Ukraine and Moldova are set to take a major step toward becoming members of the EU today. The bloc’s leaders are expected to grant the two countries official candidate status at a summit in Brussels. The symbolic victory for Ukraine, which is fighting off Russia’s invasion, will also draw attention to the languishing membership bids from countries like North Macedonia and Bosnia. Before their gathering, the leaders of the 27 member states will meet with the heads of these Western Balkan nations to find ways to further boost their integration with the bloc. Leaders are also set to discuss Russia’s weaponization of food and energy. Meanwhile, a dispute over Lithuania’s block on sanctioned goods in transit to the Russian exclave of Kaliningrad threatens to heighten tensions between Russia and the EU.

— Natalia Drozdiak

What’s Happening

Gas Cuts | Europe’s industries are slashing their usage of natural gas, a sign that factories could be starting to slow production so the vital fuel can be stored for winter. Volkswagen CEO Herbert Diess, meanwhile, warned that the shift away from Russian energy isn’t happening fast enough to shield the German carmaker from a sudden stop in gas deliveries. 

Spanish Champion | Spain is undertaking Europe’s most ambitious increase in military spending, and sustaining that effort hinges on transforming undersized Indra Sistemas into a national champion. After boardroom tensions, the pieces arestarting to fall into place, and a shareholders meeting today could be the moment that the government more firmly exerts control.

Baltic Threat | Estonian Prime Minister Kaja Kallas warned of the grave consequences of any future Russian aggression in the Baltics ahead of an important NATO summit next week. The alliance’s “tripwire” strategy for defending Estonia, Latvia and Lithuania — under which allies would arrive with reinforcements only after a Russian invasion — was outdated after the war in Ukraine.

Russian Espionage | Russia is expanding its espionage and influence operations against Ukraine and its allies, including malicious cyber activity that requires a coordinated, robust response, Microsoft said in a report. The cyberattacks included “wiper” malware that Russian hackers deployed against Ukrainian computer systems and malware masquerading as legitimate emails. 

Deals Cash | After more than a decade of freely-available financing, rocky markets are making banks less willing to lend for big mergers and acquisitions. This has cast a shadow over at least $25 billion worth of European transactions, including some high-profile deals in the UK, according to a Bloomberg analysis of ongoing situations.

In Case You Missed It

French Compromise | President Emmanuel Macron acknowledged he’d have to compromise and negotiate with rivals, in his first public address to the French people since losing his outright majority in parliament. “We must collectively learn how to govern and legislate in a different way,” he said in a televised speech last night.

Carbon Overhaul | The European Parliament agreed to seek a tougher overhaul of the EU’s carbon market in a key vote that puts the sweeping reform back on track after an unexpected setback this month. Lawmakers across political groups endorsed a set of amendments bolstering the deepest revision of the EU’s Emissions Trading System yet. The ballot defines the assembly’s position for talks with member states.

Brexit’s Legacy | The UK will be stuck with searing inflation for years because of Brexit, according to strategists at Wall Street’s top banks. Citigroup, Bank of America and Standard Bank all see the UK as an outlier in the developed world because of the economic damage wrought by the decision to cut ties with the EU.

Medieval Hungary | Viktor Orban, who’s come under broad condemnation for his decade-long project to transform Hungarian state institutions, is having a go at the country’s map. His Fidesz party has drafted a constitutional amendment that would re-designate the nation’s 19 counties with terms that were in use until 1949, at the start of the communist era.

Going Dark | Russian oil cargoes are increasingly disappearing from view in the Atlantic Ocean as sanctions against the nation’s exports ratchet up. In the past 10 days, at least three tankers have vanished from vessel-tracking systems as they approached the Azores, a tiny group of islands about 950 miles west of mainland Portugal.

Italy in Turmoil | Mario Draghi is facing the biggest coalition turmoil since he became Italy’s prime minister in 2021. Just as he sets out for a week of back-to-back international summits, Foreign Minister Luigi Di Maio — one of the highest-profile members of Draghi’s cabinet — on Tuesday acrimoniously quit the Five Star Movement. 

Chart of the Day

Switzerland imported gold from Russia for the first time since the invasion of Ukraine, showing the industry’s stance toward the nation’s precious metals may be softening. More than three tons of gold was shipped to Switzerland from Russia in May, according to data from the Swiss Federal Customs Administration. That’s the first shipment between the countries since February. 

Today’s Agenda
All times CET.

• 9:30 a.m. EU-Western Balkans leaders’ meeting in Brussels; followed by a press conference with Commission President Ursula von der Leyen and Council President Charles Michel
• 1:30 p.m. NATO chief Jens Stoltenberg and Czech Prime Minister Petr Fiala hold news conference
• 3 p.m. EU leaders’ summit in Brussels
• EU Vice-President Margaritis Schinas, Commissioners Didier Reynders and Ylva Johansson participate in the EU-US Justice and Home affairs Council in Paris