Russia’s deputy foreign minister held a meeting with the US ambassador in Moscow. The talks followed a report that Kremlin-installed authorities in Ukraine’s Kherson region plan to ask to become part of Russia, a sign that the occupied territory may be annexed.

Kyiv and Moscow clashed over natural gas supplies sent via pipelines to Europe, while Russia’s economy showed more signs of strain with a collapse in car sales. The UN labour agency said that almost 4.8 million jobs had been lost in Ukraine since Russia’s invasion.   

On the battlefield, Ukraine deployed US-supplied howitzers to the front but warned of hard times to come as it waits for more weapons.  

Key developments

• US, EU plan to pledge supply-chain cooperation to counter Russia
• Ukraine, Russia gas clash raises threat to Europe’s supply
• Russia trains missiles on Ukraine’s quiet zone to target trade
• Lack of Russian, Ukrainian translators in US opens door for AI
• Spy chief says Ukraine could leave Russia weaker but aggressive
• Russian car sales drop by record 79% as automakers leave

Italian PM says EU companies can pay for gas in roubles 

Italian Prime Minister Mario Draghi said European companies will be able to pay for gas in roubles without breaching sanctions, apparently dismissing European Union guidance to the contrary.

With payments looming later this month, companies have been trying for weeks to figure out how they can meet Russia’s demand for rouble payments – and keep crucial gas flowing – without violating the sanctions. Draghi said as of now there is no official pronouncement on what constitutes a breach of sanctions, and whether rouble payments would qualify.

Draghi said he also discussed with US President Joe Biden, whom he met on Tuesday at the White House, the possibility of creating an oil buyers’ cartel to check the power of Opec.

European gas falls as traders shrug off Russia supply risk

Russia sanctions seized Gazprom unit, others 

Russia introduced blocking sanctions on the owners of the Yamal-Europe pipeline, the entire Gazprom Germania group, and several other European and UK companies, according to a government decree.

Germany temporarily took control of Gazprom Germania, a unit of Gazprom, in early April.

Austin doubts Putin would widen war to Nato 

US Defense Secretary Austin said he doubts Russia will widen its war, such as by attacking missile sites in Poland, because Putin doesn’t want to take on the Nato alliance. “This is a fight that he really doesn’t want to have,” Austin said.

It would “quickly escalate into another type of confrontation that no one wants to see”, Austin said in testimony to the House Appropriations defence panel.

Austin also said he has emphasised to Ukraine’s leaders the importance of keeping track of US weapons sent to the country so they don’t go astray. “Accountability is an important issue to all of us,” he said.

Naftogaz CEO says gas flow return hinges on Russia 

Ukraine’s energy giant Naftogaz Ukrainy said a return to normal gas transit to Europe depends entirely on Russia.

Russian forces have closed the valve at one of two key border points where natural gas destined for Europe enters Ukraine, Yuriy Vitrenko, chief executive officer of state-run Naftogaz, said in an interview on Bloomberg Television. That prompted Ukraine’s gas grid to stop shipments through that route this morning.

“It’s entirely in their hands,” Vitrenko said. 

Ukraine readies law for seizure of Russian assets 

President Volodymyr Zelensky filed a draft law to Ukraine’s Parliament on Wednesday providing for the confiscation of Russian-linked assets no later than six months after martial law expires. Under the terms of the draft, Ukraine would be able to seize Russian assets and those of its citizens on Ukrainian territory, assuming Parliament votes it into the law.

Russia hosts meeting with US ambassador 

Russian Deputy Foreign Minister Sergei Ryabkov discussed “a number of bilateral issues” with US Ambassador to Russia John Sullivan during a meeting in Moscow, the Foreign Ministry said in a statement on its website.

The ministry readout is similar to one published on April 24, two days before Russia and the US conducted a surprise prisoner swap in Turkey.

European Investment Bank can free up funds for Ukraine ‘in days’  

The European Investment Bank (EIB) can quickly make available €1.5-billion of unused funds to finance Ukraine’s short-term needs. The money could be dispersed “within a few days”, pending final approval by the European Commission, EIB President Werner Hoyer told reporters in Berlin. 

