❈ ❈ ❈
Russia’s Campaign in Ukraine: Nearing an Inflection Point?
Yves Smith
Notice how the amount of Western reporting on Ukraine has fallen off dramatically? That’s because the war is going well for Russia and its allies.
Russia is continuing its steady and systematic grind through Donbass. However, Russia has also picked up the pace of its shelling, has moved some of its best equipment into Ukraine, presumably pre-positioning, and just had the head of its Ministry of Defense, Sergey Shoigu, visit key commanders in Donbass. Not only did Shoigu state that Russia would put an end to the Ukraine shelling of civilian targets in Donetsk, but also “gave the necessary instructions for further buildup of the troops actions in all operational directions.” In concert, Russia has moved its most advanced armor to the front lines en masse (see here at 42:45)
Part of this effort to stop the Ukraine shelling of civilians is recent and large uptick in Russian ballistic missile attacks. Jacob Dreizen (please filter out the Trumpian views for the comments on weaponry) describes starting at 14:10 of his latest video how the Ukrainians are so low on artillery that they are forced to use it strategically and are sending off 1-2 big salvos a day, targeting Russian ammo dumps behind the lines, with some effect. However, other Russia-friendly sources have claimed that Ukraine has been using Western munitions, including the HIMARS, to shell civilians in Donbass. Per Dreizen, Ukraine uses their Tochka-U’s to tie up Russian missile defenses and then send some HIMARS and a few get through.
Russia, which had stopped the active use of the Tochka-U’s to deploy the more advanced Iskanders, has pulled its Tochka-U’s out of mothballs to respond, at least tripling its ballistic missile capability. Dreizen says that Russia used to fire 3-4 Iskanders daily and in the last 2-4 days is now sending off 10 Tochka-U’s a day plus the Iskanders. Per Dreizen:
“‘Alright, America, you’re sending these HIMARS. We’re still gonna beat you. We have ten times as much stuff as you can possibly send to the Ukraine.’…..What’s gonna happen to the HIMARS is they’re gonna get destroyed just like the howitzers were destroyed.”
Military Summary also confirms a shift in Russian priorities (see at 6:30), with reduced shelling in Donbass and a big increase in Mykolaiv and near Kharkiv.
In parallel, Russia also blew up a meeting between some senior Ukraine military officers and foreign weapons dealers, with total dead estimated in the hundreds. While many observers would contend that the arms merchants are not combatants and deliberately killing them amounts to a war crime, the Russian position is presumably otherwise, since they are taking credit for this kill. From RIA Novosti, via machine translation:
The strike of Kalibr high-precision sea-based missiles on the House of Officers in Vinnitsa destroyed the participants of the meeting of the command of the Ukrainian Air Force with representatives of foreign arms suppliers, the Russian Defense Ministry reported.
“On July 14, high-precision sea-based Caliber missiles struck the building of the garrison House of Officers in the city of Vinnytsia. At the time of the strike, a meeting of the command of the Ukrainian Air Force with representatives of foreign arms suppliers was held at this military facility on the transfer of the next batch of aircraft, weapons, weapons to the Armed Forces of Ukraine, as well as organizing the repair of the Ukrainian aviation fleet,” the report says.
This action may also be a sighting shot against CIA and NATO operations in Ukraine. It also may be to give the West a taste of what might happen if they are so reckless as to let Ukraine get some of those 300km range HIMARS missiles that Ukraine has been begging for. There have been quite a few reports on the Ukraine innertubes demonstrating the government’s lust to take out the Kerch Bridge that connects Crimea to Russia. They’ve made clear they want the longer-range missiles to do so (the U.S. so far has given Ukraine only the 70km missiles precisely because they don’t trust Ukraine not to hit targets in Russia). I am highly confident that Russia has a very clear idea of the sort of missile hell it would unleash were that to occur.
In the last few days, the Russian Security Council also met and issued an unusually uncommunicative summary.
