Weekly Overview Cables - Ukraine War, hidden incentives of the grain deal, and Putin's trip to Iran: a new milestone.
Ukraine War Updates:
Donbas battlefield & outlook.
President Zelensky fired several intel officials - including his spy Chief (head of Ukraine’s SBU) and childhood friend Ivan Bakanov: citing evidence of dozens of intel officials working for Russia.
Bakanov (and others’) failure to prevent this mass treason, was probably not the only reason for the firing: head of SBU was long criticized as openly incompetent - his major error leading to the fall of a crucial southern city of Kherson.
Regardless of precise motivations, Zelensky demonstrated some mettle and resolve in firing his childhood friend: presumably one of few individuals he could trust in the den of Russian double-agents that is now Kyiv.
Things were more rosy on the actual battlefield.
War is far too complex for its analysis to be reduced to a single variable, and no one factor should be pointed out as a game-changer - but America’s HIMARS comes close to it
Ukraine has now hit more than 100 high value Russian targets enabled by this high-mobility, precision-guided rocket system.
Russia’s ammo depots and logistics centers are now all vulnerable to these attacks.
And Ukraine is also using these rockets to target key bridges in strategic locations (for example, the one in Kherson - a most likely target for Ukrainian counterattack).
It doesn’t help that Russia never developed (at least in scale) effective C-RAM (counter rocket, artillery and mortar) systems (unlike, for example, Israel with its Iron Dome system).
The increase and impact in Russian losses is so high, that the Kremlin is now resorting to fake news propaganda videos alleging successful destruction of HIMARS (so far, all of them have been proven to be false by the open-source intel community).
HIMARS creates new operation dilemmas for Russia - either they will have to:
1) Start relying on smaller/more dispersed logistics depots, and use trucks (which they are also running out of) instead of trains for central hub replenishment, or;
2) They will continue as it is - hoping to hunt down and successfully destroy all of the HIMARS under Ukraine’s possession (an openly articulated priority for the Russian army).
If they go with the first option, overall operations will slow, and Russia’s pace of forward advance will have to be reduced.
In addition, use of trucks would mean that these are now vulnerable to less exclusive (and more abundantly available) weapons in Ukraine’s inventory - for example, suicide drones or Bayraktar TB-2 drone strikes.
Alternatively, they might continue as it is, and risk even higher losses - and still fail to destroy sufficient numbers of HIMARS in the process.
No matter what route Russia takes, it is likely that Moscow will have to recalibrate operational tactics very soon: the Russian army cannot afford to keep losing high-value targets whilst dealing with ever more frequent internal incidents/attempted mutinies caused by low morale, and at the time when its army could soon “run out of steam”.
All of this anxiety was a probable factor in Russia reiterating its red lines - former President (and the current deputy chairman of the Security Council of Russia) Dmitry Medvedev warned that an attack on Crimea could constitute a ‘‘systemic risk’’ (which (intentionally) sounded awfully similar to ‘‘existential threat’’ a previously articulated threshold for Russia’s nuclear use) resulting in a severe Russian response: a ‘‘Judgement day’’ (implying the use of nuclear weapons).
Indeed, Russia’s potential overreaction and risk of escalation is the primary reason why the US is still refusing to provide longer range (300km+) ATACMS missiles for the already supplied HIMARS: fearing that Ukraine could use these longer-range missiles to strike deep within Russia - leading to an extreme escalation.
But this is a faulty logic, for even if the concerns and the policy of being overly careful about provoking Russia (in itself a wrongheaded approach - previously discussed in more detail), was correct one to take, the reasoning still does not add up: Ukraine can already strike targets within Russia with standard HIMARS ammo (as well as drones etc).
ATACMS could prove exceptionally valuable to Ukraine - allowing its army to strike all valuable targets in the entire region of Donbas.
The provision of this crucial technology should not be delayed due to unsound reasoning.
Western military support: too slow.
The US will (amongst other capabilities) provide Ukraine with four additional HIMARS units, 36,000 rounds of ammo, and 580 Phoenix ghost tactical drones.
In addition, there are talks of supplying Ukraine with fighter jets.
We are now five months into this war, and NATO leaders have just started to discuss this option: so much time was wasted on this.
