The EU softened its tone on interpreting sanctions, which should keep Russian gas flowing into the bloc. It had become clear that a number of member states couldn’t accept a cut-off. After concluding that Vladimir Putin’s decree requiring gas payments in rubles violated sanctions, the bloc’s new guidance offers companies a way to keep purchasing the fuel, even if their hard currency is later converted into rubles. The move has Berlin and Rome sighing with relief, and Italian gas giant Eni ready to open a rubles account at Gazprombank. But with the bloc’s bid to ban Russian oil stalled over Hungary’s opposition, the softer stance on gas shows that Europe’s willpower to stem the Kremlin’s cash flow may be reaching its limit.

— Kevin Whitelaw

What’s Happening

Kyiv View | Ukrainian Foreign Minister Dmytro Kuleba told Bloomberg TV that the EU faces “moral failure” if it doesn’t approve the nation’s candidacy for membership by June. But he also said that while NATO as an alliance has delivered little since the invasion, the war has helped the EU boost its role. “The European Union is back on track as a driving force, as someone who can shape the future of Europe,” he said.

Breaking Brexit | The UK will lay out a plan to amend its post-Brexit trade deal today in a direct challenge to the EU. Foreign Secretary Liz Truss will make a statement in the House of Commons, after Boris Johnson said yesterday that he’s prepared to unilaterally amend the agreement over Northern Ireland, though would prefer a negotiated solution.

Second TTC | The US and EU celebrated a partnership reinvigorated in part by its unprecedented cooperation on sanctions and export controls on Russia. But the public unity at the Trade and Technology Council masks festering disputes on unresolved Donald Trump-era trade fights, how to work with China and upcoming tech regulation showdowns.

Carbon Crackdown | On day two of the EU environment committee’s votes on the key green legislation, lawmakers will consider amendments that will attempt to curb speculation and boost emissions cuts in the bloc’s carbon markets. Watch out too for a vote on the “Carbon Border Adjustment Mechanism,” the EU’s bid to stop the outsourcing of pollution to more lightly-regulated markets.

Green Tech | The EU needs more renewables to rid itself of Russian gas, but the real investment will be needed in things to facilitate the transition — electricity grids, energy storage, hydrogen and sustainable aviation fuels — according to a new report sponsored by Bill Gates’ Breakthrough Energy. It says that 800 billion euros will be needed this decade, which is basically what the bloc would normally spend on fossil fuel investments.

In Case You Missed It

New PM | Former Labor Minister Elisabeth Borne was named France’s second female prime minister, taking over from Jean Castex, who resigned following Macron’s re-election. The 61-year-old technocrat will be tasked primarily with ensuring that all government decisions are compatible with France’s goals to cut emissions, after years of missing its targets. 

NATO Setback |  Recep Tayyip Erdogan said he won’t allow Sweden and Finland to join NATO because of their stances on Kurdish militants. At a press conference in Ankara late yesterday, Turkey’s president poured cold water on expectations that the country’s opposition to the enlargement plan could be easily resolved. Read about what prompted Sweden and Finland’s sudden shift to seek NATO membership.

Vaccine Stop | Valneva shares lost a fifth of their value after the French drugmaker said the Commission plans to cancel a deal to buy its Covid-19 vaccine, throwing this year’s financial outlook into doubt. The EU has ordered 60 million doses of the vaccine, but last month its drug regulator asked for more information on the product instead of clearing it.

WhatsApp Request | A key German financial watchdog asked Deutsche Bank to clarify how its staff use private messages for business purposes as regulators worldwide seek to curb the practice. BaFin is following up on indications that senior bank executives have been using WhatsApp and private email accounts to conduct business, we’re told. 

Chart of the Day

The euro area’s pandemic recovery would almost grind to a halt, while prices would surge even more quickly if there are serious disruptions to natural-gas supplies from Russia, according to new projections from the Commission. Under the Commission’s worst-case scenario, the currency bloc’s economy would expand about 0.2% this year, with inflation topping 9%. Growth in 2023 would be one percentage point below the base-case outlook, which sees gross domestic product advancing 2.7% this year and 2.3% in 2023 — down from February’s 4% and 2.7%.

Today’s Agenda
All times CET.

• EU foreign and defense ministers meet in Brussels with news conference around 3 p.m.
• 11 a.m. Brussels Economic Forum opens, with speakers including US Treasury Secretary Janet Yellen, commissioners Paolo Gentiloni and Valdis Dombrovskis
• Commission President Ursula von der Leyen meets Yellen
• Council President Charles Michel meets leaders of Georgia, Montenegro and Moldova
• Ukrainian Infrastructure Minister Oleksandr Kubrakov appears before European Parliament committee
• European Parliament panel votes on Emissions Trading System revision and Carbon Border Adjustment Mechanism