Cables From The Diplomatic Frontlines - What Needs to Happen for Ukraine to Win in 2023.

How the West can finally turn the tables on Putin.

• We are now just a month away from the one year anniversary of Putin’s invasion of Ukraine.

• For now, we will forgo the grandiose conclusions reached by many leading foreign policy ‘‘analysts’’ and ‘‘thought leaders’’ that the liberal West proved its staying power and that authoritarianism is on a definite decline.

• Although things are indeed moving in that direction, it is still way too early to pass such judgements.

• True, Putin’s invasion was based on bad intel and overconfident assumptions around Western response - and the extent of the Russian army’s underperformance was a surprise to us all.

• But any further grand narrative assessments are premature.

• A lot depends on the West’s conduct going forward: will it truly support Ukraine for “however long it takes”?

• What if Russia’s economy continues to limp along? Are Western leaders prepared to amp up sanctions?

• What if China (increasingly restless with the US encirclement in the Pacific) steps up its support to Russia? And provides it with both arms and money?

• What if Putin doubles down on the scale of mobilization and throws the whole kitchen sink at Ukraine? What if Iranian arms keep flowing in, and Russia finds alternative supplies of arms (and microchips necessary for domestic production)?

• Facing the possibility of biting recessions and ‘‘normalization’’ of the war in Ukraine, how much longer will the Western public decide to stick with its backing for Ukraine?

• There are a lot of contingencies, and even though at the current trajectory, Russia is indeed marching towards a military defeat, depending on how those contingencies play out, things can turn around pretty dramatically (as it has already happened so many times in this war).

• So instead of complacency, grandiose declarations of Russia’s weakness, and short-term one-off measures to help Ukraine with its air defenses, the West must double down on a clear, consistent and unanimous strategy to equip Ukraine with the highest probability of an outright victory: either Russia must be compelled into withdrawal and a genuine peace deal, or Ukraine must be in position to drive out all of Russian troops occupying its territory.

• In either case, victory must be Ukraine’s - and many things have to happen for this victory to be likely.

• But before delving into what needs to happen, let us first revisit the current status quo, and unpack why it is unlikely that Putin would seek a genuine peace deal anytime soon.

• Current status quo - Putin is in no rush to end the war.

• There is no stalemate - rather, a predicted slowdown in tempo of operations.

• Nor is there a revision of Russia’s maximalist war aims.

• In fact, rhetorically, Russia’s leaders have reiterated their commitment to the war.

• In their New Year’s Eve addresses, Both Putin and Defense Minister Sergei Shoygu have promised a ‘‘victory’’ in this war.

• With a bunch of Russian soldiers in his background (a poor selection too - many were obviously physically unfit) Putin promised to accomplish a ‘‘true sovereignty’’ of Russia.

• When a country as powerful, vast, and unmistakably sovereign as Russia speaks about ‘‘true sovereignty’’, it can only mean one thing: empire expansion.

• Here is the actual translation of Putin’s rhetoric: we will compel Ukraine into submission and acceptance of its subservient role in our sphere of influence - we will do whatever it takes to accomplish this, and we will outlast the West.

• So then, (and as previously discussed by these cables) Russia is clearly in no mood for actual ‘‘peace talks” - all of their offers of talks are gimmicks to appeal to Western appeasers and those tired by the war.

• It is designed to arm right-wing news anchors with arguments that it is in fact Ukraine that is being difficult and keeps rejecting Russia’s generous offers to secure peace.

• (side note: here is a good indicator of Russia being ready for genuine talks: they stop talking about four regions that were annexed last fall).

Why is Putin betting on Russia outlasting Ukraine?

• Why is Putin not downsizing his maximalist war aims?

• Why is he doubling down? Why is he so confident that he can outlast Ukraine?

• We have discussed this very issue at length, and without delving into too much detail, Putin’s decision to engage in a lengthy and costly war of attrition stems from the following three core beliefs:

• 1) That he can outlast the West in terms of cost tolerance,

• 2) That he is willing to do whatever it takes - in other words, his escalatory tactics like targeting civilian infrastructure will not be matched by the civilized West and Ukraine (worried about reputation with the West).

