Weekly Update #115
May 13, 2024

UPDATES ON INTERNATIONAL SUPPORT FOR UKRAINE

 US announces a new $400 million package of weapons for Ukraine to try to hold off Russian advances

The U.S. announced a new $400 million package of military aid for Ukraine on Friday, as Kyiv struggles to hold off advances by Russian troops in the northeast Kharkiv region.

This is the third tranche of aid for Ukraine since Congress passed supplemental funding in late April after months of gridlock. Ukrainian President Volodymyr Zelenskyy had warned Thursday that his country was facing “a really difficult situation” in the east, but said a new supply of U.S. weapons was coming and “we will be able to stop them.”

The package includes High Mobility Artillery Rocket Systems (HIMARS) and rockets for them, as well as munitions for Patriot and National Advanced Surface-to-Air Missile Systems, artillery, anti-aircraft and anti-tank munitions, and an array of armored vehicles, such as Bradley and Mine Resistant Ambush Protected vehicles.

It will also provide a number of coastal and riverine patrol boats, trailers, demolition munitions, high-speed anti-radiation missiles, protective gear, spare parts and other weapons and equipment. The weapons are being sent through presidential drawdown authority, which pulls systems and munitions from existing U.S. stockpiles so they can go quickly to the war front.

Also on Friday, the State Department approved a proposed emergency sale of HIMARS to Ukraine for an estimated $30 million. State said Ukraine has asked to buy three of the rocket systems, which would be funded by the government of Germany.

Secretary of State Antony Blinken determined that an emergency exists that supports the “immediate sale” to Ukraine. The systems will come from Army inventory.

White House national security spokesman John Kirby said Friday that the latest package of military aid was intended, in part, to help Ukraine fend off the surging Russian effort to capture Kharkiv, Ukraine’s second largest city.

Kirby noted that Russia has already launched initial incursions into areas around the towns of Vovchansk and Lyptsi, near Kharkiv.

“It is possible that Russia will make further advances in the coming weeks, but we do not anticipate any major breakthroughs,” Kirby said. “And over time, the influx of U.S. assistance will enable Ukraine to withstand these attacks over the course of 2024.”

The U.S. has now provided about $50.6 billion in military assistance to Ukraine since Russia invaded in February 2022.

Almost immediately after President Joe Biden signed the $95 billion foreign aid package, the Pentagon announced it was sending $1 billion in weapons through that drawdown authority,. And just days later the Biden administration announced a $6 billion package funded through the Ukraine Security Assistance Initiative, which pays for longer-term contracts with the defense industry and means that the weapons could take many months or years to arrive.

Russia has sought to exploit Ukraine’s shortages of ammunition and manpower as the flow of Western supplies since the outbreak of the war petered out while Congress struggled to pass the bill. Moscow has assembled large troop concentrations in the east as well as in the north and has been gaining an edge on the battlefield, Zelenskyy said.

Officials did not say if the latest package includes more of the long-range ballistic missiles — known as the Army Tactical Missile System — that Ukraine has repeatedly requested. The U.S. secretly sent a number of the missiles to Ukraine for the first time this spring and the White House has said it would send more. In one case, Ukraine used them to bomb a Russian military airfield in Crimea.

The new missiles give Ukraine nearly double the striking distance — up to 300 kilometers (190 miles) — than it had with the mid-range version of the weapon that it received from the U.S. in October.

Source: AP News

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Kosovo backs Ukraine even though Kyiv has not recognized its independence, foreign minister says

Kosovo’s foreign minister said Wednesday that her country is convinced that Russia must lose the war in Ukraine for conflict not to spread further in Europe. She said her young nation’s support for Ukraine is unconditional even though Kyiv has not recognized Kosovo’s independence.

Donika Gërvalla-Schwarz, who is both foreign minister and deputy prime minister, said her small Balkan nation, which declared its independence from Serbia in 2008, is constantly reminded of the aggressive intentions of both Serbia and its ally Russia.

“Ukraine hasn’t recognized the Republic of Kosovo as a state, but we really believe that we know exactly what Ukraine is going through,” she told The Associated Press in an interview.

“And we know that there is only one solution, not only for Ukraine, but for Europe,” she said. “It can only be Russia to lose the war and Ukraine to win this war. Otherwise, Europe should prepare for other conflicts in our continent.”

The people of Kosovo were the targets of war crimes and other atrocities by Serbia’s security forces in the 1990s, an experience that led Kosovo to seek independence.

“While Kosovo is a small state with very modest possibilities to help, we have tried to be very helpful with Ukraine and have not hesitated to show our unconditional support and sympathy to the people and to the state of Ukraine,” Gërvalla-Schwarz told the AP.

