TODAY: 7 Ukrainian soldiers killed by separatists in worst incident yet, signaling ‘undeclared war’ with Russia; Crimea is financial sponge; Gazprom demands billions from Kiev by June 2; polls indicate significant drop in political protest; recession anticipated, investors slight Russian business; U.S. to be excluded from space station; rights groups to back Pussy Riot at ECHR.

Pro-Russian separatists killed seven Ukrainian troops in Kramatorsk yesterday with grenades and automatic weapons, marking the greatest loss of life for the army in a single incident since the beginning of the Ukraine crisis.  Prime Minister Arseniy Yatsenyuk says Russia’s goal in Ukraine seems to be to make it ‘a failed state’; Ukraine’s acting Defense Minister says the current situation amounts to ‘undeclared war with Russia’.  Since its takeover by Russia, Crimea has become ‘a multi-billion dollar sponge’ that is diverting money away from infrastructure projects in other regions.  The advance gas bill that Gazprom sent to Ukraine for June’s supplies came to $1.66 billion, with a total overall debt of $3.5 billion and a payment deadline of June 2. (So much for its stock rally.)  Yatsenyuk says Russia must not use natural gas as a weapon, accusing it of having stolen billions of dollars worth of energy assets in Crimea.  The Foreign Ministry commented that the European Union’s expansion of its anti-Russia sanctions has ‘outlived itself as an approach to serious political problems’.