Russia marks Orthodox Easter with drone attack; Xi begins Europe tour as trade tension rises

Chinese President Xi Jinping arrived in France to begin a three-nation swing through Europe designed to bolster ties, even as trade tensions mounted.

Russia’s fortress economy has proved remarkably resilient to an onslaught of Western sanctions. Two years after the Kremlin’s invasion of Ukraine, it continues to fund a costly war and to prop up President Vladimir Putin. But there’s at least one spot where the pain is very real.

Russia targets Kharkiv again as its forces advance in east

Russia marked Orthodox Easter with a drone attack across much of Ukraine, hours after President Volodymyr Zelensky said Kyiv’s forces had shot down a Russian fighter jet and as Kremlin troops pressed in Ukraine’s east.

Kremlin troops launched 24 Shahed-type drones over the southern region of Kherson, Dnipropetrovsk in central Ukraine, and the northeastern Kharkiv region overnight.

Ukraine’s air defence shot down 23 drones, its command said on Telegram. State Emergency Services said on X, formerly Twitter, that residential buildings were hit in the city of Kharkiv, injuring five people including a child.

Kharkiv faced another Russian barrage on Sunday afternoon, according to local authorities. Preliminary information suggests hard-to-intercept guided bombs, which Russia has used to strike the city for several months, damaged residential houses and cars, and injured at least 10 people.

Ukrainian and Western officials told Bloomberg News in April that they see the bombardment of Kharkiv, which had a pre-war population of about 1.5 million, as part of an effort to force the evacuation of civilians.

Civilian infrastructure was also damaged by a missile near Odesa on Ukraine’s Black Sea coast, injuring three people, regional governor Oleh Kiper said on Telegram.

In the Dnipropetrovsk region, a residential house and several infrastructure objects in the city of Dnipro were struck by drone debris, without casualties, local governor Serhiy Lysak said on Telegram.

In his nightly video address on Saturday, Zelensky said Ukraine’s 110th Separate Mechanised Brigade had downed a Russian Su-25 fighter plane in the Donetsk region earlier in the day, offering no additional details.

Ukraine’s armed forces estimate that 349 Russian aircraft and 325 helicopters have been lost since Vladimir Putin’s troops invaded in February 2022. The figures can’t be independently verified.

Kremlin ground troops continued to press their advantage in eastern Ukraine while Kyiv’s forces awaited the arrival of new US military aid.

“Russian forces made a notable tactical advance northwest of Avdiivka, near Arkhanhelske” in the Donetsk region on Friday night into Saturday, according to the US-based Institute for the Study of War (ISW).

“Ukrainian forces may have decided to trade space for time as they wait for the arrival of US aid to the front line at scale in the coming weeks — an appropriate decision for an underresourced force at risk of being outflanked,” ISW analysts said in a situational update late on Saturday.

Russia’s defence ministry said on Sunday its forces had captured the town of Ocheretyne in Donetsk. Ukraine hasn’t commented on the claim. The Ukrainian map service DeepState reported earlier that Russian troops had reached Ocheretyne’s administrative borders.

The significance of the town is that it lies near the “Pokrovsk-Kostyantynivka” road, which has become a vital supply route for the Ukrainian army. It’s about 40km from the town of Pokrovsk, which Ukrainian military intelligence chief Kyrylo Budanov recently named as one of Russia’s chief offensive goals.

Xi arrives in Paris to begin Europe tour as trade tension spikes

Chinese President Xi Jinping arrived in France to begin a three-nation swing through Europe designed to bolster ties, even as trade tensions mounted.

The Chinese leader landed in Paris on Sunday and shook hands with French Prime Minister Gabriel Attal. It was his first visit to the European Union in five years. Xi will also visit Serbia — which isn’t a member state of the bloc — and Hungary.

Xi’s tour comes as the EU forges a more unified voice with Washington in opposing China’s capacity for cheap exports and perceived national security risks. Distrust toward Beijing in Brussels is growing, marked by a recent flurry of arrests of alleged Chinese spies and a salvo of trade actions.

Xi released a written statement via Chinese state media to mark his arrival in Paris. “I hope through this visit, we will consolidate the traditional friendship between the two countries, enhance political mutual trust, build strategic consensus, and deepen exchanges and cooperation in various fields,” Xi said in the statement.

President Emmanuel Macron aims to deepen his connection with Xi during the Chinese leader’s two-day visit to France, as he appeals to Xi to urge Putin to end Russia’s war in Ukraine, Bloomberg News reported. Macron also aims to entice Chinese spending into France’s EV battery sector.

How Western sanctions are strangling Putin’s Arctic gas ambitions

Russia’s fortress economy has proved remarkably resilient to an onslaught of Western sanctions. Two years after the Kremlin’s invasion of Ukraine, it continues to fund a costly war and to prop up President Vladimir Putin.

But there’s at least one spot where the pain is very real.

The Novatek-led Arctic LNG 2 facility, on the icy Kara Sea, is a key part of Moscow’s plans to boost exports and replenish coffers. For months now, it has been ready to ship liquefied natural gas (LNG) to new markets, alternatives to the once-lucrative European pipeline trade.

And yet, the vast new $25-billion operation is sitting virtually idle, the first piece of Russia’s energy production complex to be effectively curbed by US restrictions.