• 3) The prestige costs to Russia, (and thus to his regime) are unacceptably high if he ends the war now - with little to show for it.

• And there are many legitimate reasons why Putin may arrive at the aforementioned conclusions:

• a) Ambiguity around political will in the West: Putin witnessed America’s top General suggest that Ukraine should negotiate while it can, he saw how Biden refused to publicly commit to Ukraine’s ‘‘victory’’ in a joint press-conference with Zelensky in Washington (in spite of promising to support the country however long it takes - although this is a significantly less definitive promise, and there are number of ways to help Ukraine without equipping it with everything necessary for an outright victory).

• Putin also witnessed Rep. Kevin McCarthy securing the speakership after only 15 ballots - the GOP is increasingly ungovernable and hostage to the fringe group of aimless spoilers - most of whom reflexively repeat the Tucker Carlson talking points, and reject the support for Ukraine: all of these increase the probability that the Republican support for Ukraine will no longer be a given.

• Moreover, 2024 is an election year where the two most likely GOP candidates (Trump and DeSantis) are either openly reluctant to support Ukraine or too ambiguous about their position - one thing is clear however - none of these candidates is likely to be as tough on Russia as Biden.

• With a challenge from the left, or due to a slowdown in public support for continuous military support of Ukraine (especially if the recession in the US does after all take place), even Biden may feel the pressure to temper/limit his military and financial support for Kyiv.

• In addition, a number of Western European countries will most definitely enter a challenging recession.

• In other words, a continuous public and leadership-level appetite for a strong support of Ukraine is no longer a given.

• b) Hesitant and lagging military support for Ukraine.

• The West has been consistently hesitant in supplying Ukraine with effective ‘‘offensive’’ weaponry that would have allowed Kyiv to secure important gains on the battlefield much sooner.

• At first, there was much hesitancy around providing Soviet T-72 tanks and western drones (like Switchblades) and howitzers/artillery.

• The decision was delayed for several months and Ukraine only received these in late spring.

• HIMARS - a crucial piece of equipment that devastated Russian C2 infrastructure and ammo depots - was delivered only five/sixth months into the war (in late spring/early summer).

• It took almost a year to convince the Biden admin to send over Patriot batteries - when these were essential to protect Ukraine’s air space and its critical infrastructure - and were clearly not ‘‘offensive’’ tools like HIMARS.

• And the West is yet to supply Ukraine with fighter jets, tanks, long-range attack drones and long-range missiles (like ATACMS).

• Putin sees how the West is always lagging in its supply of critical military hardware - they are always several months late to the game.

• In contrast, Russia can deploy (and target) whatever it wants (but for physical/ammo constraints) on a very short timeline.

• It has suppliers like Iran and North Korea - countries that don’t waste time on procurement processes, and are happy to equip Moscow on a short-notice: free from the restrictions of Western ‘‘risk assessment & planning’’ measures/checklists.

• This disparity in military supply is a crucial factor - especially if Russia scales its mobilization efforts (and maintains its current 1:1 casualty ratio with Ukraine - a ratio that is unsustainable, and thus unacceptable for a country 3x smaller than Russia), and secures further routes for advanced semiconductors necessary for domestic weapon productions (especially for precision-guided ammo like Kalibr and Kinzhal cruise and hypersonic missiles).

• c) Belief in the Russian economy’s ability to withstand the biggest blows.

• This is not a wholly unreasonable belief either.

• Back in February/early March, Russia (thanks to competent technocrats like the Central Bank chief Nabiullina) managed to avert the most extreme scenarios of sudden capital flight and loss of currency value.

• For a significant period in 2022, the Russian treasury actually made more money than it did prior to the war (even accounting to approximately $1bn daily costs of running the war in Ukraine): thanks to the rise in oil and gas prices.

• Overall, and in spite of a range of significant financial blocking sanctions, export control sanctions and a major brain drain of productive, highly skilled professional workforce (that escaped Russia’s mobilization in 100s of thousands), Russia still ended the year at a contraction of 3%.

• This is a contraction - but nowhere near the amount necessary to affect the Kremlin.

• If Putin is to be dissuaded from his imperial ambitions, an annual GDP growth of -3% is not going to cut it.