The latest reminder of Moscow threatening Kosovo came this week when a Russian Telegram channel called for a denial-of-service attack on Kosovo government websites after Kosovo’s defense minister announced new military aid for Ukraine at a conference in Warsaw on Tuesday.

Gërvalla-Schwarz on Wednesday inaugurated Kosovo’s first consular mission in Poland, part of an effort to improve economic and cultural cooperation between the two countries. Poland recognized Kosovo’s statehood in 2008 but the two countries did not establish diplomatic relations at the time. For now the Kosovo mission has the status of a consulate general, but she said she hopes it could be a step to having an embassy in Poland.

Her visit to Poland this week coincided with a visit to the capital of Serbia, Belgrade, by Chinese President Xi Jinping which included pledges to deepen ties.

Gërvalla-Schwarz said the Chinese leader’s visit has implications for Europe because it shows that while Serbia is a European Union candidate state, it is “more and more identifying itself with the adversaries of the European Western democracies.”

“You cannot be at the same time a candidate state of the European Union and be the proxy of Russia in these times where Russia has declared the war not only to Ukraine but to the West as such,” she said.

Serbian forces fought a 1998-99 war with ethnic Albanian separatists in what was then the province of Kosovo. About 13,000 people, mostly ethnic Albanians, died until a 78-day NATO bombing campaign pushed Serbian forces out.

Kosovo declared independence in 2008, but the government in Belgrade doesn’t recognize its neighbor as a separate country.

Source: AP News

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Italy’s president says Russia’s invasion of Ukraine can’t be solved by rewarding Moscow’s aggression

Italy’s president told the U.N. General Assembly on Tuesday that Russia’s invasion of Ukraine can’t be solved by rewarding its aggression and peace can only come when Ukraine’s sovereignty and territorial integrity are restored.

Sergio Mattarella said Italy, which now heads the G7 meetings, and many international partners have come to Ukraine’s defense to support the principle that solidarity must be given to nations attacked by acts that violate international law and the U.N. Charter.

“No state, no matter how powerful or how equipped it is with a menacing nuclear arsenal can think of violating principles, including the sovereignty, territorial integrity, and independence of another country without facing sanctions,” he said.

Mattarella said the end of two world wars and the collapse of the Soviet Union had brought new hope to Europe, and that “Russia has taken on the great historic responsibility of having brought war back to the heart of the European continent.”

The Italian president stressed that Russia’s invasion of Ukraine isn’t merely a regional conflict since Moscow wants to exercise global influence. Russia is a veto-wielding permanent member of the U.N. Security Council, which is charged with ensuring international peace and security.

Source: AP News

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Macron makes Ukraine top priority as China's Xi Jinping visits Europe

French President Emmanuel Macron will seek to press China’s Xi Jinping to use his influence to move Russia toward ending the war in Ukraine during a two-day state visit to France. Both leaders were also expected to discuss trade disputes over electric cars, cognac, and cosmetics.

Macron’s office said talks about diplomatic efforts to support Ukraine and put pressure on Russia are a top priority for France.

Discussions will also include the Middle East, trade issues and global challenges including climate change. The European Commission president will join part of the meetings to raise broader EU concerns.

France is the first stop on a European trip by Xi aimed at rebuilding relations at a time of global tensions. After France on Monday and Tuesday, the Chinese leader will head to Serbia and Hungary.

France hopes discussions will help convince China to use its leverage with Moscow to “contribute to a resolution of the conflict” in Ukraine, according to a French presidential official. Russian President Vladimir Putin recently announced plans to visit China this month.

Macron will press Xi over supplies by Chinese companies supporting the Russian war effort despite EU sanctions, he said. China claims neutrality in the Ukraine conflict.

France also wants China to maintain a dialogue with Kyiv, the official, who was not authorized to be publicly named according to presidential policy, added.

Last year, Macron had appealed to Xi to “bring Russia to its senses” — but the call was not followed by any apparent change in Beijing’s stance. 

“French authorities are pursuing two objectives that are ultimately contradictory,” Marc Julienne, director of the Center for Asian Studies at the French Institute of International Relations, wrote in a briefing note. “On the one hand, to convince Xi that it’s in his interest to help Europeans to put pressure on Vladimir Putin to end the war and, on the other hand, to dissuade the Chinese president from delivering arms to his Russian friend.

“In short, we think that Xi can help us, but at the same time we fear that he could help Putin,” Julienne wrote.

As France prepares to host the Summer Olympics, Macron said he would ask Xi to use his influence to make the Games “a diplomatic moment of peace” and respect the Olympic Truce.

