On the day that Moscow marked the 77th anniversary of the defeat of Nazi Germany, Ukrainian President Volodymyr Zelensky issued a video slamming Putin’s framing of the conflict as an unavoidable defence of the homeland with parallels to World War 2. In the address on Red Square, the Russian leader revived unfounded claims that Ukraine had planned an attack and that Russia is fighting “neo-Nazis” there.

France’s Emmanuel Macron drew a separate historical parallel in a warning against humiliating the Kremlin, using a reference to Germany’s treatment after World War 1. Meanwhile, an internal Russian government forecast showed the country faces its deepest economic contraction in nearly three decades.  

Key developments

• Putin says Russia fighting in Ukraine as it did in World War 2
• Russia’s economy facing worst contraction since 1994
• Macron proposes political union to bring Ukraine, UK closer
• EU drops plan to stop tankers moving Russian oil to other buyers
• Fund that thrived with founder in Russian jail can’t escape war
• China’s imports from Russia hit record on energy price rises

European gas prices drop as Russia tries to calm clients 

Natural gas prices in Europe fell by the most in three weeks as top supplier Russia tried to reassure buyers that they can keep paying for gas without breaching sanctions. 

Benchmark futures closed 7.8% lower and power prices also fell. In a letter seen by Bloomberg, Gazprom told European clients that a new order published by the Kremlin on May 4 “clarifies the procedure” set out in the initial decree demanding rouble payments for gas. It’s not yet clear if the new document will be enough to assuage the concerns of the European Union. 

Ukraine says it loses $170m daily on port blockade 

Ukraine is losing $170-million every day because of the Russian military blocking its sea ports as the country’s export capacity has declined by more than half, according to Ukrainian Prime Minister Denys Shmyhal.

Seventy vessels remain blocked, including 10 in the port of Odesa, Shmyhal said during a trip to the city on the Black Sea coast together with European Council President Charles Michel. 

US has delivered howitzers, artillery rounds – official 

At least 86 of the 90 M77 howitzers that the US has committed to Ukraine have been delivered, and about 310 Ukrainian soldiers have been trained on their use, a US defence official told reporters. About 60% of the promised 184,000 artillery rounds have arrived as well.

In addition, about 20 soldiers have been trained to operate the classified US Air Force drone known as Phoenix Ghost, the official said.

On the ground, Russian forces continued to make only incremental advances in the Donbas region and none in the south toward Odesa, the official said.

Russian contraction ‘shows Putin’s hard choices’ 

US Deputy Treasury Secretary Wally Adeyemo said sanctions on Moscow were forcing Russia “to choose between using their resources to prop up their economy or to fight their war in Ukraine” and that the pressure on Putin would only increase.

“The truth is that Russia now has to make choices and that’s exactly what we want them to do,” Adeyemo said in an interview on Bloomberg Television. “And we want to continue to make that choice even harder by continuing to level sanctions until the invasion ends.” 

US to lift tariffs on Ukrainian steel 

President Joe Biden’s administration announced it is lifting tariffs on Ukrainian steel for one year, a mostly symbolic move by the US to boost the war-torn country’s economy. The duties being suspended were put into place by former President Donald Trump, who in 2018 imposed a 25% tariff on all steel imports. 

Zelensky adviser says turning point ‘very close’ 

The upcoming weeks will be “very critical” to halt Russia’s efforts – and a turning point in the war is “very close” as Ukraine pushes for more weapons, the deputy chief of Zelensky’s staff, Ihor Zhovkva, said in an interview on Bloomberg Television. 

While talks are difficult with a nation that commits “atrocities as the world saw in Bucha, Borodyanka and Hostomel”, Zhovkva reiterated the Ukrainian leader’s position that a face-to-face meeting with Putin is the only way to resolve the conflict. “Once again, my president is ready for this negotiation, but once again we see no readiness from President Putin,” he said. 

Von der Leyen to meet Orban on oil sanctions  

European Commission President Ursula von der Leyen travelled to Hungary on Monday afternoon to discuss the bloc’s planned sanctions on Russian oil with President Viktor Orban. 

Von der Leyen is seeking to break a deadlock over the EU’s plan to gradually phase out Russian oil purchases, which Hungary has been blocking. The EU had offered Hungary and Slovakia until the end of 2024 to comply with the measures. Orban has said that his country needs more time and investments to make the transition.   

Finnish support for Nato membership jumps to 76%  

Finnish support for joining Nato has jumped to a record 76% in the latest poll as Russia’s invasion of Ukraine pushes the non-aligned Nordic nation closer to the defence pact. 

Support for the North Atlantic Treaty Organization is up from 62% in March and from 53% in February, according to a poll published by Finland’s public broadcaster YLE. The survey of 1,270 respondents showed that 12% of Finns oppose Nato membership, down from 16% in March and 28% in February. 

Read more: Poll shows Putin’s invasion pushing Finns into Nato

US expands sanctions on Russian imports 

The US expanded its list denying Russia access to US products, imposing a licence requirement on all exports, re-exports and transfers.

