Nato allies seek deal to boost defence spending

Nato Secretary General Jens Stoltenberg said allies are pushing to strengthen the alliance's target of spending 2% of output on defence, with the aim of reaching an agreement by July.

Ukraine warned that Russia may launch more attacks over the Orthodox Christmas holiday later this week even as Kyiv continued to down Iran-made Shahed drones being sent into the country, the country's air defence command said on Monday. 

Germany, meanwhile, is open to using billions of euros in frozen Russian assets to help Ukraine rebuild as long as legal issues can be resolved and allies follow suit, according to people familiar with the discussions.

On the ground

Ukraine's air defence systems intercepted every drone from two consecutive nights of Russian strikes since 31 Dec, according to the Institute for the Study of War. Russian forces continued to carry out unsuccessful attempts to improve their tactical positions northwest of Svatove after a tactical pause, the ISW said. Russian forces, trying to take full control of the Donetsk and Luhansk regions, are concentrating efforts on offensive operations in the Bakhmut region in Donbas, Ukraine's general staff reports.

Russian oil flows slump as sanctions squeeze Moscow

Russian crude shipments slid to the lowest for 2022 in the final four weeks of the year as sanctions crimped Moscow's exports.

Cargoes bound for China, India and Turkey, which have become a lifeline for Russian supplies displaced from Europe, saw a third straight drop. The country's overall seaborne flows fell by 117,000 barrels a day to 2.615 million barrels on a four-week average basis.

Germany open to seizing Russian assets to help Ukraine rebuild

Germany is open to using billions of euros in frozen Russian assets to help Ukraine rebuild as long as legal issues can be resolved and allies follow suit. 

Chancellor Olaf Scholz's government supports Ukraine's demand for war reparations but hasn't yet taken an official position on seizing assets from the Russian state. The issue is complex and some parts of the ruling coalition are more ardent than others, according to people familiar with the discussions. 

Stoltenberg says Nato members want more ambitious spending goals

Some North Atlantic Treaty Organization members want the alliance to sharpen its target of spending 2% of output on defence by making the guideline a minimum, according to Secretary General Jens Stoltenberg.

In 2014, Nato agreed that members whose military spending was below 2% would "aim to move toward" the goal within a decade, yet more than half remain well below. "We will meet, we will have ministerial meetings, we will have talks in capitals," Stoltenberg said in an interview with German news agency DPA, adding that the aim is to seal agreement no later than the next Nato summit in Vilnius in July.

Ukraine expects protracted drone attack from Russia

Moscow plans a protracted drone attack on Ukraine to "exhaust" the country's energy infrastructure, air defences and people, according to President Volodymyr Zelenskiy.

Ukraine's anti-missile forces have intercepted more than 80 Iran-made drones launched by Russia against the power grid and civilian infrastructure since the beginning of the year, and many more are yet to come, Zelenskiy said in his nightly address to the nation on Monday.

"Over coming weeks, nights may be pretty troubled," he said. "We have information that Russia plans a protracted attack by Shahed drones." The attack is meant to reassure the Russian people as its troops suffer painful battlefield losses, according to Ukraine's leader.