Macron, a strong advocate of Europe’s economic sovereignty, is expected to focus on trade too. He will raise French concerns about a Chinese antidumping investigation into cognac and other European brandy, and tensions over French cosmetics and other sectors.

In a recent speech, he denounced trade practices of both China and the U.S. as shoring up protections and subsidies. 

He has coordinated with German Chancellor Olaf Scholz, who recently visited China and came to Paris last week for a private dinner with the French president. 

German government spokesman Wolfgang Buechner said Friday that Scholz in China had “clearly said that the question of over-capacity and competition though subsidies needs to be addressed.”

The EU launched an investigation last fall into Chinese subsidies and could impose tariffs on electric vehicles exported from China.

The discussions will also be closely watched from Washington, just one month before President Joe Biden is expected to pay his own state visit to France.

Xi’s visit to Paris marks the 60th anniversary of France-China diplomatic relations, and follows Macron’s trip to China in April 2023. Macron prompted controversy on that trip after he said France wouldn’t blindly follow the U.S. in getting involved in crises that are not of its concern, an apparent reference to China’s demands for unification with Taiwan.

Several groups including International Campaign for Tibet and France’s Human Rights League urged Macron to put human rights issues at the heart of his talks with Xi. Protesters demonstrated in Paris as Xi arrived Sunday, calling for a free Tibet.

Amnesty International called on Macron to demand the release of Uyghur economics professor Ilham Tohti, who was jailed for life in 2014 on charges of promoting separatism, and other imprisoned activists.

Macron said in an interview published Sunday that he will raise human rights concerns.

On Monday in Paris, Xi will first join a meeting with Macron and European Commission President Ursula von der Leyen.

A formal ceremony will then take place at the Invalides monument, before bilateral talks at the Elysee presidential palace. Macron and Xi will conclude a nearby French-Chinese economic forum and then join their wives for a state dinner.

The second day of the visit is meant to be a more personal moment. 

Macron has invited Xi to visit Tuesday the Tourmalet Pass in the Pyrenees mountains, where the French leader spent time as a child to see his grandmother. The trip is meant to be a reciprocal gesture after Xi took Macron last year to the residence of the governor of Guangdong province, where his father once lived.

Source: NBC News

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Ukraine peace summit pushes neutral Swiss toward Western embrace

An upcoming Ukraine peace summit, ostensibly the most ambitious bid in years by neutral Switzerland to mediate a major conflict, is instead showing how Swiss economic and security interests increasingly align with Western Europe over Russia.

This is the view of both Swiss advocates of closer cooperation with Western powers and nationalist opponents who say Switzerland is abandoning its neutral tradition and should limit the scope for foreign entanglements. Russia has not been invited to the June 15-16 talks taking place at a lakeside resort near the central city of Lucerne, which Switzerland agreed in January to host at the behest of Ukrainian President Volodymyr Zelenskiy.

Rather than ending the war, the summit is poised to work towards mitigating risks stemming from Moscow's invasion of Ukraine and trying to isolate Russia, according to Western diplomats and Swiss foreign policy experts.

"It's going to be about shoring up Ukraine rather than bridge-building for immediate peace," said Daniel Woker, a former Swiss ambassador to Australia, Singapore and Kuwait. Responding to a request by Reuters for comment, the Swiss foreign ministry said Switzerland's neutrality is "constant" and will not be altered by the conference.

"But being neutral does not mean being indifferent," it added in the statement. "Switzerland strongly condemns Russia's aggression against Ukraine. Outside the military realm, the right to neutrality does not stand in the way of solidarity and support for Ukraine and its people."

The conference, which Switzerland says should pave the way for a "future peace process", will focus on issues of global concern such as nuclear safety, freedom of navigation, food security and humanitarian matters, the ministry said.

Switzerland says Russia must be involved in the process, but justified its lack of an invitation next month on the grounds Moscow had repeatedly said it had no interest in taking part.

The Kremlin has described Switzerland as "openly hostile", opens new tab and unfit to mediate in peace-building efforts, in particular because of its adoption of EU sanctions against Moscow. Bern has asked over 160 delegations to the summit, pressing hard to include to Russian allies from the so-called Global South, notably China, which says it is considering taking part.

If the summit can craft consensus with Russian allies on areas of mutual concern it could increase pressure on Moscow to compromise, diplomats say.

European support for the summit is solidifying, with German Chancellor Olaf Scholz confirming his attendance, alongside leaders from Spain, Poland and Finland, among others.