The Department of Commerce’s Bureau of Industry and Security published a list that now includes wood products and construction machinery, expanding the number of goods affected relative to what it first announced in February. The measures are consistent with existing EU restrictions on similar items.

Macron invokes Versailles in warning on humiliating Russia 

After an address that included a blistering condemnation of Putin’s invasion, the French president drew a separate historical parallel with Germany’s treatment under the post-World War 1 Versailles Treaty in warning about the risks of humiliating Russia.

“Tomorrow, we will need to build peace with both Ukraine and Russia around the table,” Macron told reporters after a speech to lawmakers in the European Parliament in Strasbourg. “The terms of the negotiation will be decided by Ukraine and Russia – but this can’t happen while annihilating each other, or in humiliation.”

In the speech to legislators, Macron offered a path for Ukraine to work more closely with the EU, as part of a less formal grouping of like-minded countries. Germany was subjected to onerous reparations payments as part of the settlement that ended the war in 1918, a factor that many historians say contributed to the rise of Nazism and World War 2. 

Read more: Macron proposes political union to bring Ukraine, UK closer

Russia’s economy facing worst contraction since 1994 

Russia is facing the deepest economic contraction in nearly three decades, with gross domestic product likely to shrink as much as 12% this year under pressure from sanctions imposed by the US and its allies over the invasion of Ukraine, according to an internal forecast by the Finance Ministry. 

The government hasn’t given a public outlook yet and the Economy Ministry sees an 8% decline, according to people familiar with the estimates who spoke on condition of anonymity to discuss internal deliberations. The Finance Ministry’s figure would put the economic pain on par with the turmoil seen in the early 1990s when Russia’s Soviet-era economy lurched toward capitalism with a contraction not seen since wartime. 

Read more: Russia’s economy facing worst contraction since 1994

Ukraine moves forward with EU bid 

Ukraine’s president submitted his government’s responses to a questionnaire on its EU accession, pushing ahead with the early stages of a process to clinch membership to the bloc for his country. The commission’s Von der Leyen said in a speech that Zelensky had dispatched more than 5,000 pages.

The process is still in the early stages and could take years. Accession requires the candidate country to adopt established EU law as well as to enact reforms – including to its judicial and economic systems – to meet the bloc’s criteria. The move also requires the unanimous approval of all EU members, the European Commission and the European Parliament.

Warsaw protesters throw paint at Russian ambassador  

Russia’s ambassador to Poland was doused with red paint in Warsaw during protests against the invasion. The envoy led a delegation planning to lay flowers at a memorial to Soviet Red Army troops who defeated Nazi Germany in World War 2. He was confronted by demonstrators holding Ukrainian and Polish flags, as well as banners accusing Russia of committing war crimes in Ukraine. 

Russia condemned the incident. Russian Foreign Ministry spokeswoman Maria Zakharova said in a message on Telegram that the country won’t be “intimidated.”  

European Council president takes shelter during Odesa visit  

European Council President Charles Michel and Ukrainian Prime Minister Denys Shymal took shelter during a meeting in the port city of Odesa on Monday as Russian missiles struck the region, according to an EU official. The area has been under heavy shelling since last month’s sinking of the Russian warship Moskva.

Michel was briefed by the head of Ukraine’s navy on the damage from Russia’s sea-based missiles and saw some of the damage from the attacks, the official said. He also discussed how the EU can provide humanitarian, economic and military help to Ukraine. 

Russia finds new buyers for its oil  

Russia’s government expects its oil output to increase this month as the nation’s producers find new buyers. 

The country, which accounts for roughly 10% of global oil output, has seen production fall by more than 9% since the invasion of Ukraine. Russia has faced an unprecedented wave of economic sanctions, many of which didn’t directly target oil but nevertheless disrupted exports and domestic fuel demand. 

“If you look at the indicators at the start of May, they are better than in April,” Russian state agency Tass reported, citing Deputy Prime Minister Alexander Novak. “We expect that indicators will partly recover in May and will be better.”

EU set to dilute oil sanctions package 

The European Union is set to weaken its sanctions package on Russian oil after a weekend of wrangling, though it aims to keep a key provision on shipping that would hinder Moscow’s ability to export its crude globally.

The bloc will drop a proposed ban on EU vessels from transporting Russian oil to third countries, while retaining a plan to prohibit insuring those shipments, according to documents seen by Bloomberg and people familiar with the matter.

Prohibiting European vessels from transporting Russian oil to any destination in the world would have further dented Moscow’s exports – a vital source of hard currency.

Ukraine’s grain exports fall   

Ukraine’s grain exports were far below normal levels in April as the war affected the operation of terminals and ports on the Black Sea, Agriculture Minister Mykola Solskyi said.

Ukraine normally could ship five million tonnes or more of grain monthly through its ports, Solskyi said. Grain exports in April totalled about 1.1 million tonnes, up 200,000 tonnes from the previous month due to added capacity at Danube ports.