Russia has long sought to increase its share of the global LNG market, but the war and the subsequent sharp drop in overland exports to Europe have reinforced the importance of these ambitions. Moscow wants to expand LNG output three-fold by 2030, adding at least $35-billion in annual revenue.

Thanks to older operations, Russia is currently the fourth-largest LNG exporter globally, but restrictions on the flagship Arctic LNG 2 are crimping its aspirations to go further. More worrying for Moscow, they’ve provided a blueprint for any future Western efforts to rein in the Kremlin’s gas income by targeting operations like Yamal or Sakhalin II in the Far East — still delivering to customers in Europe and Asia.

“US sanctions are working surprisingly well,” said Malte Humpert, founder of the Arctic Institute, who has been monitoring Russia’s expansion in the region for over a decade. “Here, they’re really ahead of the curve. They blocked Arctic LNG 2 before it even started production, blocked the vessels before they could be delivered. With everything else, like oil or the shadow fleet, it’s always reactive.”

Since the Biden administration imposed sanctions on the Arctic LNG 2 facility last year, buyers in China and India — places that have bought and traded Russian oil, working around existing constraints — have refused to buy even discounted LNG. Lawyers in Singapore and London, meanwhile, have recused themselves from involvement in the project.

Even shipbuilders have been tangled in the curbs, with vessels worth hundreds of millions of dollars currently stuck at dry docks in South Korea. No one can buy or lease them. The gas, meanwhile, remains trapped at the facility.

Unlike oil exports, which have continued to flow despite a price cap and other limitations with help from a vast “shadow fleet”, LNG is trickier to keep moving, in large part because of the more complex technology required to load and ship the super-cooled fuel.

Now the European Union, which still leans on Russian LNG and has been reluctant to restrict imports, is preparing to roll out some measures of its own. Europe isn’t outright prohibiting the fuel, but the bloc’s discussions signal that gas is no longer off limits as the war enters a third year.

Up for debate is a plan to ban the use of EU ports to re-export Russian supplies destined for third countries. That matters because Russian LNG plants in the Arctic region are exceptionally remote, so the fuel is usually first delivered to Belgium or France for re-export to Asia or another European port. Restricting this practice will stretch Russia’s shipping fleet to breaking point.

The White House’s National Security Council began turning its attention to crippling Russia’s LNG expansion plans in 2023, about a year into the war, according to people with knowledge of the strategy. Officials there teamed up with the US State Department and Department of Defense to pick a target, eventually homing in on the Arctic LNG 2 project. They then brought it to the Treasury.

Now, as part of a wider plan to stop Russia from developing any new energy projects that might contribute significant revenue, the US wants to ensure the Arctic venture is “dead in the water,” as Geoffrey Pyatt, Assistant Secretary of State for Energy Resources, told a conference last month.

There are good reasons for White House officials to target the facility, co-owned by the Japanese government, Chinese state-owned oil companies and France’s TotalEnergies. While it certainly irks important allies, freezing Arctic LNG 2 has the benefit of hurting Moscow while causing only limited ripples in global natural gas markets. No less important for the Biden administration as an election nears, the fallout for US consumers is contained.

Putin critic warns Kremlin will seize more assets to punish foes

Sergey Petrov could do nothing from his home on the outskirts of Vienna as Putin moved to take over the car dealership he had founded and built.

Putin signed the decree in December transferring ownership of Rolf, Russia’s largest car dealership, from a Cyprus-registered entity controlled by Petrov’s family to the state property agency Rosimushchestvo for temporary management. Soon after, armed officers raided the firm’s headquarters to make sure the appointment of a new board went seamlessly, according to Petrov.

“It’s a kleptocracy,” Petrov said in an interview at his home in Austria, where he has resided permanently since 2016. “There are no laws, only the selective application of justice.”

During Putin’s 2½-decade rule, Russia has sought to build state-owned champions and at times used the criminal justice system to hand assets to Kremlin allies. That has accelerated after Russia invaded Ukraine, which caused a rupture in relations with the West and increased pressure on private businesses to publicly support the war.

Petrov’s family held Rolf via Delance, which was vulnerable to laws that allow Putin to seize the assets of some foreign companies because Cyprus is categorised by Russia as an unfriendly country. Russian legislators have yet to ratify a treaty on mutual investment safeguards with Cyprus, hindering efforts for a legal remedy. Russia nationalised Rolf in February.

Petrov, a dual Russian-Austrian citizen, said his situation reflected a new normal in Russia, where Putin is increasingly comfortable using the justice system to meddle in business and reward loyalists. He said the harassment by prosecutors was politically motivated and due to his criticism of the Russian leader’s actions, such as when, while serving as a legislator in Russia’s parliament, he didn’t participate in a 2014 vote to annex Crimea. In 2011-2012, he also openly backed the biggest anti-government protests of Putin’s rule.

Russian authorities opened a criminal investigation into him in 2019, accusing him of illegally transferring money abroad. Petrov said the allegations were based on obscure regulations, and courts ignored substantial procedural shortfalls when giving one of his managers, a co-defendant in the case, a prison sentence of more than eight years.

Austria’s government has rejected an extradition request against Petrov, but a 2022 Russian civil verdict referencing the criminal case forced Rolf to transfer 20-billion roubles ($214-million) to the Russian government. DM