Weekly Overview

Ukraine War Updates:

• Donbas battlefield & outlook.

• The Battle for Severodonetsk rages on.

• Ukraine has had some success with its counterattacks - pushing Russian troops out towards the outskirts of the city.

• In addition, on Sunday June 5, Ukraine killed 11th Russian General: Major General Roman Kutuzov.

• Russia in turn targeted capital Kyiv - for the first time in over a month.

• Ostensibly, the cruise missiles launched from a Tu-95 aircraft, were targeting T-72 tanks donated by NATO states - but whether or not that was the actual target, Russians missed.

• EU oil embargo and new sanctions on the Russian Elite.

• The US imposed new sanctions against a number of Russian and Belarusian entities (322 in total), and strategically/logistically important companies (like the “Voronezh Joint Stock Aircraft Company” - one of the largest Russian factories for passenger and cargo aircraft).

• In addition, closest members of the Russian elite, as well as Putin’s close friend Sergei Roldugin (known as Putin’s cellist) were also sanctioned.

• These new sanctions are arguably more powerful than the more symbolic ones imposed against Putin himself (and against other notable official state leaders like the Foreign Minister Sergey Lavrov).

• This is because the majority of ill-gotten wealth is held under the names of those close to Putin (but not holding any official government roles).

• Going after them will produce actual results, and will begin to cause some headaches for Putin (and his closest political leaders - who now have much stronger personal incentives to stop the war and preserve their wealth).

• The EU also stepped up.

• In addition to measures against major Russian banks and state broadcasters, the EU finally announced an embargo on Russian oil: the restriction will cover 90 percent of Russian oil imports, and will be implemented by the end of the year.

• There were furthermore some political concessions: “temporary exemption” for pipeline crude oil deliveries - benefitting mainly Hungary, and “temporary derogations” for Bulgaria and Croatia - due to their “specific geographic exposure”.

• (side note: Hungary also succeeded in removing Russian Orthodox Church Patriarch Kirill from the list of freshly targeted by the new EU sanctions. This is a major gesture to Putin (which Orbán will surely not forget to emphasize next time they meet), and also a nod to Orbán’s own conservative base)

• Both measures, concessions to get Hungary on board, and a phased approach to restrictions, have been thoroughly advocated for by these cables.

• The EU has now crossed a major political Rubicon - this decision will have major implications for the Bloc’s strategic independence from Russia - in the long-term, and when/if needed, the EU will have an easier time imposing devastating sanctions on Russia.

• Russia on the other hand, will suffer immensely - its oil export volume will shrink, and Moscow will have less diversified client base: meaning that price leverage is all but gone - China (importing 15% of Russian oil) will surely demand lower prices from a troubled supplier with few options.

• But in the short-term, and due to the increase in the price of oil, Russia continues to earn even more revenue from the sale of oil.

• Apart from long-term solutions (downstream exploration investments, more players in the market etc), there are primarily two effective means of reducing the Kremlin’s revenue from the sale of Russian oil: 1) special EU/US allies joint tax on the purchase of Russian oil (where Russia would have to reduce its prices to remain competitive - and thus make less profit from sales), and 2) the ‘‘reverse OPEC’’ buyer’s club agreement on a price cap (where US allies agree on a price cap and sanction anyone refusing to pay that minimum price. Beyond sanctions, most countries will actually have an incentive to agree to a lower price paid to Russia - since this would lower their own energy import costs).

• The second option is faster to accomplish and enjoys the power of interrelated incentives.

• But regardless of the chosen strategy, the US must urgently step up and demonstrate leadership in achieving this objective: the Kremlin must face the reality of crashing oil revenue for Putin to fundamentally reassess his options - realizing that time is not his side.

