as last year or be even slightly bigger,” Simson told a conference in Warsaw Thursday. “We can’t be happy with that.”

Simson called on EU member states and the bloc’s parliament to include “robust” provisions in proposed regulations that would allow national governments to restrict Russian LNG imports without introducing new sanctions. This would help the EU “completely phase out” the shipments, she said.

North Korea says Putin may visit after ‘epoch-making’ talks with Kim

Putin accepted an invitation from Kim to visit North Korea after the two held their first summit in four years, which the US believed focused on Pyongyang sending arms to help Moscow attack Ukraine.

Kim’s propaganda apparatus hailed the meeting held at Russia’s Vostochny Cosmodrome space centre in the Amur region, with the official Korean Central News agency saying on Thursday the two discussed issues of mutual interest, peace and security in the region and international justice.

“At the end of the reception, Kim Jong-un courteously invited Putin to visit the DPRK at a convenient time,” KCNA said, referring to the country by its formal name. “Putin accepted the invitation with pleasure and reaffirmed his will to invariably carry forward the history and tradition of the Russia-DPRK friendship.”

Kim left for his next destination, KCNA said without indicating where that might be, calling the talks “epoch-making.” Putin had earlier said Kim was scheduled to visit civilian and military equipment factories in Komsomolsk-on-Amur and head to Vladivostok. One of the facilities Kim may tour is a plant that makes military aircraft.

Putin doesn’t have plans yet to go to North Korea, his spokesperson, Dmitry Peskov, told Ria Novosti and other Russian media Wednesday. He said North Korean Foreign Minister Choe Son Hui would visit Moscow in October.

Russian elite bring back $50bn of assets as havens dwindle

Russian billionaires, squeezed by international sanctions and facing pressure from Putin to repatriate their wealth, have pulled assets worth tens of billions from Europe since the invasion of Ukraine.

Last month, shareholders of United Medical Group and MD Medical Group Investments, controlled by tycoons Igor Shilov and Mark Kurtser, approved the companies’ move from Cyprus to Russia. That transfer will help push the total value of assets that have been re-domiciled by the wealthiest Russians since February 2022 to at least $50-billion, according to data compiled by Bloomberg.

The shift is breaking with a decades-old practice by Russian billionaires to hold their assets in Europe, taking advantage of investor-friendly legal systems, the chance to get dividends in foreign currencies and low taxes. Now, Russia’s richest are left with a dwindling number of places to put their wealth, as many of them are under US, UK or European sanctions. 

“Right now, Russia seems less of an evil than overseas,” said Natalia Kuznetsova, partner at Business Solutions and Technologies, which formerly operated in Russia under the Deloitte brand.  

The transfer of assets registered in locations including Cyprus, Jersey and Switzerland to Russia and nations the Kremlin considers friendly, such as the United Arab Emirates and Kazakhstan, started soon after the invasion. Among the first moves were the family holdings of fertiliser billionaire Andrey Guryev and steel tycoon Victor Rashnikov from Switzerland and Cyprus to Russia. Others, like billionaire Igor Altushkin, followed later. 

The Kremlin has put pressure on the wealthiest Russians to repatriate their assets from the countries it calls “not friendly”. Dual tax treaties have been suspended, making it impractical to stay registered in places like Europe. Russia makes it hard for companies to pay dividends or sell assets to the entities registered in such jurisdictions. DM