NEUTRALITY

Thomas Borer, a former Swiss ambassador to Germany, said Switzerland's business and security interests are overwhelmingly tied to Western Europe, North America and their allies, making it strategically imperative to stand with Ukraine.

Government protestations of neutrality would not change that, he added.

"Neither the Russians nor our Western allies view us as neutral," he said.

Around two-thirds of Swiss exports go to North America, the EU, Britain, Japan and Australia. Less than 1% go to Russia.

Supporters of closer Western alignment also note Switzerland is almost completely surrounded by NATO countries, which act as a buffer against potential external intrusions.

"Neutrality is a cop-out for a country that's basically getting a free ride off the security that others provide," said Franziska Roth, a lawmaker in the Swiss parliament for the center-left Social Democrats.

Since Russia invaded Ukraine, two of Europe's other historically neutral states, Sweden and Finland, have both joined NATO.

As a U.N. member, Switzerland had a duty to uphold international law, which the Russian invasion violated, Roth said. Helping Ukraine recover from that took precedence over outdated notions of neutrality, she added.

Neutrality is, however, firmly rooted in the Swiss psyche and ditching it would be akin to Britain abolishing the monarchy, regardless of the geopolitical forces pulling at the country, said former ambassador Woker.

A study published in March by the Center for Security Studies at the ETH Zurich showed 91% of Swiss felt the country should stay neutral, though 26% also backed taking "a clear stand" in favour of one side in foreign military conflicts, up 8 percentage points from 2021.

It also showed a majority in favor of Switzerland getting closer to NATO.

Woker and other critics argue neutrality is an anachronism used as a pretext for protecting Swiss economic and financial interests, and risks isolating the country.

Recognized in 1815 by European powers after Napoleon's defeat and enshrined in the 1907 Hague Convention, Swiss neutrality helped bind together the multilingual confederation during the World Wars.

The right-wing Swiss Peoples' Party (SVP), the biggest group in the Swiss lower house of parliament, argues neutrality is an integral part of Switzerland's prosperity and that Bern's support for Ukraine undermines it.

The SVP has initiated a referendum to embed neutrality in the constitution, though it is unlikely to be held before 2025.

The party's most emblematic figure, Christoph Blocher, this month criticized the peace summit, saying failure to invite Russia did not augur well for Switzerland.

"We're only bringing the Ukrainians," he said. "And we say we're neutral."

Source: Reuters

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Explainer: Ukraine races against the clock to secure debt restructuring

Ukraine is pushing to secure a debt restructuring before a two-year payment freeze agreed by holders of its $20 billion of outstanding international bonds expires at the end of August.

Russia's full-scale invasion in February 2022 shattered Ukraine's economy and finances, forcing it into a debt freeze to avoid a sovereign default. The restructuring effort is unprecedented in a country with a war raging and uncertain economic and fiscal prospects.

Here are some of the questions and issues facing Ukraine and its creditors.

WHY IS DEBT RESTRUCTURING SO IMPORTANT?

Ukraine's programme with the International Monetary Fund stipulates that the country should restructure its commercial debt - though the Fund does not prescribe a timeline. Kyiv itself also wants to retain access to global capital markets.

Slipping into a sovereign default - which would be the case if the country fails to either agree a restructuring or extend its current payment moratorium with bondholders - would curb its ability to borrow from multilateral lenders.

WHAT DEBTS ARE EARMARKED FOR RESTRUCTURING?

Ukraine has international bonds with a face value of $19.7 billion outstanding across eleven dollar-denominated securities and two euro-denominated ones - maturing 2024-2035. Including past-due interest, Ukraine owes $23.6 billion on those bonds, according to calculations from JPMorgan.

Separately, Ukraine owes a further $2.6 billion from a previous pledge to investors that is also in the mix for a rework. The instrument - linked to GDP growth targets - was created during its 2015 debt restructuring in the wake of Russia's annexation of Crimea as a sweetener to creditors.

On top of that, Ukraine has international bonds issued by state-owned firms outstanding. Ukravtodor, in charge of building and maintaining roads, owed $700 million on its international bonds and grid company Ukrenergo $830 million by end-March, according to finance ministry data.

WHAT HAPPENS IN A DEBT REWORK?

A formal debt restructuring would likely see Ukraine's current bonds swapped for new bonds with different terms after negotiations with bondholders.

However, reaching a debt rework generally take months if not years - even when a country is not fighting a full blown war on its territory.

IS THERE AN ALTERNATIVE?

Alternatively, Ukraine could request an extension of the current payment moratorium by a year, or maybe even longer, to gain breathing space for talks with its bondholders. A group of official creditors - including Canada, France, Germany, Japan, the United Kingdom and the United States - have already agreed to a payment pause until March 2027.

