US funding for Ukraine faces a new hurdle in Congress after Representative Kevin McCarthy’s ouster as House speaker gave Republican hardliners an opening to stall the next round of aid to Kyiv. UK Defence Secretary Grant Shapps told Bloomberg TV that he would work with Nato allies and other world leaders to ensure aid still flows.

Leaders from nearly 50 European countries will try to show unity in support of Ukraine when they gather later this week in Spain, as concerns are mounting over the reliability of US funding and over a new potential ally of Moscow on the continent after Robert Fico, a candidate sympathetic to Russia, won Slovakia’s election.

Latest developments

• Ukraine central bank gets active in FX market after relaxing peg
• House speaker revolt imperils swift passage of Ukraine aid
• UK will work with Nato allies on aid to Ukraine, says Shapps
• Russia says it thwarted drones over regions bordering Ukraine
• Europe leaders seek show of unity against Russia: What to watch

Ukraine aid faces a murky path in US Congress after McCarthy’s ouster

US funding for Ukraine faces a new hurdle in Congress after Representative Kevin McCarthy’s ouster as House speaker gave Republican hardliners an opening to stall the next round of aid to Kyiv.

The fate of US assistance for Ukraine’s efforts to fend off Russia’s invasion now rests in large part on the next speaker, who will have to navigate a party sharply divided on the issue. Republicans plan a speaker election on 11 October, and all legislative action is likely to halt in the meantime.

Aid to Ukraine in its fight against Russia’s invasion still enjoys widespread support in Congress. Some of those mentioned as possible speakers, including House Majority Leader Steve Scalise, voted for a $300-million Ukraine funding bill last week.

Yet other contenders for speaker, like Judiciary Chairperson Jim Jordan, voted no. Jordan on Thursday said he would, if elected speaker, block new Ukraine aid.

The leader of the GOP hardliners who ousted McCarthy on Tuesday, Representative Matt Gaetz, emphasised that a majority of House Republicans voted against the aid bill last week.

All of this domestic political manoeuvring has fuelled anxiety among Ukraine’s allies that US support for the war effort has started to waver.

President Joe Biden held a call with allies on Tuesday — before McCarthy’s ouster — to reassure them of continued US support for Ukraine, after the stopgap bill keeping the government open until 17 November omitted the $24-billion requested by the president and the $6-billion in a Senate-proposed compromise.

Many senators in both parties told Bloomberg News they are determined to provide aid to Ukraine quickly, but there’s no consensus on how, especially with the House in turmoil and the Senate leaving for another recess.

Germany to supply air defences for Kyiv to protect grain routes

Germany plans to supply additional air defences for Ukraine to help protect grain shipments from potential Russian attacks, according to people familiar with the matter.

Berlin will send one extra Iris-T air defence system and more than a dozen Gepard anti-aircraft guns that will provide cover for consignments heading toward Romania along the country’s southern coast, the people said on condition of anonymity. The weapons should arrive in Ukraine by the end of this year, and further Iris-T units will follow once they have been built.

Kyiv has been seeking to ramp up deliveries via the Danube River and by land through so-called solidarity lanes since an agreement to allow ships to travel from Black Sea ports through the Bosphorus strait in Turkey collapsed. A small number of vessels are also navigating through strips of water off the coasts of Romania and Bulgaria, defying concerns of Russian attacks.

Russian TV journalist who protested war sentenced to 8½ years in prison 

A Russian court sentenced a journalist who staged an anti-war protest on the country’s top TV news programme to 8½ years in prison in absentia on Wednesday.

Marina Ovsyannikova was convicted of knowingly spreading false information about the actions of the Russian Armed Forces, according to a statement posted on the Telegram channel of Moscow’s Basmanny Court.

Ovsyannikova (45) gained international attention as a producer at Russia’s state-owned Channel One TV when she interrupted its news programme to stage a rare public protest against the war just weeks after President Vladimir Putin ordered the invasion of Ukraine. The journalist, who later escaped into exile in France, held up a sign during a live broadcast in March last year that said: “They’re lying to you.”

She thanked France and media freedom group Reporters Without Borders for saving her “from 8.5 years in a Russian prison” in a post on X, previously known as Twitter. The Foreign Ministry in Paris also condemned the sentence in a statement on its website.

US artillery shell surge during Ukraine war hinges on army bets

The Pentagon’s ambitious plan to accelerate production of the most widely used artillery shell in Ukraine depends on a series of near-simultaneous actions across the US unlike anything seen since World War 2.

The US goal is to produce 155mm artillery shells at a pace of 100,000 rounds per month, compared with 28,000 currently — double the 14,000 per month after Russia invaded Ukraine in February of last year.

