The Kremlin said a peace deal with Ukraine isn’t possible until Kyiv accepts all its demands — leaving conditions at a stalemate as Russia’s invasion nears the four-month mark. The timeline for Ukraine to achieve EU membership will hinge on the country’s ability to enact reforms, as well as the course of the war, a top aide to President Volodymyr Zelensky said. 

German Economy Minister Robert Habeck triggered the second stage of the country’s three-phase gas emergency plan on Thursday and warned of the potential for Lehman-like contagion.  

Key developments

• Spain’s big defence push hinges on creating a national champion
• Germany warns of Lehman-like contagion from Russian gas cuts 
• Russia faces fresh bond deadline with possible default days away
• Megayachts running low on safe harbours as Russia sanctions bite
• Europe industries cut gas use as continent saves fuel for winter 

Ukrainian air defence downs two cruise missiles targeting Odesa

Ukrainian air defence downed two cruise missiles targeting Odesa on Thursday, the city council said on Telegram. Three cruise missiles launched from occupied Kherson targeted the city of Mykolayiv, hitting industrial and social infrastructure and injuring one person. “Heavy explosions” were heard in the southern seaport, its mayor said. 

A day earlier Mykolayiv faced a large-scale rocket attack. “A threat of artillery shelling has been announced in the city,” the mayor wrote on his Telegram account, urging residents to go to shelters “immediately”. Russian troops seized two more villages south of Lysychansk, in Luhansk, a stronghold Kyiv relies on in its defence in that area.  

US Senate panel backs measure calling Russia terror sponsor  

The US Senate’s Foreign Relations Committee advanced a measure on Thursday that would direct the secretary of state to designate Russia as a state sponsor of terrorism for its invasion of Ukraine, putting it in the same category as Iran, Syria, North Korea and Cuba. Both chambers of Congress would have to pass the measure for it to be sent to President Joe Biden’s desk to be signed into law.

Earlier in the day, Senator Jim Risch, the top Republican on the committee, told an audience that included the Ukrainian ambassador to the US, Oksana Markarova, that Russia’s actions make it a “bully” and a state sponsor of terrorism because it invaded a country that was smaller in size, population and military capability.

Ukraine takes Russia to human rights court over war crimes  

Ukraine is seeking $80-billion in compensation from Russia over war crimes inflicted during its invasion of the country, kick-starting its legal battle at Europe’s human rights court. 

The country’s justice ministry filed the first round of submissions against Russia at the European Court of Human Rights in Strasbourg, according to a Thursday statement from its lawyers, Quinn Emanuel Urquhart & Sullivan. 

“Russia has caused — and is continuing to cause — loss of life, injury and trauma, population displacement and damage to property on a scale not seen in the continent of Europe since the Second World War,” the law firm said.  

Envoy presses Canada to hold on to Gazprom turbine 

Ukraine’s ambassador to Canada encouraged Prime Minister Justin Trudeau’s government to keep a gas turbine sent to the country for repairs and not return it to Europe where it would be used on the Nord Stream pipeline. The turbine was sent to Canada, where it was manufactured, for repairs just before sanctions were imposed on Russia over its invasion of Ukraine.

Ambassador Yulia Kovaliv said that Russian energy giant Gazprom is holding Europe hostage by blaming the missing turbine for a reduction in gas flows. She argued that the company could deliver additional gas to Europe through Ukrainian infrastructure.

“Instead of blackmailing, instead of threatening European consumers, there is a way to deliver this gas to the market,” Kovaliv said in an interview. “It’s quite obvious that Russia and Gazprom are playing another game. And we do call everybody and the Canadian government to understand it.”

US to provide $450m more in military aid, AP says 

The US will send an additional $450-million in military aid to Ukraine, including some additional medium-range rocket systems, according to unidentified US officials cited by the AP.

The new package is expected to include a number of High Mobility Artillery Rocket Systems, or Himars, adding to the four that have already arrived.

Germany warns of Lehman-like contagion 

Germany warned that Russia’s moves to slash Europe’s natural gas supplies risked sparking a collapse in energy markets, drawing a parallel to the role of Lehman Brothers in triggering the global financial crisis.

With energy suppliers piling up losses by being forced to cover volumes at high prices, there’s a danger of a spillover effect for local utilities and their customers, including consumers and businesses, Economy Minister Robert Habeck said after raising the country’s gas risk level to the second-highest “alarm” phase.

Europe’s largest economy faces the unprecedented prospect of businesses and consumers running out of power. 

Lithuania accuses Moscow of propaganda battle 

Lithuania accused Moscow of waging a propaganda battle and taking a threatening stance in a standoff over Vilnius restricting the transit of sanctioned goods to Russia’s exclave of Kaliningrad. 

Food crisis could last two years, Western officials say 

Even if Russia’s war on Ukraine ended tomorrow, the current food crisis could last another two years or more, Western officials said in a briefing. It’s possible an agreement on shipping grain from Ukraine’s ports could be reached within the next month, though if that happens, it will still take time to demine ports and get them back up and running. 

Officials are working with the UN Food and Agriculture Organization and the International Grains Council to look at having an investigation into allegations that Russia is stealing grain from occupied areas of Ukraine, though they said it’s hard to track because reports are coming from the country’s east, where there’s no international presence.

