(Bloomberg) -- President Joe Biden said he would send American troops to Eastern Europe as the threat of a Russian invasion of Ukraine continues to weigh on the U.S. and its allies. 

The U.S. and the European Union are zeroing in on a package of sanctions against Russia should President Vladimir Putin invade Ukraine, according to people familiar with the matter and documents seen by Bloomberg. Putin told his French counterpart Emmanuel Macron that the response from the U.S. to Moscow’s security demands “didn’t take into account Russia’s main concerns,” but that his government will study them before deciding on its next steps.

Ukrainian President Volodymyr Zelenskiy said Friday that Russia’s posture on Ukraine’s border hasn’t escalated since last spring, and warnings of an imminent invasion by Moscow are damaging Ukraine’s economy. 

The UN Security Council will debate the crisis on Monday. Russian Foreign Minister Sergei Lavrov is expected to speak with U.S. Secretary of State Antony Blinken in the next few days. Russia has denied it intends to invade its neighbor, despite massing tens of thousands of troops plus tanks and equipment near Ukraine’s eastern border.  

Key Developments:

• Wall Street banks briefed by U.S. on possible sanctions
• Many raw materials would be swept into a Ukraine conflict
• Ukraine says U.S. hurting economy by sowing panic
• Azerbaijan is ready to supply emergency gas to Europe
• Where military forces are assembling around Russia and Ukraine

All times CET.

Commodity Price Risk From Fear of Conflict (9:25 a.m.)  

Tensions over Ukraine have already sent natural gas prices spiraling, and could hit a raft of other raw materials crucial to the global economy at a time governments are dealing with an energy crunch, surging inflation, and a cost-of-living crisis. 

The crisis “could spawn a butterfly effect, sending commodity prices spiraling higher as supply woes multiply,” analysts at Bloomberg Intelligence wrote. “Sanctions could usher in shortages of food and energy, causing prices of both to soar.” 

Johnson to Call Putin, Visit Eastern Europe (3:40 a.m.)

Prime Minister Boris Johnson will speak with Putin this week and plans to go to Eastern Europe soon as the U.K. boosts its efforts to help end the Ukraine crisis. 

Johnson will reiterate the need for Russia to step back and engage diplomatically, a Downing Street spokesperson said in a statement. 

The U.K. plans to use a meeting of the UN Security Council on Monday to apply further pressure on Russia, the official said. At that meeting, the U.K. plans to focus on what it called “Russia’s flawed narrative.” 

Biden Says He Will Send U.S. Forces to Eastern Europe (11:30 p.m.)

Biden said Friday he would be sending American troops to Eastern Europe as the threat of a Russian invasion of Ukraine continues. He added that “not a lot” of soldiers would be involved “in the near term.”

Biden didn’t name any countries where troops may be deployed or elaborate further.

U.S., EU Crafting Sanctions on Russian Debt, Banks, Individuals (11:12 p.m.)

The U.S. and the European Union are zeroing in on a package of sanctions against Russia should Putin decide to invade Ukraine, according to people familiar with the matter and documents seen by Bloomberg.

The measures would broadly fall into several categories including: restrictions on the refinancing of Russian sovereign debt; financial sanctions; and the singling out of individuals and entities close to the Kremlin. Western allies are also working on a series of trade-related measures covering key goods and sectors.

Russian Attack Would Cause ‘Significant Casualties’ (8:14 p.m.)

Russia’s military buildup is far larger than those seen for previous military exercises and unleashing them on Ukraine would “result in a significant amount of casualties,” U.S. General Mark Milley, chairman of the Joint Chiefs of Staff, told reporters. “There’s the potential that they could launch on very, very little warning.”

Speaking alongside Milley, Defense Secretary Lloyd Austin said that Putin has probably not yet made a decision about whether to attack the country. But the forces the Russian leader has assembled give him a “range of options,” Austin said. 

Germany Vows Help For Ukraine’s Economy (7:15 p.m.)

Germany promised to help Ukraine in its standoff with Russia by preserving economic stability in the country. 

The threat from Russia doesn’t come only from its military but also from hybrid attacks on Ukraine’s supply chains, said German Foreign Minister Annalena Baerbock. 

“We stand at Ukraine’s side with regard to its security and defense, but above all by maintaining its economic stability,” she said.

Ukraine Accuses U.S. of Hurting Its Economy (7 p.m)

Ukrainian President Volodymyr Zelenskiy said the U.S. was damaging his country’s economy by unduly stoking panic that Russia may be planning an invasion. Zelenskiy said satellite images alone were insufficient to assess the extent of the military buildup and the situation hasn’t escalated.

“We are grateful to the U.S. for the support for our independence and territorial integrity,” Zelenskiy told foreign media in Kyiv. “But I am the president of Ukraine, I am here and I know more details and I have deeper knowledge than any other president.”

UN Security Council to Debate Crisis Monday (6:47 p.m.)

The U.S. said the UN Security Council should be fully engaged on the Ukraine crisis and confirmed that the council will discuss the issue during an open meeting on Monday, one day before Russia assumes the rotating presidency of the Security Council for February.

A senior Biden administration official said the meeting, at which Ukraine’s United Nations envoy is expected to speak, will be an opportunity to hear if Russia remains committed to diplomacy.

