Suspected spies for Russia arrested in UK; Russia’s central bank hikes rates to 12%

Russia’s defense minister told officials on Tuesday that Ukraine’s ability to fight had been “almost exhausted” and said the war had exposed vulnerabilities in Western weapons systems that Moscow would soon share.

The war has sown devastation across swathes of eastern and southern Ukraine, killed or injured hundreds of thousands and triggered the biggest rupture in Russia’s ties with the West since the 1962 Cuban Missile Crisis.

Ukraine and the West have accused Russia of war crimes and cast Moscow’s invasion as an imperial-style land grab. The Kremlin casts the conflict as an existential battle with a hostile West which it says wants to tear Russia apart.

Speaking to a security conference in Moscow attended by China’s defense minister, Li Shangfu, Defence Minister Sergei Shoigu, 68, said the conflict had been a serious test for Russia.

“In the special military operation, the Russian army has debunked many myths about the superiority of Western military standards,” Shoigu said in a rare public speech, according to a text supplied by his ministry.

“The preliminary results of combat operations show that Ukraine’s military resources are almost exhausted,” said Shoigu, one of President Vladimir Putin’s most powerful allies. He did not give detailed evidence to back up either statement.

Shoigu also said he would share details about the weaknesses of Western weapons and that none were invulnerable.

“We have data on … the destruction of German tanks, American armored vehicles, British missiles and other weapons systems,” he said. “We are ready to share our assessments … with our partners.”

— Reuters

Ukraine’s President Volodymyr Zelenskyy visited troops in the southern region of Zaporizhzhia Tuesday, a day after a similar visit to military units in the east of the country.

“Today we continued our work and meetings with our defenders in the Melitopol direction. I paid a visit to the 3rd operational brigade named after Colonel Petro Bolbochan,” a post on the president’s Telegram account stated. 

“The brigade took part in combat missions in Donetsk and Luhansk regions, in defensive battles for Kharkiv, in the liberation of villages and towns near Kharkiv, and is currently conducting offensive operations in the Zaporizhzhia direction. We discussed the most problematic issues with the brigade commander,” Zelenskyy commented.

The president used similar language Monday, alluding to problems and challenges being encountered by Ukraine’s forces as they look to reclaim Russian-occupied territory in southern and eastern Ukraine.

— Holly Ellyatt

Ukraine is to strengthen its defenses in northeastern regions that border Russia and Belarus by funding new fortifications and military infrastructure, Prime Minister Denys Shmyhal said on Tuesday.

“At the request of Kharkiv and Chernihiv … we are allocating 911.5 million hryvnias ($24.7 million) for Kharkiv and 363 million ($9.8 million) for Chernihiv to build military engineering and fortification structures,” Shmyhal said on Telegram, according to a translation by Reuters.

Chernihiv, which borders both Russia and its ally Belarus, was partially occupied when Russia invaded Ukraine in early 2022 but was later liberated, while a large part of Kharkiv in northeastern Ukraine was liberated last year, although it is nearer to intense fighting on the eastern frontline.

The move to fortify northern areas comes as Ukraine continues to watch Belarus closely for any signs it will actively join Russian forces fighting in Ukraine.

Minsk has so far given logistical support to Russia, allowing part of its invasion to be launched from its territory, as well as sheltering Russian mercenary fighters following a failed mutiny.

– Holly Ellyatt

Russian shelling on eight Ukrainian regions overnight killed three and wounded 27 others, Ukrainian Internal Affairs Minister Ihor Klymenko said Tuesday.

Attacks on Lviv in western Ukraine wounded 15 people wounded, the official said on Telegram, updating the number of casualties from the latest attacks on western Ukraine, including the region of Volyn where three people died.

“22 objects of civil infrastructure were damaged, including 1 apartment building, 9 private houses, 1 medical and 1 educational institution,” he added, stating that fires had broken out as a result of the shelling.

Investigative police teams were recording evidence of suspected Russian war crimes, he said.

Western Ukraine has not often been the target of Russian missiles but has experienced a number of attacks in recent days putting NATO countries neighboring the war-torn nation, such as Poland, on edge.