Italy won’t trigger emergency gas alert yet 

Italy is “much better off than other countries” on gas reserves and sees no need to copy Germany’s move to increase the alert on supplies, Energy Minister Roberto Cingolani told reporters in remarks quoted by Radiocor. 

His comments follow Germany’s decision to raise the country’s gas risk level to the second-highest “alarm” phase. Still, Italy’s approach could shift, Cingolani said, adding, “The impact of the war is unpredictable, what Russia is doing is unpredictable.”

Italy’s gas storage is 55% full, he said. Italy has mandates from energy companies including Snam Spa to stock up as soon as possible to reach an 85% to 90% level by the end of the year. Most EU members have more gas in storage now than is normal at this time of year, Josep Borrell, the EU’s foreign policy chief, said in Brussels.  

US long-range rocket launchers arrive in Ukraine  

US high mobility artillery rocket systems, or Himars, have arrived in Ukraine, Defence Minister Oleksii Reznikov said in a tweet. 

The delivery is part of an effort to provide heavy weapons to Ukraine to counter Russia’s firepower. President Joe Biden promised the Himars as part of an announcement of new military aid this month. 

Himars have a “recognised and proven range up to 300 kilometres”, according to their manufacturer, Lockheed Martin.   

Zelensky calls on Israel to do more 

The Ukrainian president said he regretted Israel’s reluctance to join sanctions against Russia in a video address to The Hebrew University of Jerusalem community. While thanking Israel for medical aid, Zelensky said there was a lack of support to help Ukraine defend itself. Israel has significant ties with both Russia and Ukraine, and its government has been adopting a neutral stance since Putin’s invasion.

Kremlin says peace possible if Kyiv accepts demands  

Russia is ready to agree to a peace deal with Ukraine if it accepts all of Moscow’s demands, President Vladimir Putin’s spokesman said. “As far as the peace plan is concerned, it’s only possible after Ukraine fulfils all the conditions of the Russian side,” Dmitry Peskov told reporters on a conference call on Thursday, Interfax reported.

Negotiations between Russia and Ukraine on a ceasefire and peace deal have been effectively frozen since April. In addition to demanding that Kyiv give up its ambitions to join Nato and declare its neutrality, Russia wants to keep the territory it’s captured since its February invasion of the neighbouring state.

Europe’s offshore wind industry in major ramp-up 

Dutch power grid operator TenneT Holding has launched a tender to build the infrastructure that will speed the construction of North Sea wind farms as Europe looks to cut its dependence on Russian energy imports.

The company plans to enter agreements worth as much as €30-billion, a sign that Europe is following through on plans to rapidly ramp up renewable power. 

Europe’s top economies slow significantly 

Growth in Germany and France slowed sharply as manufacturers suffered from a dearth of demand, increasingly strained supply chains and surging prices. 

Reports on Thursday signalled that, for now, economic activity is still being supported to some extent by workloads built up earlier in the year. But the range of challenges confronting the world economy has led to worries that a recession is on the horizon.

European stocks fell on Thursday, with miners and energy firms leading the decliners in the Stoxx Europe 600 Index. 

Germany a step closer to gas rationing 

German Economy Minister Robert Habeck triggered the second stage of the country’s three-phase gas-emergency plan on Thursday, moving Europe’s biggest economy to the “alarm” level following steep cuts in supplies from Russia, according to a person familiar with the plan.

The heightened alert gives the government the option of enacting legislation to allow energy companies to pass on cost increases to homes and businesses, while some coal-fired power plants could also be reactivated to help minimise gas consumption. The third and highest “emergency” level would involve state control over distribution. 

Ukraine’s EU membership timeline depends on war, reform  

Kyiv sees “positive trends” for Ukraine to get EU candidate status, Zelensky’s deputy chief of staff, Ihor Zhovkva, said in an interview on Bloomberg Television as the bloc’s summit kicks off. 

“Ukraine should become a candidate country for EU membership and then move further on the path to integration with the European Union,” Zhovkva said. He warned that negotiations might be tough and difficult. While much depends on the course of the war, the pace of reforms will also be critical, he said.  

Zhovkva said Moscow would need to withdraw its troops to the lines of February 23 to resume diplomatic talks. There are no talks planned between Ukraine’s Zelensky and Russian President Vladimir Putin.

Russia faces fresh bond deadline 

Another pressing Russian bond deadline looms on Sunday night on previously missed payments from late May. Those funds — about $100-million of bond coupons — are stuck due to international sanctions and the grace period to find a solution expires at the end of June 26. At that point, Russia will effectively be in default, unless it somehow gets payments through to sufficient holders of the debt.

Billions of dollars of energy revenue pour into Kremlin coffers each week but the country has failed to meet the deadlines because mounting sanctions are cutting off avenues to transfer the cash.

Read more: Russia faces fresh bond deadline with possible default days away

Megayachts running low on safe harbours 

Russian tycoons are running out of places to park their floating palaces, four months after their country’s invasion of Ukraine. The US and Europe are going after their superyachts, villas and other assets because of their ties to Russian President Vladimir Putin. Already, more than a dozen boats worth more than $2.25-billion have been seized by the US, EU nations and willing allies, such as Fiji.

Fearful of having their yachts seized, owners have sent them to a small number of locales still considered friendly — allowing the vessels to dock or hang around unbothered — including Dubai in the United Arab Emirates, Turkey and the Maldives, according to Spire Global, a data and analytics firm that uses satellite technology to track maritime activity. DM