Ambassador Dmitry Polyanskiy, the deputy at the Russian Mission to the UN, tweeted his opposition to the meeting, calling it a “stunt shameful for the reputation” of the council. 

Ukrainian Leader Says Russia’s Posture Is Stable (5:02 p.m.)

The situation on the border with Russia hasn’t escalated beyond where it stood last spring, Zelenskiy told reporters in Kyiv. He criticized “international leaders” who’ve openly speculated about a possible Russian invasion, and said that officials should be more careful in making comments about the imminent risk of war.

“Unbalanced information” costs Ukraine’s economy “a lot,” Zelenskiy added. His remarks come amid increasingly strong U.S. warnings about Russia’s plans. Biden told Zelenskiy in a call Thursday night “that there is a distinct possibility that the Russians could invade Ukraine in February,” according to a U.S. official. 

Ukraine needs as much as $5 billion in financial support from countries and international partners to stabilize its economy, Zelenskiy said. 

Putin Tells Macron His Intentions Are Good (4:37 p.m.)

In a call with French President Emmanuel Macron on Friday, Putin denied any offensive intentions regarding Ukraine, according to a French official. The leaders agreed that de-escalation was needed and to continue having a dialog on the issue.

Biden Team Briefs Wall Street on Possible Russia Sanctions (4:30 p.m.)

Biden administration officials met with the largest U.S. banks to discuss possible sanctions against Russia in an effort to make sure any moves don’t disrupt the global financial system.

The banks briefed by included Citigroup Inc., Bank of America Corp., JPMorgan Chase & Co. and Goldman Sachs Group Inc., according to people familiar with the matter. The U.S. and EU are honing in on a package that would include targeting Moscow’s ability to convert currency in the event of a Russian invasion of Ukraine.  

EU, U.S. Seeking to Boost Gas Supplies to Europe (4:15 p.m.) 

The EU and U.S. are working with other countries to diversify European gas supplies to avoid supply shocks from a possible Russian invasion of Ukraine.

“We are collaborating with governments and market operators on supply of additional volumes of natural gas to Europe from diverse sources across the globe,” according to a joint statement from President Joe Biden and European Commission President Ursula von der Leyen. A meeting of the U.S.-EU Energy Council is planned for Feb. 7. 

The EU gets about a third of its gas supplies from Russia and sees liquefied natural gas as perhaps the most plausible way to replace energy supplies if Moscow cuts off deliveries amid a conflict. 

NATO Has Boosted Readiness, Chief Says (3 p.m.)

NATO’s Jens Stoltenberg said the military alliance has increased the readiness of its response force this month and is considering adding battle groups to the Black Sea region.

“Our aim is to convey a clear message to Russia,” Stoltenberg said at an Atlantic Council conference. “If they use military force against Ukraine it will have severe consequences.”

Stoltenberg also said Putin’s strategy of armed forces buildup has backfired given NATO’s newest deployments. 

U.S. Energy Sanctions Would ‘Cause Chaos’ (2:30 p.m.)

If the U.S. were to impose sanctions on Russian energy exports it “could really throw the market into a lot of chaos,” but the White House has left it too late to avoid such damage, said Ellen Wald, a senior fellow at the Atlantic Council.

“The U.S. has been trying to talk to other natural gas producers to get them to increase production, but it’s not going very well,” Wald said in a Bloomberg TV interview.

UniCredit Scraps Russia Bank Deal (2:20 p.m.)

Italy’s second largest bank has halted work on a potential deal to acquire Russian lender Otkritie Bank FC, with Chief Executive Officer Andrea Orcel signaling Friday that the military build up in the region was a factor in the decision.

Russia Sees ‘Rational Elements’ in U.S. Proposal (10:05 a.m.)

Lavrov said offers to discuss restricting missile deployments and military maneuvers near Russia’s borders were “at least something.”

Russia isn’t satisfied that the U.S. and its allies rejected Moscow’s central demands, but the fact that the West has now agreed to discuss the other issues after ignoring Russia’s appeals for years shows that Moscow’s approach is working, Lavrov said.

EU Official to Visit Ukraine to Discuss Aid (10:05 a.m.) 

European Commission Vice-President Valdis Dombrovskis will visit Ukraine next week to discuss the details of the new EU financial assistance program, according to an official familiar with the trip who asked not to be identified because the plans are private. Dombrovskis will meet with Prime Minister Denys Shmyhal on Jan. 31 and Zelenskiy the following day.

Earlier this week, the commission announced an emergency package of 1.2 billion euros ($1.3 billion) to address the financial needs of the country. The commission believes that a first tranche of 600 million euros can be disbursed rapidly. 

EU Sanctions ‘Could Hit Energy Sector’ (8:20 a.m.) 

Dombrovskis, who is also the EU’s top trade official, said the bloc could target the energy sector with restrictive measures if Russia were to invade Ukraine, part of what he called a “substantial package of sanctions.”

“Member countries are ready to tolerate a possible negative effect on income because peace is in danger in Europe,” Dombrovskis said in an interview. “The sanctions in preparation will also affect the energy sector,” he added, without providing details.

Germany has pushed for an exemption for the energy sector if there is a move to block Russian banks from clearing U.S. dollar transactions, according to documents seen by Bloomberg this week.   

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