• It is true that going forward, with oil cap at $60 (and hopefully, gradually lowered throughout the year), and gas prices back to their pre-war levels, Russian coffers will feel the pinch.

• But here too, Putin may be overly optimistic in his assessment of future economic conditions: a large proportion of Russian oil (e.g. Urals oil) is already sold at below the price cap levels, and Putin may calculate that China’s reopening will boost the global demand (and price) for oil and gas.

• d) Kremlin’s partners have an incentive to stick with Russia.

• Putin may calculate that with increasing tensions and suffocating economic pressure from the West, China may have little incentive not to offer stronger military, logistic and economic support to Russia.

• Beijing is witnessing rapid militarization in the Indo-Pacific: America and its major Allies - Australia, Japan, and Taiwan, are all increasing their military capacity.

• As such, supporting Russia and forcing the US to support Ukraine for much longer (expending valuable stocks of weaponry - everything from Javelins to HIMARS missiles), is a prudent step to keep Washington overstretched.

• At the very least, this is Putin’s hope - and one that is once again not too unreasonable.

• In addition, Putin expects that Iran will be willing to back Russia all the way - with Netanyahu back in power, and Biden admitting that the nuclear deal is dead, Tehran will be right to anticipate a military showdown with the US/Israel - this is where Russia’s knowhow and equipment for electronic warfare and air defense kit (like S400s) will come in handy - in return, Iran will surely be more than happy to supply cheap Shahed drones (and even more expensive short-range ballistic missiles).

Changing the calculus: what needs to be in place to secure victory for Ukraine in 2023.

1. Proper Western military mobilization.

• a) Air defense systems appropriate for high volume of missiles.

• Patriot batteries are good (even if delivered way too late) - but these are more appropriate against Russia’s ballistic and cruise missiles.

• Patriot missiles are too expensive to use on Iranian drones.

• Russia will increasingly use Iranian Shahed drones and short-range ballistic missiles to occupy Ukrainian air defenses - before more serious and accurate strikes are deployed against overwhelmed air defense systems.

• Situation will worsen as Russia gets to use more of Iran’s cheaper (short-range) ballistic missiles - these are harder to distinguish from more serious/longer range missiles - meaning that Patriot missiles worth $4m could be wasted on hitting missiles that are 10-50 times cheaper.

• The numbers don’t add up, and are thus unsustainable.

• As such, Ukraine needs more short-range air defense tools: C-RAM type weapons, jammers and systems like the Israeli Iron Dome.

• (side note: persuading Netanyahu to deliver Iron Domes to Kyiv should be a major diplomatic objective for the Biden admin. And if this fails (if Netanyahu calculates that securing Russia’s tacit acceptance of Israeli strikes of Hezbollah and other Iran militia in Syria, is preferable to the risk of triggering Moscow), then an alternative solution exists: NATO may purchase Iron Domes and supply it to Ukraine on its own - minimizing the political cost to Israel).

• These should be deployed to protect the electrical grid and transmission lines.

• Without a steady supply of electricity, more advanced air defense systems will need to depend on generators - these in turn leave heat signatures: revealing the locations of crucial Ukrainian military hardware.

• b) Training and logistical support.

• If Ukraine is right in its assessment, and Russia is indeed about to mobilize (500k) more troops, then that is extremely bad news for Kyiv - but one that is not unforeseen.

• Back in March 2022, these cables called for creation of training camps in Western Ukraine and Poland - where NATO would jointly train a fresh new army to replenish Ukrainian army with the necessary manpower - providing a steady stream of capable and NATO-trained soldiers.

• Although both the UK and US (and a number of other NATO states) are in the process of training Ukrainian troops, the numbers don’t add up.

• The scale of this training regimen is not up to the level necessary to par Russia’s mobilization.

• Only approximately 1,500-4k Ukrainian troops receive NATO training a month - there is no reason why the alliance of 30 largely rich states could not pool its resources further - scaling this training program by 20-30x.

• There is no good reason why 50-75k Ukrainian troops could not receive NATO training every month.

• All that is required is a political will and stronger leadership from Washington.

• c) provision of offensive weapons.