A shortage of Ukrainian grain will become more noticeable on global markets in two to three months unless Black Sea ports can be unblocked. The planting season has suffered as farmers have limited cash, fuel, inputs, machines and time. 

China’s imports from Russia hit record 

Chinese imports from Russia surged to a record in April, probably due to soaring global energy prices, while exports fell to the lowest level since the early months of the pandemic. 

Chinese companies bought $8.9-billion worth of goods from Russia in April, an almost 57% jump from the same month a year ago. That rise came even though total imports from the whole world were unchanged and underlines the closeness of ties between the two nations. 

China has refrained from sanctioning Russia even as the Group of Seven and European nations look to stop all oil purchases from Russia.  

Zelensky defends Ukraine’s World War 2 role 

Millions of Ukrainians were killed during World War 2 and Moscow would not be allowed to take the credit for their role in fighting the Nazis, Ukraine’s Zelensky said.

“We will not allow anyone to annex this victory, we won’t allow it to be appropriated,” Zelensky said in a video address as he took a stroll down Khreshchatyk Street, the boulevard in Kyiv where parades are held.

His comments follow a Victory Day speech in which Putin couched the invasion of Ukraine as a fight to defend the Russian homeland from what he said was an impending attack on territories controlled by pro-Russian separatists. 

Russia’s top general not seen at parade 

Valery Gerasimov, the chairman of Russia’s Joint Chiefs of Staff, wasn’t shown on state television during Moscow’s annual Victory Day parade on Red Square. His absence at the pomp-filled event that Putin presided over comes in contrast with last year’s parade, when he was shown in the tributes with other top officials.

Kremlin watchers have a tradition that dates back to the Soviet era of following who stands where during public Red Square events for insight into Moscow’s opaque political culture.

Russia opposition questions nixed flyovers 

Russian opposition figure Leonid Volkov questioned the decision to cancel traditional Victory Day flyovers in Russia’s biggest cities on weather concerns.

Volkov tweeted that the weather in Novosibirsk was mostly sunny and 12°C, while it was 19°C in Yekaterinburg, and photographs didn’t show any bad conditions.

The forecast in Moscow was for scattered showers, but during the parade there were only scattered clouds visible.

Sweden to reveal Nato stance on Sunday 

Sweden’s ruling party, the Social Democrats, will announce its stance on membership in the Nato defence bloc on Sunday, 15 May, according to a report by state broadcaster SVT.

Finland is expected to apply for entry before May 17, while Sweden’s stance has been less clear. Both Nordic nations have in the past days been winning assurances of help if threatened by Russia in the interim period between an expected application to join the bloc and an eventual entry.  

Russia marks World War 2 win in Red Square parade  

About 11,000 troops marched across Red Square in Moscow, with nuclear missile launchers, tanks and air-defence systems due later, as cities across Russia marked the end of World War 2 with parades and pageantry.

A planned flyover by military jets and helicopters was cancelled because of cloudy weather conditions, state-run Tass news service reported, citing Kremlin spokesman Dmitry Peskov.

“Today, you’re defending what our fathers, grandfathers and great grandfathers fought for,” Putin told the troops at the beginning of the Moscow parade.

Russia hits residential areas, cemetery 

A Russian missile hit a Jewish cemetery in Hlukhiv near the Russian border on Sunday as residential areas in the south and east of Ukraine continued to face attack, the Ukrainian General Staff said. Seven people were killed and 11 wounded in Luhansk and Kharkiv over the past 24 hours, it said. 

Luhansk Governor Serhiy Haiday said on Telegram there would be no evacuations from Luhansk on Monday as Russian forces were shelling the Lysychansk-Bakhmut highway. He said fighting was also hindering rescue efforts in Bilohorivka, with no new bodies recovered from the rubble of a destroyed school in the area. There was no immediate comment from Russia. 

Scholz faces voter test over Ukraine 

German Chancellor Olaf Scholz defended his government’s efforts to support Ukraine in a bid to revive his flagging popularity after voters delivered a bruising defeat for his party in a state election.

The 63-year-old Social Democrat is struggling to regain momentum after getting battered at home and abroad for dragging his feet on supplying Ukraine with heavy weapons and halting Russian energy imports. The fallout of a disjointed approach to the conflict became clear on Sunday, with the SPD suffering its first defeat since he took office in December. 

Scholz’s party slumped to third in the northernmost state of Schleswig-Holstein, tumbling by about 11 percentage points compared with the previous election in 2017.

Scholz defends Ukraine policy as voters punish muddled strategy

Oil swings as traders weigh G7 ban 

Oil fluctuated as investors weighed a pledge by the Group of Seven to ban imports of Russian crude against a cut in official prices by Saudi Arabia and the impact of China’s energy-sapping lockdowns. 

West Texas Intermediate traded near $110 a barrel after earlier losing as much as 1.7%. The US and the UK have already moved to ban imports of Russian fuel in response to the assault, but the weekend pledge by the G7 will increase the pressure on Moscow further. 

Read more: Oil swings as traders weigh up G7 crude ban, Saudi price cuts DM