–Holly Ellyatt

A top Ukrainian official on Tuesday called for sanctions on manufacturers and suppliers of microchips to Russia, saying they are being used in missiles being launched against Ukrainian targets.

“Last night, the Russians fired at Ukraine, in particular, with Kh-101 missiles. These missiles were manufactured by the Russians this year. The Kh-101 missiles, which were released in April, have approximately 30 foreign chips,” the head of the Ukrainian President’s Office Andrii Yermak said on Telegram.

“Restrictions have already been introduced, but sanctions need to be strengthened so that Russia cannot obtain critical components and manufacture missiles,” he added.

— Holly Ellyatt

Russia’s security forces said Tuesday that they had prevented a Ukrainian sabotage group from entering the border region of Bryansk.

Bryansk governor Alexander Bogomaz said Russian soldiers and security services stopped the group near the village of Kurkovichi, which is less than two miles (3.2km) from the border.

“There were no casualties. As a result of shelling from the side of the Armed Forces of Ukraine, one animal of the agricultural enterprise was killed, there are partial damages to industrial premises and a car,” Bogomaz wrote on the Telegram messaging app, according to a Google translation.

CNBC was unable to independently verify the claims.

— Karen Gilchrist

The head of the office of the president of Ukraine on Tuesday called for all Russian athletes to be banned from participating in international competitions, after Russian strikes destroyed a sports facility in Dnipro.

Sweden is preparing a new military support package for Ukraine worth 3.4 billion krona ($313.5 million), Reuters reported Defense Minister Pal Jonson as saying Tuesday.

The package is set to include ammunition and spare parts for previously donated weapon systems, including CV-90 infantry fighting vehicles, Archer artillery systems and Leopard 2 tanks.

— Karen Gilchrist

Three suspected spies for Russia have been arrested and charged in the U.K. in a major national security investigation, the Metropolitan Police confirmed Tuesday.

The defendants, all Bulgarian nationals, were held in February and have been remanded in custody since. They were named by the BBC as Orlin Roussev, Biser Dzambazov, and Katrin Ivanova.

The trio were arrested under the Official Secrets Act by counter-terrorism detectives from the Metropolitan Police, which has national policing responsibility for espionage.

They are charged with possessing identity documents with “improper intention,” and are alleged to have known they were fake.

The documents include passports, identity cards and other documents for the U.K., Bulgaria, France, Italy, Spain, Croatia, Slovenia, Greece, and the Czech Republic, the BBC said.

The are due to appear at the Old Bailey on an as yet unconfirmed future date.

— Karen Gilchrist

A Moscow court on Tuesday fined social media site Reddit for the first time for not deleting “banned content” that it claimed contained fake news, state-owned news agency RIA reported.

RIA said the court had fined Reddit 2 million rubles ($20,436) for what it said was “fake” information about Russia’s military presence in Ukraine.

Social media sites have been under pressure since last year when Moscow introduced a new law limiting coverage of what it calls its “special military operation” in Ukraine.

Reddit did not immediately respond to CNBC’s request for comment.

— Karen Gilchrist

The Russian ruble gave up early gains Tuesday shortly after the central bank announced an emergency 350-basis-point rate hike.

The decision to raise rates to 12% came a day after the ruble fell to a near 17-month-low, sliding past the psychologically important threshold of 100 to the U.S. dollar.

The ruble firmed on the central bank’s announcement Tuesday before falling 0.2% to settle around 97.82 by 11:15 a.m. Moscow time.

— Karen Gilchrist

Russia’s central bank on Tuesday raised its key interest rate to 12% from 8.5%, the bank said in a statement on its website.

The bank called an extraordinary meeting for Tuesday amid pressure from Moscow to halt a rapid depreciation of the country’s ruble currency.

“Inflationary pressure is building up,” the bank said in a statement.

“The decision is aimed at limiting price stability risks,” it added.

The ruble slumped near 102 to the dollar on Monday as anxiety around the state of the economy and the impact of Western sanctions weighed heavily on the beleaguered currency.

