Russian Assault Shows No Letup as War Enters a Second Week

(Bloomberg) -- Russian forces fired missiles at Kyiv and bombarded cities across Ukraine, as President Vladimir Putin pushed ahead with his invasion in disregard of a United Nations vote to immediately halt the fighting.

As the war entered a second week, it became ever clearer that a humanitarian tragedy is unfolding in Europe. Refugees continued to spill over the borders, with more than a million people leaving Ukraine for neighboring countries. Ukraine's President Volodymyr Zelenskiy accused Russia of a deliberate strategy “to ruin our cities, to kill our people, to take from us everything that we hold dear.”

Baltic nation leaders called for the UN to broker a safe corridor for those fleeing the shelling. And with Russia's campaign gaining pace in the south of the country, NATO warned of a “high risk of collateral damage on civilian shipping” in the northwest Black Sea, within and adjacent to Ukraine's territorial waters. Hours later, the Estonian owner of a cargo ship said it had gone down near Odesa.

Putin rejected claims by U.S. and European officials that the offensive has bogged down amid tough resistance. “All the goals that have been set are being attained,” he told top officials in televised comments to a meeting of his Security Council. He claimed his forces are fighting “neo-Nazis” and forces from outside Ukraine, whom he accused of using civilians as human shields and of holding foreigners hostage.

Against the backdrop of escalating violence, a second round of talks between Russia and Ukraine were held in the Bialowieza Forest on the border between Poland and Belarus. It's a location famous for a meeting in 1991 of the leaders of Ukraine, Belarus and Russia, who signed a treaty dissolving the Soviet Union.

But any hopes of a fresh impetus for cease-fire efforts were diminished by Moscow's insistence that Ukraine must still be “demilitarized.” Ukraine has said it won't agree to preconditions or “ultimatums.”

Russia will fulfill its objective of “demilitarization, in the sense of destroying the weapons infrastructure that threatens us,” Foreign Minister Sergei Lavrov told reporters in Moscow before the delegations met. “Even if we sign a peace agreement, it will definitely have to include such a clause.”

The ruble plunged again on Thursday as Russia continued to suffer the economic fallout from its invasion, after its credit rating was slashed to junk on the back of a wave of sanctions imposed by the U.S., the European Union and others. The price of oil whipsawed, further roiling the global economy.

The EU is seeking to tighten the screws on Russia by removing its most-favored nation status at the World Trade Organization, a move that could further hit 95 billion euros ($105 billion) of Moscow's exports to the bloc with tariffs.

Read More: What Russia Invasion, Sanctions Mean for Global Economy

Billionaire Oleg Deripaska, speaking at the Krasnoyarsk Economic Forum, said an “Iron Curtain” has fallen on Russia and the country is facing a severe crisis for at least three years. Deripaska, who has been sanctioned by the U.S. since 2018, said the first step to getting out of the crisis is peace.

The extent of Moscow's isolation was exposed late on Wednesday as the UN General Assembly voted 141 to 5 in favor of a measure urging Russia to immediately cease its aggression. Only North Korea, Syria, Belarus and Eritrea joined Russia in opposing the measure.

On to Berlin

Fighting continued on the ground regardless. Police in Kyiv said that there were explosions in the capital overnight, but that it was the result of Ukraine's air defenses hitting Russian missiles launched at the city.

In the south, a spokesman for Russian-backed separatists threatened strikes on the port of Mariupol to demoralize the Ukrainian army and encourage its surrender, adding in comments broadcast on Rossiya 24 Thursday that an evacuation corridor for civilians wasn't working. A senior U.S. defense official said that Russian troops have advanced on Mariupol but that Ukraine still held control of the city.

Zelenskiy accused Russian forces of shelling routes that could be used for evacuation, as well as cutting off electricity, water, food and medical supplies “for peaceful civilians.”

“If, God forbid, Russia takes Ukraine,” he told reporters in Kyiv later, then Latvia, Lithuania, Estonia, Moldova, Georgia, and then Poland will be next -- “and they won't stop until they reach Berlin.”

German U-Turn

As the UN warned that 10 million people -- or almost a quarter of Ukraine's population -- could end up fleeing their homes, the prime ministers of Lithuania and Estonia called for a humanitarian corridor to be established, while acknowledging that both Moscow and Kyiv would need to agree to the plan. U.S. Secretary of State Antony Blinken is due to travel to Poland and the Baltic states after talks with NATO counterparts in Brussels later on Thursday.

The international order continued to feel the repercussions of the war.

Prime Minister Fumio Kishida said that Japan would freeze the assets of oligarchs in his country, adding that it was “outrageous” for Putin to order Russian strategic nuclear forces be put on higher alert.

Germany, which until last week had a policy of refusing to send weapons into conflict zones, doubled down on its U-turn by approving the release of 2,700 Strela anti-aircraft missiles to Ukraine.

Further enlargement of the 27-nation EU is suddenly back on the table with Moldova and Georgia, both formerly part of the Soviet Union, submitting applications for membership. Ukraine applied to begin accession talks earlier this week, albeit the application process to align with the bloc takes years.

“Ukraine has set a process in motion and this will be discussed with member states,” European Commission President Ursula von der Leyen said in Bucharest. “But right now the focus is on ending the war.”