Despite Putin’s assertions to the contrary, increasingly what is becoming obvious is that the plan he had in mind for this campaign is not working. Even now, with the full might of the army being deployed, the resistance remains in Kharkiv and Mariupol, which by any standard account should have fallen in the first phase. Indeed, before the war began, much had been written about the military superiority of the Russians, equally in practice what we are seeing is:
- In the main, the Russian troops are conscripts, and many of them had not even been told about the fact they were being deployed into a hot war.
- Ground conditions are such that tanks and other heavy military units are getting stuck in the mud and abandoned. Iconic images are emerging of farmers taking abandoned units to local military command centres.
- Simultaneously, supply lines are failing, where across the country, especially the north, troops are looting for basics such as food. Others are just surrendering.
- The ‘convoy of death,’ aka the 40km supply line from Belarus to Kyiv, is stuck and making no real progress. Meanwhile, it is being picked off, by a combination of missile attacks, drones, and strafing runs.
- Insofar that Belarusian troops initially were meant to reinforce the Russians, now the reports are that they will no longer be involved, due to mutiny across the ranks. Georgia also declined to support the Russian campaign.
- Experienced commanders, in seeking to accelerate the advance, are making high-risk maneuvers, which is resulting in significantly higher losses than anyone could imagine. According to the Ukrainian military, KIA ratios are currently 10 / 1. Similarly, senior commanders are being assassinated by snipers.
- The Russian Air Force, despite having supposed superiority, seems to be unable to assert its dominance. Reports of Russian Fighters being shot down are becoming commonplace. With that, the big question is why the Russian Air Force is unable to do more. Could it be that the Russians have failed to provide the necessary investment into training pilots? For context, it is estimated that the cost of training a pilot for a fighter jet is in excess of 5M USD. On that basis, for Putin to train up sufficient Pilots for his entire air force would be 5 Billion USD… How many active pilots do Russia actually have? Similarly, how well trained are they when in a highly contested airspace, with enemy fire from the ground as well?
- Indeed this could be the first time in military history we are seeing a conflict where one side has numerical superiority combined with heavy military firepower, while the other has highly motivated, trained forces and an actively engaged territorial army with them using weaponry one generation more advanced, meaning they can hold their positions as long as their supply lines remain in place.
- This means that Russian battalions instead of being able to advance and apply more pressure through momentum are being forced to apply even more resources and manpower to take first phase targets. Similarly, the longer the sieges continue, the harder it is for the Russians to win them, as defending troops dig in, increasing the cost of war even further.
- The only arena where Russia seems to be making serious progress is along the coastline, but this is only due to them being able to triangulate forces between heavily armored columns coming out of Crimea, Naval bombardment, and amphibious troops being able to land with little notice on any point on the coastline.
Against this backdrop statements from the Kremlin are becoming ever more shrill. Putin’s press briefings are so detached from the facts on the ground, that one must only assume he is stating what he is for domestic consumption. Statements he is making include:
- We are not targeting civilians
- The Ukrainian air defenses are nearly destroyed
- Sanctions are an act of war on Russia
This is then at a time when all independent media have in effect been banned, or blocked (in the social media) to ensure the dominance of the Kremlin propaganda machine.
But it’s not working. While some people are parroting the propaganda to their peers, others are taking to the streets and making their protests heard however they can. Indeed, according to google, in the last week, there have been record numbers of searches for people asking ‘how they can leave Russia.’
With no clear end in sight, one week into this war what is becoming clear is that the Ukrainian response has been herculean, with the courage under fire being shown by the military territorial army not to mention the people enlisting both within the country and from abroad (the latest estimate is 66k Ukrainian men have crossed the border to fight) unlike anything seen in modern times.
So now that Putin is upping the ante, by stating sanctions are an act of war, while shelling a nuclear plant, risking a Chernobyl II, the cost of inaction by the west is also increasing. Already refugees are flooding into the EU. One week in, it is estimated over 500,000 people have left, mostly women and children, and that’s just the beginning.
Ukraine is a nation of 40m people. Policymakers in the EU need to factor that in the event Russia was able to achieve victory, the nature of how that would be achieved (flattening cities) combined with the absolute hatred for him would mean we could well see 5-10m refugees from Ukraine. The physical cost to the EU of then absorbing that populace, between housing, food, etc, not to mention the wider integration issues, mean that the cost of standing by is higher than the cost of escalating, even if Putin is threatening tactical nuclear weapons. Already Warsaw, which has become a primary point for refugees to head to, due to the diaspora, is bursting. The city does not have the infrastructure to support current numbers, let alone ten times more.
There is also a real potential downstream benefit for helping Ukraine achieve total victory. Assuming Ukraine was able to achieve total victory, which means the freedom to shape and set the path of the Ukrainian nation, where they are free to join the EU and NATO and they return to pre-2014 borders, what this would mean amongst other things, is that within a generation, they could be harnessing the offshore gas within the black sea (if you recall from my previous post, Ukraine has natural gas deposits almost at a level Norway does, and they are untapped) and at that point, energy independence is secured.
