Nato announced an ambitious plan to boost the size of its high-readiness force to 300,000 as it implements a “fundamental shift” in its deterrence plans after Russia’s invasion of Ukraine. Group of Seven leaders meeting in the Bavarian Alps committed to supporting Ukraine in its defence against Russia’s invasion “for as long as it takes”.

Russia defaulted on its foreign-currency sovereign debt for the first time since 1918, the culmination of ever-tougher Western sanctions that shut down payment routes to overseas creditors.

Key developments

• Russia slips into historic default as sanctions muddy next steps
• Russian crude flows slump, but it’s likely to prove temporary
• Ukraine’s richest person sues Russia at Court of Human Rights
• Finland, Sweden set for top-level talks on Nato with Turkey
• Putin to leave Russia for first time since the Ukraine invasion
• G7 expected to agree on exploring a price cap on Russian oil

On the ground

Ukrainian troops are withdrawing from Sievierodonetsk, while Russian forces are trying to block nearby Lysychansk from the south, closing in on the last major holdout in the Luhansk region that Kyiv still controls, Ukraine’s General Staff said in a statement on Facebook. While Lysychansk remained the main hotspot of military action, Russian troops shelled Ukrainian positions and civilian areas elsewhere along the front line, including with air-to-land missiles.

At least two die as Russian missiles hit shopping mall

Russia’s missile attack on the shopping centre in the central Ukrainian city of Kremenchuk killed at least two people and injured about 20 as attacks on civilian targets get closer to the heart of the country.

More than 1,000 people were at the mall at the time of the attack, Zelensky said on Facebook on Monday. Rescuers were trying to extinguish a fire at the site.

Johnson says Ukraine attack will ‘strengthen resolve’ of G7 

Russia’s missile strike on the shopping centre shows “once again the depths of cruelty and barbarism to which the Russian leader will sink”, UK Prime Minister Boris Johnson said in a statement read out to reporters at the G7 summit.

“Putin must realise that his behaviour will do nothing but strengthen the resolve of the UK and every other G7 country to stand by Ukraine for as long as it takes,” Johnson said.

Casualties rise in eastern city under Russian shelling 

At least four people were killed and 19 wounded after Russia’s troops shelled the large eastern city of Kharkiv overnight, according to the head of the region’s government, Oleh Synyehubov.

Ukraine had warned that Russians would intensify firing on the city, which they failed to capture in the early stage of the invasion.

EU may be trying to defuse Kaliningrad standoff with eased rules  

Some European countries are raising concerns that the European Union is trying to pressure Lithuania into watering down the bloc’s sanctions to allow some banned goods to transit through its territory to Russia’s Baltic exclave Kaliningrad, according to people familiar with the matter.

The commission is set to issue additional guidance on the issue and officials are worried that Lithuania could be pressured to offer exemptions for banned Russian goods bound for Kaliningrad in an effort to defuse the standoff.

The issue comes as Lithuanian government institutions reported a fresh wave of “intense” cyberattacks.

Nato to boost response forces to above 300,000 

The alliance will increase the size of its high-readiness forces to more than 300,000 — effectively a seven-fold increase — as it seeks to deter any threats from Russia, Nato Secretary-General Jens Stoltenberg told reporters ahead of a summit in Madrid. He called it part of “the biggest overhaul of our collective deterrence and defence since the Cold War”.

Nine Nato allies now reach or exceed the alliance’s target of spending 2% of GDP on defence, while 19 have clear plans to reach it by 2024, he said. Five other allies have concrete commitments to meet it after the 2024 goal, he said.

By the end of this year, Nato allies will have invested “well over” $350-billion extra since the alliance agreed to its defence investment pledge in 2014.

Zelensky wants fighting over by end of this year 

President Volodymyr Zelensky joined the G7 summit by video link from Kyiv and said he wants the war to be over by the end of the year, according to officials familiar with his remarks.

He addressed each of the leaders individually with a specific comment, according to the officials, who asked not to be identified by name.

He requested support on flight defence systems, security and financing for reconstruction, as well as help on unblocking exports of the country’s grain.

Putin to leave Russia for first time since Ukraine invasion 

Russian President Vladimir Putin will travel to Tajikistan on Tuesday and later visit Turkmenistan for a summit of Caspian Sea nations, his spokesman said, in the first foreign trip by the Russian leader since the invasion of Ukraine in February.

Ukraine seeks to boost passage of goods via Danube ports 

Ukraine wants to increase the volume of goods passing through the three operational ports on the Danube River under its control to 1.5 million tonnes in June, the deputy head of the Seaports Administration, Dmytro Barinov, said in a video briefing.