• It appears that the taboo on supply of tanks is finally breaking: the Biden administration announced it is sending $2.85 billion in military aid to Ukraine. - which includes around 50 Bradley armored fighting vehicles.

• Germany is to supply Kyiv with Marder Infantry fighting vehicles, and France (to its credit) was the first to kickstart the chain reaction with supply of AMX-10 RC vehicles.

• In addition, there are talks of UK potentially supplying Ukraine with Challenger 2 tanks - actual tanks - this would be unprecedented and welcome.

• (side note: it would also act as a signaling pressure on the US and Germany to follow suit, and supply M1 Abrams and Leopard 2 tanks respectively).

• As always, the West is doing the right thing - and as always, very late.

• This practice of delaying the correct judgment must end now.

• NATO states should provide necessary tanks - but not only.

• All of the offensive weaponry needed for Ukraine to succeed must be offered to Kyiv.

• This means ATACMS missiles for HIMARS, longer range cruise missiles, long-range Gray Eagle drones, and actual fighter jets like the F-16s and Swedish Saab Gripens (this one will require relatively more training and so NATO must get on top of this without further delay).

• d) economic commitment to match the gravity of the situation.

• This means that the EU must step up its game and start providing grants (like the US) instead of loans (current approach).

• This also means that the US must spend more money (as a proportion of its total GDP) to become the leader in provisioning of economic and military support for Ukraine.

• Washington needs to ensure moral authority to be able to demand higher contribution from other NATO allies.

• And this moral authority cannot be secured if the US commits funds to Ukraine that come to only around 0.23% of its total GDP.

• For comparison, Estonia’s commitment is at 1.09% of its GDP (the current leader) - fully 4x that of the US.

• e) Crushing Iranian weapons pipeline.

• National Security adviser Jake Sullivan is right to say that Iran is in effect committing war crimes by providing drones (and in near future, missiles) that cause humanitarian catastrophe.

• (side note: this is an obvious observation to make and a label to impose - but one that re-frames Iran as a rogue state - after many years of diplomatic engagement. An important global reminder that tacitly commits the EU/UK to similar positions - for if/when Washington decides to go with a Plan B and uses force, as opposed to attempting to renegotiate the JCPOA/nuclear deal)

• But what has been done to stop these war criminals?

• Sure, relevant IRGC commanders and companies involved in manufacture of drones have indeed been sanctioned.

• But it is not like these institutions traded on NASDAQ to begin with - IRGC companies are competent in surviving in spite of tough sanctions.

• To dissuade (or at least temper) Tehran’s involvement in the Ukraine war, an additional indirect approach is needed.

• The US must target the Iranian regime’s coffers.

• Washington must devote extra resources to track, identify and seize Iranian oil sales.

• Just like it did with the recent shipment of AK-47s to Yemen, America’s Navy must increase the resources devoted to seizing all illegal oil trades.

• And this policy shift must be communicated directly to leaders in Tehran - the regime heads must realize that continuous supply of arms to Russia will cost the regime dearly - at the time when it cannot afford to weaken and loosen its grip over domestic unrest.

• There are additional indirect methods too.

• One assumes that offensive cyber units in Kyiv would be extremely excited to cooperate with NATO professionals and jointly target key Iranian industries and IRGC assets.

• Closing off this Iranian tap is essential - Putin must see that all escape routes are closing off.

2. Crushing Russia’s Economy.

• Current sanctions in place are clearly not enough to affect Putin’s calculus.

• To be clear, they will bite: Treasury’s export controls especially, are going to cause a major blow to Russia’s long-term economic capacity - the Russian industry will suffer due to an extreme shortage of essential electronics and microchips.

• But these will take effect on a longer timeline: and Putin is betting that he only needs to outlast Ukraine another year or so: in his mind, this - coupled with few battlefield victories and incremental territorial gains - should be enough to dissuade the Western backers of Ukraine from further support - pushing Kyiv to settle on pro-Russia terms.

• Consequently, sanctions must align with this timeline too - inflicting the biggest amount of pain in the shortest amount of time possible.

• Oil price caps must be periodically reviewed and gradually lowered from the current $60 per barrel to Russia’s minimum profitable price point (somewhere in the high $30s/low $40s) - enough to incentivize continuous production (avoiding global price hikes) - but not enough to fund the war from bumper profits.