Back in March (at the time of MIG-29 fiasco), these cables advocated for early training and preparation of Ukrainian pilots: they could have been ready to take over new systems on short notice.
Well, the announcement was made (presumably, to test Russia’s reaction) but further delays will be unacceptable.
Ukraine must be equipped with everything that it needs for a successful counterattack: for if Kyiv fails to deliver concrete battlefield results in early autumn, it is possible that Europeans facing cold winter (and shortage of Russian gas) will restart the pressure on Ukraine to offer concessions and settle: granting a victory to Putin.
Underlying dynamics of the Ukraine grain deal.
Ukraine and Russia agreed to a Turkey-brokered deal on the export of Ukrainian grain.
The deal stipulates for the creation of a ‘‘control center’’ in Istanbul Turkey - which will coordinate and monitor grain exports (Turkey will also ensure that the ships carrying grain are not transporting weapons).
This is a significant achievement: at least 20 million tons of grain will be released as shipments from Ukraine: in itself, this is consequential enough to provide a significant relief to Ukraine’s economy.
Crucially, the deal does not place any obligations on Russia to abstain from attacking Ukrainian ports - only ships and grain stores themselves are to be spared.
Indeed, with strikes on Odessa (naturally, officially denied by the Kremlin) just a day after the deal was signed, Putin was quick to remind Ukraine that he is not slowing down or tempering down his military ambitions.
In the meantime, the US Undersecretary of State Victoria Nuland was quick to claim credit for America’s leadership in the global PR campaign to pressure Russia into allowing the grain exports: “Moscow felt the hot breath of global opprobrium”.
Although it is true that the increase in world hunger did not really win Russia any friends, there are far more nuanced incentives at play here.
There are a number of factors that probably had at least some effect on Putin’s calculus, (including the ‘‘global opprobrium”) but there were also at least three concrete reasons for the Kremlin to concede:
1) Russia was hurting the swing state/partner countries.
Russia’s partners in the Middle East, for example the Gulf states that have both: a) tempered their diplomatic response to Russia’s invasion of Ukraine, and b) Brazenly acted as financial hubs for Russian monies trying to escape long tentacles of Western sanctions, have long been worried about the geopolitical shortages of the grain shortages.
The Middle East and Northern Africa is full of countries dependent on Ukrainian grain to prevent widespread hunger: which usually precedes severe social conflict, and therefore, political instability in the entire region.
Then there are countries like India - already struggling with food shortages (so much so that they had to ban their own export of wheat).
Although the threat of hungry northern African refugees flooding Europe was a powerful lever in Putin’s hands, the collateral damage to partners that it needed was also significant: and the Kremlin could no longer afford to sustain this damage.
2. Turkey.
Turkey was already suffering from high inflation - Putin couldn’t afford to annoy them further with high food costs.
Although Turkey supplied (and continues to do so) Ukraine with high-tech weapons and know-how, it still acts as an indirect diplomatic channel for the Kremlin: connecting Russia with the outside world.
Russian trade and money can still flow (at least for the foreseeable future) through Turkey.
This deal will lower food costs, and remove one of the headaches for Erdogan - who is facing a re-election in 2023, and is currently bleeding in opinion polls.
The deal will also provide a direct financial benefit to Turkey: since it will act as one of the hubs to process grain from Russia and Ukraine.
3) Domestic economic incentives.
Russia will now boost its revenue from exports of its grain, as well as from other agricultural products like fertilizers.
Although sanctions relief for these exports wasn’t a formal part of the Istanbul deal, negotiations were ongoing in parallel.
And Putin insisted on these concessions as a condition to accepting the grain deal with Ukraine.
The US leadership was certainly correct in allowing for this to happen by reassuring banks, shipping, and insurance companies that these specific exports wouldn’t breach American sanctions on Russia.
Beyond obvious macroeconomic benefits, let’s note the direct benefits to Russian regime leaders too: grain & fertilizer money will flow to some big players in the Russian agriculture industry - an industry managed by Russia’s agriculture minister Dmitry Patrushev: son of Nikolay Patrushev, Secretary of Russia’s security council, and the leader of the siloviki/security apparatus faction of the Kremlin’s power vertical.