This would still be less than one-third of the pre-war volume, he said. Further increases of throughput won’t be reached by merely improving logistics as new infrastructure will have to be built, he said.

Ukrainian ports on the Danube River were unprepared to handle the increased amount of cargo after Russia invaded, he said. About 70 foreign vessels still remain in Ukrainian ports blocked by Russia, some with crews on board.

EU ‘needs alternatives to Russian gas’

The European Union needs to find alternatives to Russian natural gas as fast as possible because Putin is cutting supply, Thierry Breton, the region’s internal markets commissioner, said in a French radio interview.

Breton urged European utilities to prolong the lifespans of nuclear reactors, citing in particular French company Engie, which operates plants in Belgium. Coal plants will also have to be revived along with a “massive acceleration” in rolling out renewable energy projects like offshore wind farms, he said.

G7 to explore Russian oil-price cap 

The G7 is expected to reach an agreement for member states to develop and discuss ways to set a cap on the price of Russian oil, according to a senior Biden administration official. The group plans to direct relevant ministers to work with other governments and private-sector companies to come up with a mechanism that focuses on the transportation of Russian oil to foreign markets.

Right now it remains an idea, and the discussion will centre around its viability. The discussion will happen over the coming days and weeks and there is no set date to establish a cap, the official said.

US providing anti-air defence system to Ukraine 

US President Joe Biden is set to announce the purchase of an advanced surface-to-air missile system for Ukraine.

Nasams (National/Norwegian Advanced Surface to Air Missile System) is an advanced medium to long-range surface-to-air missile defence system. Ukraine is suffering from missile attacks and can only strike down a fraction of incoming missiles. The problem remains how quickly Kyiv can get them, how many will come and how long will it take to train people to use them.

It’s the same system the US uses to protect the airspace around the White House and US Capitol in Washington.

Japan to ban imports of Russian gold 

Prime Minister Fumio Kishida told his G7 counterparts he planned to impose extra sanctions on Moscow that include banning the import of Russian gold. Japan will also ban the provision of services such as accounting and freeze the assets of an additional 70 individuals, a government spokesman told reporters in Munich.

Spot gold rose 0.5% to $1,835.99 an ounce as of 6.20am in London on Monday. Shipments between Russia and London have collapsed to almost zero since Western countries imposed sanctions on Russia for its invasion of Ukraine.

EU confronts risks of low gas storage 

EU governments are confronting the risk of a splintering energy market as Russian cuts in natural-gas supplies test EU unity in response to the war on Ukraine.

An increase in gas supply disruptions following EU sanctions on Russia is prompting member countries to step up winter preparations as they seek to fill depleted storage.

Read more: EU confronts risks of low gas storage in test of unity on Russia

Crude oil fluctuates as traders monitor G7  

Oil fluctuated near $107 a barrel as investors monitored developments from the gathering of G7 leaders, while fears of a demand-sapping recession continued to hang over the market.

Oil is heading for its first monthly decline since November on escalating fears about a global slowdown as central banks hike interest rates to combat surging inflation. Retail prices for products like petrol haven’t fallen anywhere near as fast as crude, however, due to a shortage of capacity to make fuels.

Ban on new gold imports seen as ‘largely symbolic’ 

The plan by some G7 nations to ban new gold imports from Russia is “largely symbolic” as flows have already been restricted by sanctions, according to analysts.

While the UK government said in a statement over the weekend that “this measure will have global reach, shutting the commodity out of formal international markets”, analysts played down the potential impact as the London Bullion Market Association, which sets standards for that market, removed Russian gold refiners from its accredited list in March.

Read more: Ban on new gold imports from Russia seen as ‘largely symbolic’

Russia defaults on foreign debt 

For months, Russia found paths around the penalties imposed after the Kremlin’s invasion of its neighbour. But at the end of the day on Sunday, the grace period on about $100-million of snared interest payments due by 27 May expired, a deadline considered an event of default if missed.

The move is a grim marker in the country’s rapid transformation into an economic, financial and political outcast. The nation’s euro bonds have traded at distressed levels since the start of March, the central bank’s foreign reserves remain frozen, and the biggest banks are severed from the global financial system.

The last time Russia fell into default vis-à-vis its foreign creditors was more than a century ago, when the Bolsheviks under Vladimir Lenin repudiated the nation’s staggering tsarist-era debt load in 1918.

Read more: Russia defaults on foreign debt for first time since 1918 DM