The shipments of Javelin anti-tank missiles and Stinger surface-to-air missiles, along with howitzers and ammunition, to Ukraine have depleted US stockpiles, demonstrating a lack of US resilience. That wake-up call prompted the Pentagon — with congressional backing —to pour billions of dollars into expanding US industrial capacity.

Of $3.4-billion on contract for industrial expansion, three-quarters, or $2.5-billion, is going toward boosting production of 155mm artillery rounds, Douglas Bush, the Army’s acquisitions chief who’s at the centre of the industrial expansion, said in an interview.

The US will be able to increase production from 28,000 a month to 36,000, then 48,000 to 57,000 shells a month, Bush said. The industry should be able to “turn the corner” in early 2025 to 80,000 shells a month and then reach the 100,000 goal toward the end of that year, he said.

“A lot has to happen; there are many steps along the way,” Bush said in the interview. “Success is not guaranteed but that’s one reason we have tried to not put all of our eggs in one basket. It’s ambitious, our plans are aggressive, but so far industry is doing it.”

Russia says it thwarted drones over regions bordering Ukraine

Russia said it repelled Ukrainian drone attacks against three western regions, while also thwarting an attempted landing in Crimea.

Air defences intercepted and destroyed 31 drones over the regions of Kursk, Bryansk and Belgorod bordering Ukraine, the Defence Ministry in Moscow reported on Wednesday. Forces prevented an attempted raid on Crimea, annexed in 2014, that involved a high-speed military boat and three jet skis, the ministry said on Telegram.

No casualties were reported in the overnight drone assault, which was one of the largest in recent months on Russian regions bordering Ukraine. The government in Kyiv generally doesn’t comment on retaliatory strikes in response to the Kremlin’s invasion of Ukraine that is now in its 20th month and has involved large-scale Russian missile and drone attacks on cities.

Still, Ukraine’s Ministry of Intelligence said on its website that a unit had landed on the Crimea peninsula, with an accompanying video showing troops holding up a national flag. An official at Ukraine’s security service also said drones hit an S-400 anti-aircraft complex in Russia’s Belgorod region in the second such attack in less than a month. Bloomberg couldn’t verify the information.

Saudis to stick with 1 million-barrel oil supply cut for now

Saudi Arabia and Russia reaffirmed that they will stick with oil supply curbs of more than 1 million barrels a day until the end of the year as a rally in prices falters.

The leaders of the Opec+ coalition announced the plans in separate official statements on Wednesday. Riyadh has slashed crude production by one million barrels a day, and Moscow is curbing exports by 300,000 a day, on top of earlier cuts made with fellow Opec+ nations.

Oil prices surged to almost $100 a barrel in London last week as the two nations choked supplies just as global demand hit a record, draining inventories at the fastest pace in years.

But the rally has since cooled, with Brent futures retreating to near $89 on Wednesday amid signs that the price spike is encouraging the Federal Reserve to keep interest rates higher for longer. JPMorgan Chase says “demand destruction has begun” as fuel costs squeeze consumers.

EBRD seeks capital boost to lift investment in Ukraine

The European Bank for Reconstruction and Development (EBRD) is working on a plan to boost its capital to be able to invest about €1.5-billion in Ukraine annually, its president said.

The EBRD has emerged as an important financial backer of Ukraine’s war-hit economy. The London-based development bank said in May it planned to ask shareholders for as much as €5-billion in capital increase by the end of this year.

“We’re now moving toward a conclusion to convince them that it’ll be better to have a capital increase,” EBRD President Odile Renaud-Basso said in an interview in Kyiv. “Financially, it makes more sense because for one euro of capital we can extend five euros of financing.”

The prospects for increased investment to keep the economy going will be welcome news for Ukraine as concern grows that support for the war effort is starting to waver.

The World Bank in March increased its estimate of how much Ukraine will need for its recovery and reconstruction to at least $411-billion — a figure that’s 2.6 times the country’s projected 2022 gross domestic product.

The investment target of €1.5-billion a year compares to a pre-war figure of around €1-billion, Renaud-Basso said.

UK will work with Nato allies on aid to Ukraine, says Shapps 

UK Defence Secretary Grant Shapps said he would work with Nato allies and other world leaders on ensuring aid continues to Ukraine, amid turmoil in the US Congress after the ouster of Kevin McCarthy as House speaker.

Shapps told Bloomberg TV at the Conservative Party Conference in Manchester on Wednesday he would “work together” with leaders including at meetings of Nato and the Ukraine Defence Contact Group in the coming weeks. DM