• This means that Russia’s financial industry, and especially its banking industry, must face full blocking sanctions.

• This has not happened yet - and should urgently take place.

• In addition, Moscow must be threatened (initially, privately) with: a) possibility of imposing full blocking sanctions on all private Russian companies (excluding few areas like fertilizer producers, medical supply producers, etc), and b) exclusion from the IMF (that would require 85% vote of all member states - doable, even if a stretch).

• Moreover, the overseas assets of Russian oligarchs or Russian state companies should be made subject to nationalization.

• If Russia refuses to stop and negotiate in good faith, these sanctions must go ahead, and Congress must pass legislation enforcing broad range of secondary sanctions against any foreign persons or nations that don’t comply with American sanctions: this means sanctions on banks, insurance providers, logistics providers, or other financial and/or non-financial entities that trade with or facilitate prohibited trade with Russia.

• In essence, Russia must face the possibility of turning into North Korea.

• And why would we not do that?

• At this point, Russia has caused more suffering to civilians across the globe than North Korea (which concentrates its harms on its own citizens).

• To be clear, such devastating sanctions will have a major impact on the world economy as well.

• But what is the alternative? And what is the price of a prolonged continuous war in Ukraine?

• Whatever the macroeconomic damage that comes from tougher sanctions, they will surely pale in comparison to a few more years of humanitarian suffering, refugee crises, and economic disruptions caused by this war.

3. Delaying the Ultimate China confrontation

• In an annual end of year conference call with the Chinese President, Putin said that the Russia - China relations were “gaining in significance as a stabilising factor in conditions of rising geopolitical tensions”.

• To this, Xi responded that Moscow and Beijing “closely co-ordinate and co-operate in international affairs and oppose unilateralism”, adding “sanctions and interference were doomed to fail”(a clear message to Washington).

• Putin and Xi are to meet in spring - and clearly, China is a lifeline that Russia is counting on.

• Preventing China’s unconditional support to Russia is by far the biggest challenge for Washington.

• Sure, private chats and side deals might do something, but fundamentally, the US would need to temper its tempo on sanctions against China.

• Beijing needs to have an incentive not to fund and support Russia as a spoiler against the West.

• As of today, such incentives are almost nonexistent: with extreme export controls, the US is imposing technological blockade on China, and the Indo-Pacific allies of Washington are rapidly militarizing to confront China.

• As such, Beijing would love nothing more than a distraction and energy (and military armament) drain to occupy and distract the West.

• The calculus was not so obvious in early summer - prior to Washington’s most restrictive measures against Beijing took effect.

• The policy against China is a correct one for Washington to pursue - but the timing and sequencing of these policies is not ideal.

• Washington must aim to deal with Russia first - before focusing on China.

• Ending the war in Ukraine should be the number one priority.

• Luckily for the Biden admin, there is some rhetorical opening from China.

• China’s top diplomat (head of the ruling Communist Party's foreign affairs office) Wang Yi, called for a ‘‘dialogue’’ and cooperation with the US.

• This allows the US to respond from a position of power, and ‘‘agree’’ with the frame - rewarding goodwill, and working on normalizing relations for the next year.

• Again, no major accomplishments are to be expected - but merely preventing a rise in the scale of Chinese support will already be a major win for Washington.

• The status quo of China’s level of support to Russia is not satisfactory for Putin - he is betting on a more intense backing, and Washington must thus work hard to prevent this very scenario.

• Ultimately, Putin’s manpower and technological edge must be crushed, his economy choked further, and his military stuck in a demoralized high-casualty war of attrition that comes with little progress, high casualties, and major embarrassing defeats to show for all of the Kremlin’s effort.

• Moreover, Russia must be isolated further, and the new reality of prosecuting the war (largely) without major external support must kick in.

• In other words, Putin must be convinced that at the current trajectory, he will not win, and that his staying power will not outlast that of the West.

• Only this will turn the tables on Putin, and max out the probability of either a) Ukraine’s outright victory, or b) Russia’s genuine willingness to end the conflict and withdraw its troops on acceptable (first and foremost to Kyiv) conditions.