• Macron’s misguided priorities

• True to his reputation, the French President Emmanuel Macron didn’t wait for too long before making another strategically unsound pronouncement:

• "We must not humiliate Russia so that the day when the fighting stops we can build an exit ramp through diplomatic means…I am convinced that it is France's role to be a mediating power.[emphasis added]”

• Of course, let’s all wrap up this war so that France can get back to playing a role of a great power mediator - after all, the biggest military invasion on continental Europe since WWII shouldn’t delay Macron’s ambitions for the French self-importance and its special role in advancing Europe’s “strategic autonomy”.

• Macron is inadvertently doing his best to tarnish the whole idea of strategic autonomy - a concept that is becoming increasingly unattractive to all of the European states (say Baltics, or Poland, Romania, Sweden and Finland) that care about their security, and actually need to act strategically in order to preserve their autonomy.

• But going back to this particular statement, first off, never mind Putin - Macron needs to stop humiliating himself.

• Unfortunately though, this sentiment that we must somehow care a lot about preserving Putin’s face, is gaining some momentum and thus needs to be addressed.

• This whole approach is wrongheaded for a number of reasons:

• 1. At the very basic level, (and even if Macron was rational in pursuance of this strategy) this policy reflexively presumes (without much evidence) that Putin is currently driven by a desire to avoid humiliation rather than seek extra military success and thus, political gains.

• If avoidance of embarrassment was indeed his primary objective, then he would have sued for peace immediately after taking over Mariupol: the invasion of that specific city would have allowed Putin to claim victory, and his propagandists would create a narrative that Russia successfully “demilitarized” and “denazified” Ukraine - who is now also willing to accept neutrality.

• But he did not stop at that opportune moment - instead, he proceeded with new war aims: territorial gain in the East of Ukraine.

• 2. Preventing unnecessary humiliation can only ever be a diplomatic tactic, and not an end in itself.

• A tactic that can only be granted in return for significant concessions from Russia.

• Sure, if Putin wants to retreat and agree to a genuine settlement, we could come up with appropriate ‘‘exit ramps’’ to prevent unnecessary embarrassment.

• But he is not doing that, and there is little indication that Putin is currently looking for a way out.

• Instead, all evidence points to the fact that Putin will likely consider his options (after capturing Severodonetsk) and may even decide to add to the current war aims and seek further territory or strategic objectives.

• For example: further invasion of Ukraine’s Black Sea coast, or a new fresh attempt against Kharkiv in the northeast.

• In these circumstances, promoting this policy of saving Putin’s face can only ever backfire - emboldening Putin (who would sense weakness and lack of resolve) to push his advantage and press for more concessions, and/or proceed with a further invasion.

• 3. Avoidance of humiliation is Putin’s problem - not ours.

• As discussed above, he and his propagandists can spin this war in many alternative ways - creating any alternative narrative as they like.

• There are plenty of facts on the ground that can allow Russia to claim victory.

• A true humiliation (resistant to propaganda and spin) would only ever take place if Ukraine would not only kick out all Russian troops, but would also then enter Russia proper and demand certain political/security guarantees before their withdrawal - the probability of that happening is almost zero.

• And even then, even if such an unlikely scenario ever materialized, it would still not happen in a day - Putin would get plenty of notice, and could easily freeze/stop the conflict before it risked crossing the ‘‘humiliation threshold’’.

• It is important to remember that Russia is still claiming that this is still a “special operation” and not actual war - meaning that they don’t actually have to demonstrate significant territorial expansion to claim victory.

• The Kremlin propagandists can always fabricate a victory even if they were to lose all newly gained territories - the ‘‘denazification’’ (defeat of Azov battalion), “demilitarization” (destruction of military-industrial facilities), and Ukraine’s agreement to neutrality, could all be used to announce a total victory.

• Putin has his own media spin masters to create alternative domestic political reality - Macron or any other Western leader, should not act like an unpaid intern for the Kremlin’s propaganda department.

• 4. Consider what is not being said

• Finally, Macron’s policy would imply that Ukrainians would need to carry the burden of being humiliated.

