Zelenskiy sees gain in the East; Austria warns of blackout

(Bloomberg Opinion) — Ukraine’s economy could grow next year, and inflation this year could be slower than expected, according to the central bank chief, citing the nation’s resilience in the face of Russia’s campaign to destroy energy infrastructure.

Bloomberg’s Most Read

Kyiv has seen a notable drop in enemy Air Force activity after a drone strike on a strategic bomber base deep within Russian territory on Monday, a military spokesman said. President Volodymyr Zelenskiy said Ukrainian troops are resisting Russia’s advances in heavy fighting in the east and are finding some opportunities to drive them out.

Ukraine’s Foreign Minister Dmytro Kuleba said in an interview with the Associated Press that his country wants to hold a “peace” summit in February but doubts that Russia will participate. Russian Foreign Minister Sergei Lavrov has said Ukraine must comply with Moscow’s demands to surrender completely and cede sovereignty over the annexed lands or face continued war.

(See RSAN on the Bloomberg terminal for the Russia sanctions dashboard.)

key developments

• Ukraine’s resilience helps stem economic slide, says central banker

• Russia Says Ukraine Must Surrender Even As Putin’s Army Withdraws

• AP Interview: Ukrainian FM targets February peace summit

• Three Killed in New Drone Strike on Russia’s Strategic Bomber Base

• Russia says it could cut daily oil production by 700,000 barrels

On the floor

Zelenskiy said in his late-night speech that the most difficult areas on the front are near the cities of Bakhmut and Kreminna, where Russia is pressing for breakthroughs, and his office said he met with his commander-in-chief to discuss the situation. Russian forces, military equipment and weapons are concentrated around Bakhmut, but efforts to encircle the city have been unsuccessful, Deputy Defense Minister Hanna Malyar said on television. Ukrainian troops repelled attacks near eight settlements in the eastern Donetsk and Luhansk regions, the Ukrainian General Staff said on Facebook.

the story continues

(All times Central European Time)

Ukraine’s resilience helps stem economic slide, says Pyshnyi (3:23 pm)

Ukrainians’ resilience is helping stem a slump in economic growth, and inflation is picking up more slowly than expected, National Bank of Ukraine Governor Andriy Pyshnyi said in an interview.

Households and businesses have kept working and avoided panicking money and banking markets, in a show of resilience as the war enters its 11th month. That may be enough for the economy to stabilize or grow slightly next year, after contracting more than 30% this year, Pyshnyi said.

Ukraine says nearly 70 Iranian-made drones have been shot down in the past two weeks (2:06 pm)

Ukraine’s Air Defense shot down the single-use drones, which Russia used to attack Ukrainian infrastructure, spokesman Yuriy Ihnat said on television.

The Shahed-131 and Shahed-136 drones were part of a second shipment of 250 recently received by Russia, Ihnat said, without specifying where he got the information from. Russia is also increasing the use of single-strike “Lancet” drones, mainly at the front, Ihnat said.

Ukraine Says Russian Air Force Activity Drops After Drone Strike (11:30am)

Ukraine has seen a significant decrease in Russian air force activity after a drone attack on the Engels strategic bomber base in the Saratov region on Monday, the Russian air defense force spokesman said on television. Ukraine, Yuriy Ihnat.

Russia moved several of its Engels planes to other airfields and even reduced its tactical aviation operations around Ukraine after strikes hundreds of miles inside Russian territory, Ihnat said, without confirming Ukraine’s involvement in the strikes.

Russia’s Defense Ministry said three military personnel were killed by falling debris after a Ukrainian drone was shot down.

Ukraine’s energy deficit is reduced, says Ukrenergo (10:30 am)

Ukraine’s electricity shortage eased slightly after a missile-damaged production unit at a thermal power plant was repaired and reconnected to the grid, national operator Ukrenergo said on its Telegram channel.

According to Ukrenergo, demand from households and industry continues to outpace supply as network access is restored following repeated Russian attacks on civilian infrastructure.

German regulator optimistic on gas supplies (8:15 am)

Germany has refilled gas storage facilities for five straight days due to a combination of milder weather, increased wind power generation and lower exports to neighboring France, according to the head of the country’s grid regulator.

“Well-filled gas storage means security of supply for 2023” and for the coming winter, the president of the Federal Network Agency, Klaus Mueller, said in a tweet. Germany was forced to search for alternative gas supplies after Russia halted deliveries, raising the possibility of rationing and power outages in Europe’s biggest economy.

Russia’s Lavrov says Ukraine must surrender to end the war (8 am)

Lavrov said Ukraine must comply with Moscow’s demands for full surrender and cede sovereignty over lands annexed by President Vladimir Putin or face continued war.

In an interview with the state-run Tass news service published Tuesday morning, Lavrov reiterated calls for the “denazification and demilitarization” of Ukraine that Putin had used as a justification for invading the neighboring country.

In recent months, Russia had scaled back on those calls, failing to topple Zelenskiy’s government early on and losing ground to Ukrainian counter-offensives in the south and east.

Austria warns of blackout threat in Europe (7 am)

There is a “very high probability” that the European Union will experience widespread blackouts in the near future due to Russian “hacking attacks”, according to Austrian Defense Minister Klaudia Tanner.

“The question is not if it will happen but when,” Tanner said in an interview with Germany’s Welt newspaper. “Russian hacking attacks on Western power supplies are a means of hybrid warfare,” she added. “We should not pretend that this is just theory. We must prepare for blackouts in Austria and in Europe.”

Ukraine Says 4,500 Cyber ​​Attacks Repelled (7am)

Ukraine has countered 4,500 Russian cyberattacks against various targets, including government websites, data records and infrastructure facilities, the head of the Security Service’s cybersecurity department, Ilya Vityuk, said on television. “Russia carries out up to 10 attacks every day, and massive missile attacks are always accompanied by cyber attacks,” Vityuk said. “But we learned to fight them even in blackouts.”

Millions of Ukrainians face power outages (10:05 pm)

As Ukraine’s power workers mobilize to repair damage to the electrical system caused by recent Russian missile and drone attacks, nearly 9 million Ukrainians are still dealing with power outages, Zelenskiy said in his late-night address.

Earlier on Monday, Ukraine’s Energy Minister Herman Halushchenko said Russia has not given up plans to launch more attacks on the nation’s energy facilities, with another round possible during the New Year holidays.

Bloomberg Businessweek Most Read

©2022 Bloomberg L.P.