Putin’s Iran trip marks a new chapter in the Russia - Iran relationship
Ostensibly, Putin visiting Tehran had multiple objectives - he did after all also meet with Turkish President Erdogan: discussing potential new military campaigns in Syria and Iraq, Ukraine’s grain exports (and probably, also the situation in Karabakh).
And although it is difficult to dismiss the meeting with Erdogan as a sideshow that could have been arranged elsewhere (unlikely, given that the optics of a NATO leader inviting Putin to Turkey, or Traveling to Moscow to meet him there, would be too damaging to Turkey. And there was no good legitimate-looking reason for any third country to host the meeting on such short notice), the primary purpose of Putin’s Tehran visit was to solidify and expand the nature of Russia’s relationship with Iran.
And that he did - indeed, one could plausibly argue that this is a new chapter in Russia - Iran relationship.
Consider the following: not only is Iran now arming Russia with its drones in a war with Ukraine (something that even China is reluctant to do), but Tehran provided the strongest possible rhetorical support to Russia (excluding joke/insignificant states like Syria and North Korea).
Iran’s Supreme Leader Ayatollah Ali Khamenei had the following to say about Russia’s invasion of Ukraine:
“War is a violent and difficult issue and the Islamic Republic is in no way happy that civilians get caught up in it, but concerning Ukraine, had you not taken the initiative, the other side would have taken the initiative and caused the war…NATO is a dangerous entity. The West is totally opposed to a strong, independent Russia. If the way is opened for NATO, it will recognize no limits. If it hadn't been stopped in Ukraine, it would have later started a similar war in Crimea”
This is straight out of the Kremlin’s propaganda playbook.
Iranian Ayatollah did something that no head of state would thus far dare to do: repeat the Russia Today presenters’ talking points.
Even Russia’s allegedly ‘‘no limits’’ partner, China is not justifying Russia’s ‘‘initiative’’ in starting a war.
In previous cables, (and in the context of the ongoing war in Ukraine) we have discussed what Russia gains from Iran: from diffusing and distracting America’s power, providing leverage over Gulf States, acting as a check against Israel in Syria (when Russia can hardly afford any more resources to that operational theater), to more practical benefits like know-how on sanctions evasion and drones (and potentially diverse hardware in future) to be used in Ukraine.
What about Iran?
Iran’s gains.
1. Industrial/financial.
There is already an early and quick victory for Tehran: a memorandum of understanding (worth around $40 billion) between the National Iranian Oil Company (NIOC) and Russia's Gazprom was signed just in time for Putin’s trip to Iran.
Under this deal, Gazprom will provide help and technical expertise to NIOC in developing two gas fields and six oil fields - as well as taking part in liquefied natural gas (LNG) projects and construction of gas export pipelines.
Not only is this a direct financial/industrial gain to Iran, but it will also increase Tehran’s leverage vis-à-vis the EU - incentivizing the latter (desperately seeking alternative gas supplies) to double down on normalization (as opposed to the war) path in relation to Iran’s nuclear program - putting pressure on Washington.
In other words, (even if only in the medium to long-term) Russia is literally going to build Iran’s indirect geopolitical leverage over both the EU and the US.
2. Boosting its military industrial complex.
With its provision of drones to Russia, Iran has an opportunity to enter a low-cost/high impact military drones segment with a worldwide market.
Turkish Bayraktar TB-2 drones’ success in Syria, Karabakh, Libya, and now in Ukraine, have all bolstered its reputation and boosted global demand for them.
Turkish Bayraktars have customers all across the world: from NATO member states, to African/Asian states mired in conflict (and Saudi Arabia/UAE/Qatar are likely going to be new customers as well).
To be clear, even if Iran performs really well, it will not enjoy similar markets - for not only is it not a US ally/NATO member like Turkey, it faces some of the toughest sanctions.
But even long-term contracts with Russia (and potentially, few more countries in Africa. It would be a stretch to assume that countries like India would dare to become potential customers as well - crossing America in such a brazen fashion) could massively boost its military-industrial complex - securing Iran a significant amount of non-energy revenue.
To be clear, this comes with a major risk - once Ukrainian forces shoot a number of them in conditions of active battle (where their tactical deployment will be different from their use in one-off strikes across the Middle East), the tactical vulnerabilities of Iranian drones (shareable with Israel and Gulf States) will be out in the open.