To step back and put this in context, keep in mind that commentators keep focusing on Russian progress in terms of capturing territory, when that is not Russia’s primary goal. It is to destroy Ukraine’s ability to wage war. Thus while some Western accounts have fixated on the idea that Russia has or hasn’t taken Bakhmut, Russia is more interested in getting fire or actual control of key roads and railroads to deny resupply and better yet, encircle troops so they can capture them or at worse, lead them to flee, abandoning materiel.
Accounts in the last few days indicate that Russia is destroying Ukraine units and soldiers at an accelerating pace, with some credible experts putting daily deaths at the end of last week at well over 1000. Even if that pace of destruction is not maintained, it points to a fighting force that is crumbling.
Russia forces took control of all of Lugansk on July 3, taking Sievierodonetsk and Lysychansk faster than even Russia-favoring commentators had forecast. Russia has now been moving forces so as to achieve the final goal in taking Donetsk, that of capturing Sloviansk and Kramatorsk. Once that is done, Russia will have freed the Donbass.
On the Ukraine side, the body language is the polar opposite. Zelensky has launched a purge, accusing officials right and left of collaboration with Russia. This could be somewhat or very much true, since a coup attempt is long overdue and the rebels would likely be more willing to consider a deal with Russia. However, Zelensky could also be searching for scapegoats, since it’s been clear for some time that the long-promised August and/or Kherson counter-offensives are na ga happen. Aside from the fact that Ukraine has yet to stage an offensive where it recaptured and held territory and it’s now reduced to having to conscript old men and women to refill its depleted army, Russia has such command over Ukraine that it’s impossible to train a sizable force and not have it subjected to Russian missile attack.
Speculation among Western sources that read Russian or have good Russian contacts (see the Larry Johnson-Andrei Martyanov-Alexander Mercouris roundtable, hosted by Gonzalo Lira, as an example) is that Russia will pause after it has secured Donbass and will deliver its conditions for a peace to Ukraine. These are certain to be unacceptable since the bare minimum ask will be conceding the loss of Donbass and Crimea (and let us not forget neutrality and denazification too). The West of course will flatly reject it. That’s fine by Russia since it would not trust any deal with Ukraine or the West as far as it could throw it.
The point of this offer at the point of securing the first objective of the Special Military Operation is to play to China, India, the global South, and secondarily to the more cautious and war-averse members of the Russian citizenry, that Russia going beyond the narrowest implementation of the SMO was not due to Russia wanting to take more territory, but being forced to do so to achieve its additional goals of demilitarization and denazificaition. If Ukraine and its allies won’t do so voluntarily, Russia will by force.
The Military Summary channel has observed that once Russia secures Donbass, there are no major lines of defense to the west until the Dnieper. That may also explain the claim he made in his latest report (at 12:50), that Zelensky told the troops in Donass that the U.S. told him if they lose the so-called Zaluzny defense line (Kramatorsk and Sloviansk are on this line) that it would be considered to be the total collapse of Ukraine forces and no more Western support would be forthcoming. I doubt that politically that the U.S. can totally abandon Ukraine but they can certainly send only eyewash, and more importantly, stop funding the Ukraine government, which has become a money pit.
The remaining major troop concentration is around Kiev. The question is what Russia does next.
My belief is still that Russia will give priority to taking Odessa unless there are logistical considerations that argue against that. The Ukraine military is so close to collapse that Russian forces going to Odessa sooner rather than later is a real possibility. It’s the psychologically most important target for the Russian people, and economically more valuable than Kiev. The West would recognize that Russia getting control of what was Ukraine’s entire Black Sea coast as an enormous loss.
I suspect what Russia decides to do with or about Ukraine to the west of the Dnieper is event dependent. However, the West has decided to tie itself even more tightly to the Ukraine albatross. I had said to Lambert that it was not impossible for Russia to have decisively won (as in taken Odessa) by sometime in October, but even with the Western forces clearly unable to rout Russia, that Europe and the U.S. would keep its citizens cold and hungry this winter just to spite Russia.
It’s already official. From TASS:
The EU will not withdraw the sanctions, imposed on Russia over the situation in Ukraine, if Moscow and Kiev sign peace treaty on Russia’s terms, German Chancellor Olaf Scholz said in his article for the Frankfurter Allgemeine Sonntagzeitung, published Sunday.
