(Bloomberg) -- The Biden administration has confronted China’s government with evidence that suggests some Chinese state-owned companies may be providing assistance for Russia’s war effort in Ukraine, as it tries to ascertain if Beijing is aware of those activities, according to people familiar with the matter.

Ties between Russia and the three Baltic nations on the northeast border of the European Union and NATO reached a new low as tit-for-tat expulsions and staff cuts were set to leave no ambassador-level diplomats between the nations. 

Poland will file a request for German approval to send its Leopard tanks to Ukraine, Prime Minister Mateusz Morawiecki said, adding that it was a formality “because we will transfer the tanks without the nod.” 

Foreign ministers of the European Union held talks in Brussels, with Germany facing pressure from several countries on tank deliveries. The EU ministers are expected to approve another 500 million euros ($545 million) in funding for weapons sent to Ukraine. 

(See RSAN on the Bloomberg Terminal for the Russian Sanctions Dashboard.)  

Key Developments

• US Confronts China Over Companies’ Ties to Russian War Effort
• Germany’s Rheinmetall Could Ship 139 Leopard Tanks, RND Reports
• Baltic Relations With Moscow Deteriorate in Diplomatic Standoff
• Sweden’s NATO Bid in Doubt After Erdogan Refuses Support
• Germany Still Years Away From Replacing Russian Gas Capacity
• Ex-FBI Official Charged With Work for Russian Oligarch Deripaska

On the Ground

Russian forces continued their offensive around Bakhmut, conducted unsuccessful assaults on the Lyman, Avdiyivka and Zaporizhzhia axes, and are on the defensive in other areas, Ukraine’s General Staff said on Facebook. It said Russian troops launched four missile and five air strikes on Ukraine over the past day and carried out more than 40 salvos from multiple rocket launchers, while the Ukrainian military repelled attacks near 11 settlements in the eastern Donetsk and Luhansk regions. One person was killed by Russian shelling in the Kherson region.

(All times CET) 

Zelenskiy Announces Government Shakeup, Restricts Officials’ Travel (3:50 a.m.)

Volodymyr Zelenskiy is preparing a personnel shakeup in Ukraine’s government, law enforcement agencies and regional authorities. He made the announcement in a Facebook post on Monday that did not name specific officials or posts. 

He also restricted travel by government employees outside the country. “Officials will no longer be able to travel abroad for vacation or for any other non-governmental purpose,” he said. 

Word of the personnel changes came after Vasyl Lozynskyy, the nation’s deputy minister of communities, development and infrastructure, was detained in a corruption investigation. 

US Confronts China Over Companies’ Ties to Russian War Effort (2:20 a.m.)

The Biden administration has confronted China’s government with evidence that suggests some Chinese state-owned companies may be providing assistance for Russia’s war effort in Ukraine, as it tries to ascertain if Beijing is aware of those activities, according to people familiar with the matter.

The people, who asked not to be identified discussing private deliberations, declined to detail the support except to say that it consists of non-lethal military and economic assistance that stops short of wholesale evasion of the sanctions regime the US and its allies imposed after Russian forces invaded Ukraine.

The trend is worrying enough that US officials have raised the matter with their Chinese counterparts and warned about the implications of supplying material support for the war, the people said, though they declined to provide details of those contacts. President Xi Jinping has avoided criticizing Russia over the war but has also offered to play a role in peace talks and come out against the use of nuclear weapons in the conflict.

EU to Prolong Trade Liberalization With Ukraine (5:32 p.m.)

The EU is leaning toward prolonging full trade liberalization with Ukraine to support its economy in spite of concerns raised by industries. The bloc is “likely to expand those measures because they are providing tangible economic support to Ukraine” in a difficult moment, European Commission vice-president Valdis Dombrovskis said.

Last June, the EU adopted a temporary full trade liberalization with Ukraine and the suspension of trade defense measures for one year as part of its response to the Russia’s invasion of the country. Member states had noted the increased volume of some imports including poultry and eggs.

Latvia Says Next Two Months Are Critical For Ukraine (3:41 p.m.)

The next two months will be critical for Ukraine as Russia builds up forces and equipment near the border for an offensive, Latvian Defense Minister Inara Murniece told journalists.

Ukraine needs weapons now to defend itself, she said. Latvia, which has given arms to Ukraine, is planning to rebuild its arsenal by buying air defense systems, Himars rocket launchers and a coastal defense system, Murniece said. Thta way Latvia can strengthen its defenses over the next five years as Russia may be able to rebuild its forces.

Ukrainians Show Record Support of Joining NATO (3:08 p.m.)

Ukrainians support joining both NATO and EU by record amounts — 86% and 87% respectively — according to a survey from the Rating Group agency. 

Latvia to Reduce Diplomatic Ties With Russia (2:04 p.m.)

Latvia will pull its ambassador to Russia in response to Moscow’s decision on Monday to expel Estonia’s top envoy, completing a diplomatic downgrade across the Baltics in response to the Kremlin’s war in Ukraine. 

Latvian Foreign Minister Edgars Rinkevics said his country will recall its ambassador by Feb. 24 due to the “ongoing brutal Russian aggression against Ukraine” and “in solidarity with Estonia.” 

Earlier this month, Estonia ordered the Russian embassy to reduce its staff by almost half to 23 diplomats, bringing the number in line with its own team in Moscow. Fellow Baltic state Lithuania recalled its ambassador from Russia and downgraded its diplomatic relations in April.

EU Pushes Ahead on Reconstruction Donor Plan (1:34 p.m.)

The EU is planning to confirm its intention to play a “leading role” in the reconstruction of Ukraine through a donor coordination platform it plans to run with the Group of Seven and other partners, according to the text of a joint statement planned for an EU-Ukraine summit on Feb. 3.

Donors are setting up a steering committee with a meeting as early as this month, people said. A secretariat of the steering committee would be hosted in the EU’s executive arm in Brussels, with a small presence in Kyiv to be expanded in the future.

Any Exceptions in Sanctions on Russia Are “Inadmissible,” Kuleba Says (12:30 p.m.)

The next EU sanctions package should be adopted as soon as possible, have no exceptions or relaxations and include a wide range of powerful restrictions on the missile and drone industry as well as energy, banking, media and telecommunications, Ukrainian Foreign Minister Dmytro Kuleba said in a video linkup with EU counterparts Monday. 

Russia tries to bypass restrictions, and all such attempts should meet with “strong resistance,” Kuleba said according to a statement on his ministry website.

Russians Heavily Mine Captured Territories, Kyiv Says (11:58 a.m.)

Over 800,000 hectares of Southern Kherson and Mykolayiv regions, occupied by Russian troops from the start of the full-scale invasion and liberated by the Ukrainian army last fall, are heavily mined, the Ukrainian military media center said citing operational group “Tavria” commander Oleksandr Tarnavskiy. 

“After liberating our territories, we immediately begin clearing them from explosives,” Tarnavskiy said, adding that Ukrainian sappers and engineers risk their lives every day “to make the liberated territories safe again.”

Ukraine Needs Several Hundred Tanks, Kyiv Says (11:05 a.m.)

Ukraine needs not 10-20 tanks, but several hundreds, President Volodymyr Zelenskiy’s chief of staff Andriy Yermak said on Telegram. 

Yermak said the priority is to restore the borders of 1991 and “punish the enemy.” He added: “This is not only a Ukrainian front, it is a front of civilization against backwardness and barbarism.” Earlier, Ukrainian officials said that the 1991 borders include the territories occupied by Russia since 2014 - the Donetsk and Luhansk regions, and Crimea.

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