By James Brooke

By James Brooke
🔵 Russia’s naval deployments in the Black and Azov Seas threaten to “block important trade routes in international waters,” Ukraine’s Defense Minister Andriy Taran warned the European Parliament’s subcommittee on Security and Defense on Wednesday. The bulk of Ukraine’s $103 billion in foreign trade last year moved by ship. Taran has predicted: “The total number of Russian troops concentrated along the Ukrainian borders in this direction will reach 56 battalion tactical groups with 110 thousand troops.”
🔵 In Paris today, President Zelenskiy will discuss the growing Russian military threat with French President, Emmanuel Macron, and with German Chancellor, Angela Merkel, who will join by video conference. The three countries – plus Russia – are members of the ‘Normandy’ format of peace talks. The Normandy group has not met since December 2019.
🔵 The Biden administration imposed a series of new sanctions on Russia yesterday, including restrictions on buying new sovereign debt, the White House has reported. The measures come in retaliation for the SolarWinds hack and efforts to disrupt the 2020 U.S. election. Effective June 14, US financial institutions are barred from buying new debt issued by the Russian Central Bank, Finance Ministry and sovereign wealth fund. International investors now hold approximately 20% of Russia’s ruble denominated debt, an estimated $37 billion. US investors can still buy the bonds on the secondary market.
🔵 Timothy Ash, the Senior Emerging Markets Sovereign Strategist for Bluebay Asset Management, writes from London: “This is not good news for Russia. The result of these actions will inevitably be that fewer foreign investors will want to buy Russian debt which means higher borrowing costs, less investment and growth and a further tightening of the economic constraints around Putin.  The US is signaling that there are lots more things it can still do on the sanctions front unless Russia changes its behavior.”

🔵 PrivatBank, Ukraine’s largest bank, will put up for sale ‘soon,’ announced Kyrylo Shevchenko, the Governor of the National Bank of Ukraine, (GlobalCapital). “The privatization of PrivatBank, which owns 20% of the Ukrainian banking market, will be of interest to the most prestigious international investors, including those from the United States and the European Union,” he said. The December 2016 nationalization of the bank prompted its previous owner, Ihor Kolomoisky, to launch 100 lawsuits. The Central Bank Governor said that he hoped that “the lawsuits will be resolved” by the end of this year. Privatization of PrivatBank is key to the government’s strategy to cut the state share of Ukraine’s banking system from 55% today to 25% in five years time.

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