“The part of the new reality is that the EU has also consolidated. It has reacted to the Russian aggression quite unanimously and imposed unprecedentedly harsh sanctions,” Scholz said. “We knew it from the start that we will potentially have to keep these sanctions for a long time.”
“And it is also clear that not a single one of these sanctions will be withdrawn in case of peace, dictated by Russia,” he continued. “There is no other path for an agreement with Ukraine for Russia than the one that could be accepted by the Ukrainians.”
It does not seem to occur to Sholtz that even Ukrainians who are not that keen about Russia would choose having Russian or Russian-lite rule over the West’s plan of fighting to the last Ukrainian. It also seems likely that Russia will hold referendums, again to legitimate its actions in the court of non-collective-West opinion. But of course those will be deemed to be bogus even if the most reputable independent observers say otherwise.
So this is not going to end well for the West. But you knew that already if you were paying attention.
(Courtesy: Naked Capitalism. Naked Capitalism is an American financial news and analysis blog that “chronicles the large scale, concerted campaign to reduce the bargaining power and pay of ordinary workers relative to investors and elite technocrats”.)
❈ ❈ ❈
Russia Teaches Europe ABC of Gas Trade
M.K. Bhadrakumar
The unthinkable is happening for the second time in five months: Russian gas giant Gazprom writes to German gas companies announcing force majeure effective from June 14, exonerating it from any compensation for shortfalls since then.
The first time shock and awe appeared in German-Russian relations this year was on February 22 when Chancellor Olaf Shloz surprised even hardened political observers by freezing approval process for the newly-constructed Nord Stream 2 gas pipeline. The $11 billion pipeline beneath the Baltic Sea would have doubled the volume of gas sent directly from Russia to Germany, but Scholz instead blocked its commissioning. Those were halcyon days when Berlin talked of “defeating” Russia.
Scholz’s move was in reaction to Moscow’s decision on February 21 to recognise two breakaway regions of Ukraine as independent republics. Russia hawks in Germany applauded his decision. Acclaim came pouring in. Jana Puglierin, head of the European Council on Foreign Relations in Berlin, praised Scholz, saying he was “raising the bar for all other EU countries… this is real leadership at a crucial moment.”
However, in Moscow, which has a thorough understanding of German energy market, Scholz’s move was seen as an act of deliberate self-harm. Moscow reacted with a flash of sardonic humour. Dmitry Medvedev, former president and deputy head of Russia’s Security Council, tweeted,
“Welcome to the brave new world where Europeans will soon be paying €2,000 per 1,000 cubic meters of gas!”
He was alluding to the grim reality that gas accounted for a quarter of Germany’s energy mix, and more than half of it came from Russia. Indeed, it was plain to see that Germany’s reliance on gas could only rise having decided to shelve nuclear power in the aftermath of the 2011 Fukushima disaster in Japan and committed to phasing out coal-fired power by 2030.
But Scholz insisted that Germany would expand solar and wind power capacity “so we can produce steel, cement and chemicals without using fossil fuels.” His confidence actually stemmed from the fact that Germany had a long-term contract with Russia to supply gas at a friendly price via Nord Stream 1.
The first indication that something was going horribly wrong was when the influential Russian daily Izvestia wrote on July 11 quoting industry experts in Moscow that the scheduled routine stoppage of NS1 for annual servicing and repairs from July 11-21 might continue due to Canada holding back, under sanctions against Russia, the turbine that had gone for repair.
The daily went on to forecast that Gazprom might announce force majeure because of western sanctions, as Siemens twice already failed to return equipment to Gazprom after repairs in Canada, which resulted in a reduction in the gas flow from the planned 167 million cubic meters.m to 67 million cubic meters.m per day.
Izvestia noted that the situation would lead to a spike in spot market price for LNG upward of $2,000 per 1,000 cubic meters–perhaps, “even more–up to $ 3,500”–from the July 8 price level of $1800.