President Vladimir Putin’s economic advisor, Maxim Oreshkin, on Monday blamed the plunging currency and the acceleration of inflation on “loose monetary policy.”

The bank last made an emergency rate hike in late February 2022 with a rate raise to 20%.

— Karen Gilchrist

The Russian ruble rose on Tuesday ahead of an extraordinary policy meeting called by the central bank to stem the currency’s depreciation.

Russia’s central bank called the meeting on Monday after the ruble tumbled past 101 per U.S. dollar as anxiety around the state of the economy and the impact of Western sanctions weighed heavy on the beleaguered currency.

The bank will discuss the level of its key interest rate, currently at 8.5%, when it meets Tuesday, with a decision to be published at 10:30 a.m. Moscow time, the central bank said.

That comes after President Vladimir Putin’s economic advisor on Monday blamed loose monetary policy for the currency’s rapid depreciation.

“The central bank has all the tools to normalise the situation in the near future,” said Maxim Oreshkin, Putin’s economic advisor. “It is in the interests of the Russian economy to have a strong rouble.”

— Karen Gilchrist

Ukrainian forces destroyed 16 of at least 28 Russian air and sea-based missiles launched overnight, Ukraine’s air defense forces said Tuesday on the Telegram messaging app.

“As a result of anti-aircraft combat by the forces and means of the Air Force, in cooperation with units of other components of the Defense Forces, the following were destroyed: 16 Kh-101/Kh-555 cruise missiles, Caliber,” the post said.

CNBC was unable to independently verify the claims.

— Karen Gilchrist

At least three people were killed and many more injured after overnight Russian airstrikes on Ukraine’s western region of Lviv and the northwestern region of Volyn.

The three were killed after a business enterprise in Lutsk was hit, Volyn’s regional governor said on the Telegram messaging app. The Volyn region borders NATO-member Poland to its west.

No casualties have so far been reported from the attack on Lviv, though scores of apartments and a kindergarten were destroyed, according to the city’s mayor Andriy Sadovyi.

“Fortunately, there were no casualties. Unfortunately, a lot of damage. The rocket flew into the yard of the kindergarten. More than a hundred apartments were damaged, more than 500 windows were broken, and a kindergarten was destroyed,” Sadovyi said on the Telegram messaging app.

Ukrainian media has reported that the attack on Lviv is the largest on the city since the war broke out. CNBC was unable to independently verify the claims.

Until last month, the Lviv region had been spared most Russia’s air attacks. However, seven people were killed in July when a missile hit a residential building.

— Karen Gilchrist

Russia’s central bank is to hold an extraordinary rate meeting on Tuesday after a steep fall in the ruble Monday.

Russia’s currency slid past 100 to the U.S. dollar earlier nearing a 17-month low, prompting Russian President Vladimir Putin’s economic advisor to blame loose monetary policy for the rapid depreciation.

Russia’s central bank then put out a statement in which it said a meeting will be held tomorrow “to consider the issue of the key rate level.” It said it would announce the board’s decision at 10:30 a.m. Moscow time.

The central bank’s key rate currently stands at 8.5%, having been raised 100 basis points last month. Then, the bank acknowledged “the possibility of a further increase in the key rate at the next meetings to stabilize inflation near 4% in 2024 and beyond.”

— Holly Ellyatt

Britain said its Typhoon fighter jets intercepted two Russian maritime patrol bomber aircraft in international airspace north of Scotland on Monday, within NATO’s northern air policing area.

“Pilots launched in their Typhoon jets to intercept two Russian long-range bombers this morning, monitoring them as they passed north of the Shetland Islands, ready to counter any potential threat to UK territory,” British armed forces minister James Heappey said.

Russia’s defense ministry said earlier that Russian strategic bombers have carried out routine flights over international waters in the Arctic.

Russia regularly flies its Tu-160 and Tu-95’S long-range bombers, which are capable of carrying nuclear cruise missiles, over international waters.

“All the flights were carried out in strict compliance with international airspace regulations,” the ministry said, adding that the longest flight had lasted for more than seven hours.

— Reuters