Without an extension or a restructuring, Ukraine would face a hard default that would make obtaining financing from other lenders more complicated.

HOW BIG A HIT MIGHT CREDITORS TAKE?

Most of Ukraine's dollar-denominated bonds currently trade below or around the 30 cents in the dollar mark - deeply distressed levels.

Getting debt relief could include maturity extensions, a reduction of the principal - so-called haircuts or lower or possibly even no interest payments in the near future - or a combination of the above.

Looking at how a possible debt restructuring could unfold, JPMorgan sketched a scenario under which the existing bonds would be swapped into four new ones maturing between 2028-2039 and with step-up coupon payments.

"In our view, a 30% haircut on the Eurobond stock including deferred interest along with some coupon relief would allow Ukraine to reach the IMF's required targets for debt sustainability under the baseline scenario," JPMorgan analysts said in a note to clients. The GDP warrants could be folded into a new bond that would mature in 2041, JPMorgan added.

WHAT COULD THE SEQUENCING BE?                                                  Ukraine and its bondholders - which have already formed a committee - are expected to start formal talks soon, with a view to reaching an agreement in principle by June, sources familiar with the situation told Reuters.

They expect the government and its advisors - Rothschild on the financial side and White & Case on the legal aspects - to focus on Ukraine's international bonds in the first instance, and tackle the GDP warrant and debt owed by state-owned companies down the line.

WHO HOLDS UKRAINE'S INTERNATIONAL BONDS?

Ukraine's sovereign bonds are held by major fund managers.

Filings gathered by EMAXX show that BlackRock, the world's largest asset manager, had positions in pretty much all of the bonds - as did PIMCO, Fidelity and Alliance Bernstein.

HOW ARE UKRAINE'S ECONOMY AND FINANCES HOLDING UP?

The war has devastated Ukraine's economy and territorial integrity. Its economy contracted by one third in the first year of Russia's full-scale invasion, but grew by 5.3% in 2023, according to the country's statistics service which publishes a limited set of data.

The government expects a budget deficit of about $37 billion in 2024 and plans to fund it with domestic borrowing and financial aid from its Western partners. Year-to-date, Ukraine has received nearly $12 billion in financing from its international partners, compared to $73.6 billion in the years 2022-2023, according to the Finance Ministry.

IS THERE A PRECEDENT?

Not really. Emerging markets such as Zambia, Sri Lanka and Ghana have slipped into default and debt restructurings amid the economic hit from COVID-19 and a spike in energy prices. But countries generally don't restructure bonds with a war raging which makes fiscal and economic projections extremely difficult.

Source: Reuters

HOLY FATHER ON UKRAINE

Angelus - May 12, 2024 (Sunday)

As we celebrate the Ascension of the Risen Lord, who frees us and wants us free, I renew my appeal for a general exchange of all the prisoners between Russia and Ukraine, assuring the willingness of the Holy See to favour any effort in this regard, especially for those who are gravely injured and ill. And let us continue to pray for peace in Ukraine, in Palestine, in Israel, in Myanmar… Let us pray for peace.

Mentre celebriamo l’Ascensione del Signore Risorto, che ci rende liberi e ci vuole liberi, rinnovo il mio appello per uno scambio generale di tutti i prigionieri tra Russia e Ucraina, assicurando la disponibilità della Santa Sede a favorire ogni sforzo a tale riguardo, soprattutto per quelli gravemente feriti e malati. E continuiamo a pregare per la pace in Ucraina, in Palestina, in Israele, in Myanmar... Preghiamo per la pace.

General Audience - May 8, 2024

Oggi la Chiesa eleva la preghiera della “Supplica” alla Madonna del Rosario di Pompei. Invito tutti ad invocare l’intercessione di Maria, affinché il Signore conceda pace al mondo intero, specialmente alla cara e martoriata Ucraina, alla Palestina, e a Israele, al Myanmar. Affido in particolare alla nostra Madre i giovani, gli ammalati, gli anziani e gli sposi novelli che oggi sono qui presenti, ed esorto tutti a valorizzare in questo mese di maggio la preghiera del santo Rosario.

NEWS

Pope: Holy See ready to facilitate exchange of Russian and Ukrainian prisoners of war

Pope: Pray Rosary for Our Lady's intercession in wars lashing our world

Concerns grow about the treatment of prisoners of war in Ukraine-Russia war

Father Mykievich: the community helps to overcome the loneliness caused by the war (Google translate)

Archbishop Shevchuk: The Church is fighting on four fronts for the good of Ukrainians (Google translate)