As for Ukraine’s longer-term needs, Hoyer said there is no other option than issuing new debt as the sums for reconstruction will be astronomical.

Zelensky: Diplomatic solution gets tougher 

“We want to bring back peace… and we want to restore our territory,” the Ukrainian president said in an address to Science Po students in Paris. The Ukrainian side is ready to carry on negotiations, he said, but “with each new atrocity, the desire and possibility to negotiate regresses, along with the possibility to resolve this diplomatically”.

Ukraine deploys US howitzers to the front  

Ukraine is already using US 155mm howitzers at the front, but more time is needed for Western weapons to arrive, Deputy Defence Minister Hanna Malyar said during a video briefing. “

We are in for some very difficult weeks, maybe months,” Malyar said of the military situation. 

Sweden, Finland win security guarantees 

UK Prime Minister Boris Johnson signed “mutual security assurances” with Sweden and Finland. The UK is committing to support the two nations’ armed forces if they come under attack, and it will also step up intelligence sharing as part of the agreements.

Norway, Denmark and Iceland are separately working on a common political declaration with Sweden and Finland to support them as they weigh Nato applications, Norway’s VG newspaper reported. The declaration may include military support for the period between the time of application and eventual membership when full security guarantees would come into force, it said.

G7 ministers condemn Russian ‘disinformation’ 

Digital ministers from the Group of Seven nations meeting in Germany published a joint statement denouncing “Russia’s malicious cyber activities, information manipulation, interference, and online disinformation campaigns”, which they said they would “continue to address”.

“We affirm the right of people in Russia to access unbiased and factual information and we commit to defending freedom of expression online,” the ministers said. “We are resolved to counter the use of the digital sphere as a battleground.”

Russian car sales drop by a record number

Russian car sales plunged the most on record in April as sanctions undermined domestic production and most foreign carmakers suspended operations in the wake of the invasion of Ukraine. Sales fell by 79% to 32,706 vehicles compared to a year earlier, according to the Association of European Businesses in Moscow.

Car production is heavily dependent on imports, with a recent report by Moscow’s Higher School of Economics estimating that more than half of the value added in the sector comes from abroad. 

Occupation government in Kherson seeks to join Russia – Tass  

The Moscow-installed occupation authorities in the Kherson region of southern Ukraine plan to formally appeal to President Vladimir Putin to become part of Russia, Tass reported. It’s the first public sign the Kremlin may move to annex territory taken in its invasion.

The region wouldn’t hold a referendum on joining Russia, as Crimea did in 2014, but would appeal directly to Putin to be annexed, Tass quoted Kirill Stremousov, the deputy chief of the administration, as saying. Annexation may not take place until the end of the year, he said.

Absorbing occupied lands would confirm Russia’s ambition to permanently take more Ukrainian territory and further complicate stalled peace talks. At the start of the invasion, Putin said Russia didn’t intend to occupy Ukraine.

Hungary still against EU embargo on Russian imports  

Talks over the past few days with European Commission President Ursula von der Leyen and Foreign Minister Peter Szijjarto said Brussels has no plan to deal with the impact that an embargo on Russian oil would have on the Hungarian economy. The best way forward is for European Union sanctions to only target Russian crude imports via tankers, he said.

Von der Leyen travelled to Budapest on Monday to try to convince Prime Minister Viktor Orban to lift his veto threat. French President Emmanuel Macron spoke with the Hungarian leader by phone a day later.

EU floats energy funding for some countries 

The bloc is set to propose a limited investment in the infrastructure of member states most dependent on pipeline oil from Russia to ensure the security of their supplies, according to people familiar with the matter.

Hungary has been blocking EU plans to ban Russian oil imports by the year’s end, arguing it needs more time and money to ensure a sustainable transition and has been seeking technical and investment assurances.

The EU hasn’t decided on the size of the proposed investment, which will be included in the bloc’s “RePowerEU” package – its $205-billion blueprint to wean the continent off Russian energy supplies by 2027. DM