(Bloomberg) -- Ukraine pulled its troops from Lysychansk, ceding control of a key city in the Luhansk region to Russia as President Vladimir Putin’s troops come closer to their goal of capturing the province.

Extending the city’s defense would have led to “fatal consequences” in the face of Russian advantages in artillery, aviation, ammunition and personnel, Ukraine’s general staff said. Russia earlier declared full control of the city, advancing its goal of taking over Ukraine’s entire Donbas region. 

Ukraine will present a blueprint for how it will rebuild following Russia’s invasion, which has destroyed cities, displaced millions and devastated the economy. The plan, which will be unveiled at a two-day conference in the Swiss city of Lugano, includes investments in infrastructure, climate and digital. Separately, Commission President Ursula von der Leyen will present a platform to coordinate European Union donations to mobilize what could amount to more than 500 billion euros ($522 billion). 

What’s Happening

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Key Developments

  • Ukraine to Unveil Massive Rebuilding Plan Even as War Bogs Down
  • Putin’s Media Blitz on Africa Food Crisis Sparks Alarm in Europe
  • Germany Risks a Cascade of Utility Failures, Economy Chief Says
  • JPMorgan Sees ‘Stratospheric’ $380 Oil on Worst-Case Russian Cut
  • The Great European Energy Market Bailout Is Only Getting Started

On the Ground

With Lysychansk in hand, Russia is switching its focus further west into Donetsk, intensifying shelling of the region, according to Ukrainian officials. Moscow’s forces also hit residential areas, leaving nine civilians killed and 25 wounded there over the last 24 hours. Russia is attempting to blunt a counteroffensive by Kyiv’s forces in the Kharkiv, Kherson and Mykolayiv regions, the Ukrainian military said.

(All times CET)

EIB to Propose 20-Billion Euro Fund for Rebuilding (8:19 a.m.)

The European Investment Bank will propose a new 20 billion-euro fund to help finance the reconstruction of Ukraine when donors gather in Lugano.

The fund would aim to mobilize as much as 100 billion euros of investment from other sources over the next 10 years and could potentially be scaled up, according to people familiar with the matter.

That’s just a fraction of what Ukraine will need when the war is over. The EIB has estimated that the costs of rebuilding the country could surpass 1 trillion dollars and the has EU has acknowledged that it will cover the bulk of the costs.

Russian Warship Sails Near East China Sea Disputed Isles, NHK Says (5:35 a.m.)

A Russian Navy vessel joined a warship from China in sailing near East China Sea islands on Monday morning, Japanese public broadcaster NHK said citing government officials. Japan earlier expressed “grave concerns” to Beijing over one of its warships on Monday passing near the uninhabited islands -- known as Senkaku in Japan and Diaoyu in China -- that are at the center of a territorial dispute between Japan and China. 

Read more: How a Few Tiny Islands Put Japan and China in Dispute: QuickTake

In May, Russian and Chinese warplanes conducted a joint drill near the airspace of US allies Japan and South Korea, in a show of power by the long-time partners that came as President Joe Biden wound down an Asian trip to seek support over Putin’s invasion of Ukraine.

Australia to Ban Russian Gold Imports (1:40 a.m.)

Australia will prohibit imports of Russian gold, joining partners including Canada, Japan, the UK and the US in a measure that will reduce Russia’s ability to fund its war, Prime Minister Anthony Albanese’s office said in a statement following his visit to Kyiv on Sunday.

Plans for the four Group of Seven countries to ban imports of new Russian gold were announced before last week’s summit of G-7 leaders in Germany. Australia isn’t part of the group.

Scholz Says Putin Capable of Long War (7:45 p.m.)

Putin “will be able to continue with the war really a long time,” German Chancellor Olaf Scholz said in comments broadcast Sunday. 

“The conflict will end when Putin understands that he will not be successful with the idea to conquer part of the territory of his neighbor,” Scholz said in an interview on CBS’s “Face the Nation,” recorded during last week’s NATO summit in Madrid.

Russia Takes Lysychansk, Key Element in Push to Control Donbas (6:30 p.m.) 

“After heavy fighting for Lysychansk, the Defense Forces of Ukraine were forced to withdraw from their occupied positions and lines,” Ukraine’s armed forces said in an update. “In order to save the lives of Ukrainian defenders, the decision to leave was made.” 

The news came hours after Russia’s Defense Minister Sergei Shoigu told Putin on Sunday that Moscow’s troops had captured the last major city still held by Ukraine in Luhansk province, according to Russian state media.   

The capture puts Russia closer to its goal of controlling of Ukraine’s Donbas region, comprised of Luhansk and Donetsk. Ukrainian forces spent weeks defending Lysychansk and neighboring Sievierodonetsk, on the opposite bank of the Siversky Donets river, from which they withdrew in late June. 

 

 

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