• Someone would need to be humiliated if not Putin - Macron would rather have millions of Ukrainians give up on resisting an unprovoked genocidal war, and willingly let go of the invaded 20% of their territory: since not humiliating Putin, ending further Ukrainian counterattacks, and freezing the conflict at its current form, would all lead precisely to that scenario.

• This is absurd, Putin can always spin victory out of thin air, but Ukraine is a democracy and the truth matters - in effect, we would be asking Zelensky to accept actual humiliation so that Putin can save his face.

• Why? Why should a nation willing and capable to fight for its sovereignty, dignity, and life, be forced to end its resistance?

• What for? So that Putin saves his face and Macron gets to play his favorite role of a (to date, totally failed) mediator?

• Again, this is both a strategically nonsensical and morally unjustifiable “policy”.

Further military aid and Biden’s self-deterrence

• To its credit, Germany decided to supply Ukraine with advanced air-defense systems.

• The UK and the US (HIMARS) both provided MLRS systems.

• (side note: the question is whether the US will now supply ATACMS ballistic missiles for its HIMARS MLRS system - these missiles have a range of 190 miles, and could really amount to a game changer: allowing Ukraine to engage in long-range pinpoint strikes).

• But all this good work was overshadowed by President Biden’s strategic communications error, and displayed self-deterrence.

• On Monday, he announced that the US would not supply Ukraine with rocket systems with an extensive range - allowing them to strike targets deep within Russia.

• This was a significant miscalculation: such over-exaggerated fear of confrontation with Russia was indeed common in Biden’s statements prior to the war.

• One hoped that the situation in Ukraine, Washington’s openly announced political objectives in this war (that Russia must suffer such debilitating injury that a repeat offense becomes unlikely), and the US track record of supplying advanced lethal weaponry, would all make such a stunning rhetorical reversal extremely unlikely.

• By displaying a clear fear of escalation, Biden bestowed Putin with much-desired prestige - the Kremlin can once again tout America’s excessive restraint and in practice, self-deterrence, as Putin’s achievement in promoting Russia as a power to be feared.

• Here is a good rule of thumb: if Russia responds by labeling your actions as ‘‘rational” (how former President Dmitriy Medvedev described Biden’s announcement), then you have committed a grave strategic error.

• Both Biden’s announcement and this policy in general, are extremely problematic - for a number of reasons:

• 1) Even under strict terms of international law, engaging in deep strikes against legitimate military targets of an attacking party, and in pursuit of self-defense, is wholly legal - Ukraine is well within its rights to do so.

• 2) To date, all of Ukrainian deep strikes against Russia were targeting legitimate military installations and/or locations of high logistical value - with minimal civilian casualties too.

• Given that Ukraine holds an upper moral hand in this conflict, given its past deep strike conduct, and given its realpolitik incentives to keep its reputation clean, there is little suggestion that future longer-range strikes against Russia would have been conducted against anything but legitimate military targets.

• 3) On a strategic level, this solidifies Russia’s asymmetric power in the conflict: Putin can do all he wants on Ukraine’s territory, and face little if any repercussions back home.

• Where is an incentive to not continue on this very path? If costs of the conflict are carefully circumscribed and limited to a specific geographic area only, Putin has fewer disincentives to push him away from further adventurism.

• Biden’s decision crystallizes Putin’s advantage in asymmetric risks/costs.

• Ukrainian citizens in Lviv, Kyiv and Odessa can get killed by random missile strikes, but nothing similar can happen in Russia.

• 4) On a grand strategic level, this will boost Putin’s appetite for more risks - he is already seeing divided Europe and efforts to wrap up the conflict with a ceasefire that would literally freeze the status quo - solidifying his gains.

• Now, he is additionally witnessing an American President that is reluctant to inflict significant military costs on Russia.

• All this could mislead Putin into believing that he possesses more leverage than that granted by the actual facts on the ground - this could then lead to further recklessness.