Therefore I can see a scenario emerging where the EU decides it is prepared to stare down Vladimir Putin and fully back Ukraine What that would mean is:
- Increasing military aid
- Ban Russian Gas
- Impose full sanctions
How would these objectives facilitate a Ukrainian victory?
Increasing military aid
The most significant military aid that could be provided now over and above what is being done already, would be to supply Ukraine with fighter aircraft. The Ukrainian air force is only trained in Russian Aircraft so this means only a handful of EU nations are in a position to help. In the here and now, those nations have yet to commit. The impact of the 100 MIG29s that could be made available though is not to be underestimated. It could make it not just impossible for the Russians to make any further material advances on land, but provide the cover for the Ukrainian army to make advances and reverse Russian gains. Given the negotiations now taking place between the US and Poland, where the Americans supply the Polish F-15 fighters in return for their MIGs being sent to Ukraine, this is looking increasingly likely. Watch this space.
Factor that at the moment, the Russian Army is making gains and is slowly forcing the Ukrainians back. As touched upon before, they have already completed two of their pre-war objectives (Kherson & Sea of Azov coastline) and their third is in their sites (eastern oblasts, Luhansk, Donetsk & Kharkiv.) The Ukrainians have been effective in their use of drones to disrupt supply lines. However, if Ukraine was able to compete in the air properly, it would severely hamper the Russian ability to advance further. Hence their coded threat on Monday, after the EU announced their plan for aircraft aid. Russian military morale is already in question. Deprived of momentum, this could even lead to mass desertion.
Ban Russian Gas
Approx 80% of Russian Gov’t income comes from Oil & Gas exports, therefore implementing a ban here for imports into the EU would have an immediate impact on the Russian Government’s ability to generate hard currency. As an interesting side note, for the past year imports into the EU have been at minimum levels, resulting in gas prices going up and reserves dropping down. In the last week, suddenly Russia is exporting as much as they can… Turn off the taps and stop the Russians from being able to finance their war engine.
With the various sanctions that have been implemented already, the Ruble is under pressure, having lost 33% of its value in a week. However, in the here and now, the Russians are managing to prop up the Ruble through the hard currency generated by gas sales to the west. Take that away and it makes the currency significantly harder to defend. Already there are rumors that prices in shops are rocketing up in Russia and shortages of key goods including medicines are being reported. If gas exports are then banned as well this could well be a crippling blow but would come at a heavy price for Europe and Germany specifically. Despite that fact, spring is now coming which will lead to domestic consumption dropping, therefore if this was actioned, this would be one of the most significant events that could enable Ukraine to be victorious.
Impose full sanctions
At the moment, sanctions have not been fully applied. Still, certain banks remain on the swift network and western companies remain free to trade in Russia should they choose. In the event the US and EU decided to impose full sanctions, including banning businesses registered in their jurisdictions to do business in Russia, this would likely create huge societal issues in Russia, as hundreds of thousands of people, potentially millions would be made unemployed in one go. Already western businesses are beginning to withdraw and the pressure is increasing on those who haven’t.
Capital flight is also a significant issue and there are now increasing concerns within Russia regarding the continued closure of the Moscow Stock Exchange. Companies such as Yandex, (responsible for 60% of search traffic in Russia) despite not being sanctioned, could still default. Investors who hold $1.25 billion in Yandex convertible notes have a right to demand repayment in full, plus interest if trading in its shares are suspended on the Nasdaq for more than five days.
Overall, an approach of making it impossible for people in Russia to do business with, sell to / buy from the west, from the individuals to the institutions, including all the banks, combined with sanctions on oil & gas, would mean that the Russian economy could well collapse and mass unemployment happens.
Already people are protesting on the streets in sufficient numbers to make them impossible to be all arrested. In such a scenario, the sheer pressure from the mass discontent could lead to Putin seeking to enforce martial law. Equally, if people within the country feel they are losing everything and have nothing to lose, at that point, the whole situation may become untenable.
There are already those within Russia who oppose what Putin is doing. Zelenskyy remains alive thanks to the FSB tipping off his team about potential assassination attempts by the Cheychans and the Wagner Group. The longer the war goes on, the more vocal the opposition will become and the more likely it is that Ukraine will start getting the kind of military aid it needs to reverse the war.
At that point, all bets are off. If the Ukrainians can push back so the Russian army is forced to retreat and Russia is due to the pressure on the economy, forced to negotiate with the West to have sanctions lifted, we could well see a scenario where we have a long term settlement, which gives Ukraine what it wants, i.e. the ability to choose its own destiny, including EU & NATO membership, while enabling Russia to return to the international fold. Whether Putin will be the one to negotiate such a settlement on behalf of Russia is another question.
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