Acting on an urgent request from Berlin and recommendation for Washington for waiver of sanctions, Canada since agreed, but, according to Izvestia, even after Siemens returns the turbines to Gazprom,
“there will be a long period of testing the turbines to find out how correctly they were repaired. No one wants to install turbines that are at risk of failure after being repaired in an unfriendly country. So the real time for launching turbines and returning SP-1 (NS1) to its design capacity is two to three months.”
That is, gas may flow through NS1 earliest only by September/October. Even then, Gazprom may not be able to utilise more than 60 percent of its capacity, since overhauls are overdue for two more turbines.
Therefore, the experts told Izvestia that problems with gas shortages in the European Union would persist for the next few winters and authorities may have to “limit the supply of hot water, dim street lights, close swimming pools and turn off energy-consuming equipment” and, furthermore, instead of green energy, switch to coal.
Kommersant newspaper reported today that while classic force majeure events could be natural disasters, fires, etc., in the case of Gazprom, “we are talking about a technical malfunction of equipment,” which may lead to litigation–and,
“what will be decisive will be whether Gazprom’s actions to cut gas supplies were proportionate to the real scale of the technical problems.”
Evidently, Gazprom is well-prepared. Germans suspect that Gazprom’s alibi of non-delivery of gas turbines from Canada, et al, is bogus. And Kommersant foresees a “lengthy trial.” Now, the catch is, in the long run, we are all dead.
For Germany, however, this is a grave situation, as many industries may have to shut down, and there could be serious social unrest. Germans are convinced that Moscow is resorting to the “nuclear option.” The big question is whether Germany’s solidarity with Ukraine will survive a cold winter.
Scholz’s confidence was predicated on the belief that Russia desperately needed the income from gas exports. But then, Moscow is today generating more income from less exports. Arguably, Russia’s best strategy today would be to reduce gas deliveries without ending them altogether, as even if Russia sells only a third of the gas it sold previously, its revenues do not get affected, since the shortage of LNG globally has exponentially spiked the market price. It’s a fair bet that’s what Gazprom would do.
Putin once disclosed that under the long-term contracts, Russia sold gas to Germany at ridiculously low price–$280 per thousand cubic meters–and Germany was even reselling Russian gas to other customers for a tidy profit!
Where it hurts Germany most is that this is not only about freezing homes, but the implosion of its entire economic model that is over-reliant on industrial exports, thanks to imports of cheap fossil fuels from Russia. German industry is responsible for 36 percent of its gas use.
Germany behaved in an unprincipled way on all aspects of the Ukraine crisis. It pretended to support Zelensky but shied away from giving military support, triggering a nasty diplomatic spat between Kiev and Berlin. On the other hand, when Moscow introduced the new payment scheme for gas exports, making it mandatory to pay in rubles, Germany was the first country to fall in line, knowing well that the new regime undercut EU sanctions.
Thus, Moscow insists that German gas buyers keep euro and dollar accounts at Gazprombank (which is not subject to EU sanctions) and convert the currencies into rubles, since the Russian central bank is subject to western sanctions and can no longer transact in foreign exchange markets!
Russians have made monkeys out of Europeans. Clearly, it is impossible to sanction a country that is sitting on valuable commodities. Russia is the world’s second largest exporter of oil, the largest exporter of gas, and the largest exporter of wheat and fertilisers–plus the range of rare earth metals like palladium.
Both Boeing and Airbus have complained of risks in their supply chain. Airbus imports large quantities of titanium where about 65 percent of the supply of the metal comes from Russia. It has publicly requested the EU not to impose restrictions on the material, which is used to manufacture critical components of aircraft.
Thus, it comes as no surprise that the EU is slowing down the pace of sanctions against Russia. The bureaucrats in Brussels have exhausted the potential for increasing sanctions and the political elites admit that the sanctions were a mistake.
The consequences for European economies are already extremely serious. The rising energy prices are fuelling inflation in all EU countries. According to forecasts, in France inflation will reach 7% this year; in Germany–8.5-9%; and in Italy–10%. And this is just the beginning. Most countries will also face a serious drop in GDP next year–from 2 to 4 percent.
(M. K. Bhadrakumar is a former Indian diplomat. Courtesy: Indian Punchline, the author’s blog.)
