Russia and Ukraine are discussing stopping strikes on energy infrastructure sites in each other's countries, that could signal a significant de-escalation. Both sides have already cut down the number of attacks on each other's energy infrastructure and oil refining capacity recently following an understanding reached by their intelligence agencies. Vladimir Putin has admitted that sanctions on Russia and worker shortages have contributed to economic turbulence in the country. Inflation is 8.6% which is more than twice the Central Bank's goal as the Russian ruble continues to weaken.Russia and Ukraine are discussing stopping strikes on energy infrastructure sites in each other's countries, according to a report that could signal a significant de-escalation in hostilities.
The Financial Times reported that Kyiv is looking to restart negotiations mediated by Qatar that came close to agreeing an end to the attacks in August before Ukraine's incursion into Russia's Kursk region.
Over the course of the war, Ukraine has struggled with rolling blackouts caused by Russian drone and missile strikes on energy infrastructure. During the summer, attacks took out half the country's power generation capacity.
Between March and August, Russia destroyed all of the thermal power plants and almost all of the hydroelectric capacity in Ukraine, President Volodymyr Zelensky said, according to a report in the Kyiv Independent.
Moscow has continued these strikes, which will further pressure Ukraine ahead of the freezing winter months.
Kyiv in turn has stepped up drone strikes on oil-processing facilities across a wide swathe of Russian territory. Often without claiming direct responsibility, the Ukrainian strikes have hampered Russia's military machine.
The interim head of Ukraine's state grid operator, Ukrenergo, Oleksiy Brekht, said Ukraine could face its toughest winter since the start of the war and that if Russia continues its attacks on energy infrastructure, the population may face daily power outages of up to eight hours.
"The winter will be the hardest of the previous three years," Brekht told Ukrainian outlet Suspilne in an interview published Tuesday.
Serhiy Kovalenko, the CEO of energy supplier Yasno, said in June that Ukrainians may have electricity in the cold months for as few as six hours a day, depending on how much of the grid can be repaired.
But an unnamed diplomat told the FT there were "very early talks" about both sides resuming negotiations that included a focus on energy facilities.
Citing an unnamed Ukrainian official, the newspaper said both sides had already cut down the number of attacks on each other's energy infrastructure recently following an understanding reached by their intelligence agencies.
However, the paper reported that a former Kremlin official said that Putin would be unlikely to agree to a deal until Ukrainian troops are pushed out of the Kursk region. Meanwhile, a Ukrainian official said that Kyiv still plans to continue hitting targets including oil refineries to push Moscow to the negotiating table.
"Halting these attacks is essential to Ukraine's survival and resilience in the face of aggression," Svitlana Romanko, founder and executive director of the Ukrainian organization Razom We Stand, told Newsweek.
"With each pause, we can focus on rebuilding an energy system that not only serves our people but also builds a foundation for a secure, decentralized renewable energy future,
"Russia's relentless attacks on Ukraine's energy infrastructure have been devastating, disrupting power for millions of civilians, threatening the operation of hospitals, schools, and critical services, and leaving communities in the cold."
Zelensky has previously said that any deal to protect energy facilities could precede broader peace talks.
The FT said that other attempts to reach a deal had failed, including one struck last autumn that was meant to pave the way toward talks. But Kyiv resumed drone attacks on Russian oil facilities in February and March this year to pressure Moscow following its failed counteroffensive the previous summer.
Vladimir Putin has admitted that sanctions on Russia and worker shortages have contributed to economic turbulence in the country.
The Russian president made the comments days after Russia's Central Bank raised its key interest rate to a record 21 percent—higher than the emergency 20 percent level introduced in the aftermath of Putin's full-scale invasion of Ukraine when facing Western sanctions and isolation from the global financial system.
Despite unprecedented Western sanctions on Russia, the IMF this month raised its estimate for the country's GDP growth for 2024 from 3.2 percent to 3.6 percent, a point noted by Putin during a video conference Monday with top officials.
Russia's economic growth has been fueled by record levels of military spending but a lack of workers exacerbated by troop losses in Ukraine and a brain drain of those avoiding the draft, have fueled inflation which the Central Bank has tried to curb.
"Difficulties and imbalances remain in the economy," Putin said. "They are primarily caused by those difficult conditions in which we build up industrial, agrarian, and financial potential."
Central Bank Governor Elvira Nabiullina attended the meeting. She said last Friday that there would need to be tighter monetary policy next year and suggested the key rate could be even higher when the bank meets for the final time this year in December.
On Monday, the Russian president referred to issues caused by "external sanctions" as well as "shortages of personnel and technology, logistics. These factors are reflected, among other things, on the dynamics of consumer prices."
Inflation is 8.6 percent which is more than twice the Central Bank's goal of four percent which the growing key interest rate aims to address.
"These hikes have significantly raised the cost of new loans and variable-rate loans," Grzegorz Drozdz, market analyst at Invest.Conotoxia.com told Newsweek. There have been big spikes in the prices of food, transport, and building materials.
"The Russian ruble continues to weaken despite high real interest rates," said Drozdz, referring to the rate of the Russian currency to the greenback now exceeding 97. "For over a year, Russia's central bank has been combating rising CPI inflation."
Drozdz said that the Central Bank is concerned about pro-inflationary factors like sanctions on imported products "and the government's expansionary fiscal policy."
"These measures aim to support the weakening ruble," he said. "However, this decision is unlikely to undermine the Russian economy, which is indebted by approximately 15 percent of GDP—a record low compared to Western countries," adding that high interest rates "will primarily impact citizens" rather than the government.However, Vasily Astrov, an expert on the Russian economy at the Vienna Institute for International Economic Studies, told Newsweek that the Central Bank's move to fight inflation at all costs by continuing to raise the key interest rate was misguided.
"Suppressing it by draconian monetary policy measures will only lead to stalling private investments, thereby exacerbating in the future the very problem of supply-side bottlenecks, which the central bank and many others, are lamenting," he said.
0 comments:
Post a Comment