• Indeed, there are already early signs of this taking place: Russian foreign Minister Lavrov warned that providing Ukraine with MLRS systems could drag third countries into conflict - exactly how this would happen was not elaborated - of course.

• There is very little logical reason to conclude that a third country would be dragged into the conflict - why would they? Is Ukraine going to target some third party by mistake?

• No - this is rather a blatant threat against any European NATO state: play a role in delivery of these weapons, and you might be attacked.

• In addition, the Russian Foreign Ministry accused Germany of altering the balance of power in Europe by ‘‘remilitarizing’’ - this is rather brazen by even Russian standards.

• It is crucial that Germany responds with resolve - not with the typical hippie gibberish from Chancellor Olaf Scholz (like, “can violence be fought with violence?”).

• 5) Causing massive morale issues in Ukraine.

• The decision to deprive Ukrainians of a symmetric capabilities was already demoralizing to all the relevant stakeholders: Zelensky and his generals, general public, and soldiers on the ground.

• But to then go further and seek assurances from the Ukrainian side (and they duly obliged) that they will not use the donated rocket systems/MLRS to engage in deep strikes? Well, that’s just a new low point.

• American leaders have effectively asked Ukrainians to not fight too hard (and smart), and forgo attacks against strategic Russian targets: all of their high-value targets that are located deep within Russia - their air bases, logistics depots, military-industrial complex etc.

• Aside from the political and strategic repercussions, there is additionally, a huge issue with actual practical enforcement of this policy: how will American leaders prevent the use of HIMARS near the Russian border? Those have ranges of 50+ miles (even when only ordinary ammo is used) and can therefore strike deep into Russia.

• What about the long-range drones (MQ-1C Gray Eagle) armed with Hellfire missiles? Will American advisers prevent their flights into Russia? What if the drone was in the middle of chasing a high-value Russian target - will they have to abort the mission? How embarrassing and pathetic would that be?

• This new sudden fear of confronting Russia is rather unexpected.

• There is a broader pattern here, in his NYT op-ed, President Biden says explicitly (when nobody was even asking) that he doesn’t intend to have Putin removed from power - this coming from a leader that only two months ago, was declaring idealistically, that Putin “cannot remain in power” (these cables have criticized that statement as well - the US President shouldn’t engage in rhetoric that he is then unwilling to or incapable of backing with concrete action).

• But why the sudden change in external displays of resolve? Why is the US leadership suddenly signaling a fear of confrontation?

• This part is pure speculation: was Putin able to successfully blackmail the US over grain exports ? Did Putin promise to ease the Black Sea blockade in return for the US reining in Ukraine?

• Or perhaps the Biden admin is scrambling to compensate for the revelation that the US was engaged in offensive cyber operations against Russia? (which there was nothing wrong about - in fact, it was long overdue as Russia has been long engaged in offensive cyber campaigns against mainland US targets).

• Regardless of exact reason/s, now is not the time to pull back support and demoralize Ukraine - they should be unequivocally encouraged and supported to engage in successful counter attacks, and prevent Putin’s solidification of his territorial gains - which are currently at 20% of the Ukrainian territory.

• If Putin succeeds in crystallizing his gains, he will send the message to the entire world, that in spite of all US/NATO leadership and resistance, and in spite of all economic and long-term strategic costs, Russia could get away with an invasion of a sovereign country in 21st century: if this is not a deathblow to the US-led global rules-based order, then what is?

• And on a more practical level, after taking over Severedonetsk, Putin could dig in and enjoy his new increased options: demand tougher concessions from Kyiv, whilst recouping and considering new axes of invasion: perhaps targeting the rest of the Ukrainian Black Sea coast.

• That cannot be allowed to happen - now is not the time to hesitate and pull back support: Ukraine must be equipped and encouraged to counterattack and strike all legitimate high-value Russian targets - regardless of where they might be.