3. A long-term committed ally in denting America’s rules-based order, and the strategic pressure points that come with it.
Iran will share know-how on successfully evading sanctions, and sourcing critical supplies for military gear - teaching the Kremlin on ways to sidestep crucial Washington choke-points.
The benefit will be mutual - the more countries join in creating alternative supply chains, the easier it gets for the coalition of revisionist powers to challenge Washington’s tactical and strategic grip over the global tools of coercion and disincentives: the network effect will kick-in with full force.
And to be clear, Iran’s aspirations go beyond a desire to weaken sanctions and limitations across the supply chains.
Khamenei has grander ambitions still - weakening the influence and coercive power of the US Dollar:
"The U.S. dollar should be gradually taken off global trade and this can be done gradually.."
Not very practical in the short-term, but a coalition of revisionist powers can (as Khamenei himself says) start the process gradually.
4. Distraction and counterweight in nuclear talks.
The JCPOA/nuclear deal is most likely going to fail - it is hard to see how it could be salvaged this late in the game.
In addition, and if the MI6 Chief is correct in his assessment that the Iranian Supreme leader actually doesn’t want a deal, (which would make sense - the leverage rests squarely with Iran - and the potential of catastrophic (to Iran) alternatives have not been painted by the US with sufficient credibility).
In this context, and even if the US offers certain concessions to pull Iran back to the table (highly unlikely in itself),Russia (upon Tehran’s request) could act as a spoiler - throwing in new obstacles to the deal and delaying the process: all the while providing Iran with an excuse to avoid return to the JCPOA whilst looking relatively passive (and less blameworthy - relevant if Washington decides to sell the use of military force to the domestic audience) in the failure of the talks.
5. Possibility of Russia providing expertise and military tech for nuclear weapons.
Building a nuclear weapon and reaching the weapons-grade level of Uranium enrichment (90%) are two different things: the latter can be easily accomplished in a matter of weeks.
The former will require specialist skill - the fact that all of this will have to be done in utmost secrecy, will complicate things further.
Russia is not necessarily interested in Iran getting a nuclear weapon - but neither would this harm Russian interests in a radical way.
Although Russia-Iran interests in the Middle East do frequently clash, there is nothing that couldn’t be resolved without a confrontation: let alone a nuclear one.
On the other hand, as a nuclear power, Iran would leave a definitive massive dent in America’s supremacy in the Middle East.
So Iran will most definitely pitch this to Russia.
Having said all that, it is still unlikely (on balance) that Russia would provide a direct military instruction on the development of nuclear weapons - but it need not do so in order to secure itself a massive amount of leverage either.
Mere flirting from the Kremlin - implying that such a cooperation could be forthcoming (cloaked in the acceptable language of nuclear energy cooperation), could be turned into a potentially powerful leverage against the US and the EU: Moscow could then use this leverage to demand relief of certain sanctions or commitments to avoid supplying Ukraine with certain weapons.
This implied threat could also be used against Gulf states - to pressure them into other concessions or benefits.
6. More control in Syria and leverage over Gulf states.
Now that Russia and Iran are forming a closer partnership, Tehran will push for more control and space in Syria.
Russia will likely agree to this, providing freer reign to Iranian militias (using this on/off button of allowing Iran more leeway as leverage against Israel, Turkey, and Saudi Arabia).
Iran could also press Russia for commitments against arming its arch-enemies in the region.
If Saudi Arabia fails to secure further “offensive” ammo from Washington, it will undoubtedly turn to Russia for advanced cruise missiles like “Kalibr’’.
And this would not be the first time either: back in 2017, Russia agreed to sell $3 billion worth of arms to Saudi Arabia.
And included in the deal, were the the rights for local manufacturing of Kornet-EM anti-tank missiles, TOS-1A multi rocket launchers, and AGS-30 automatic grenade launchers.
And in August 2021, Russia and Saudi Arabia signed another joint military development/cooperation deal.
In other words, when it comes to the possibility of supplying the Kingdom with advanced Russian weapons, a lot is currently on the table.
Closer partnership with Russia will allow Iran to pressure Moscow against arming one of its primary adversaries in the region.
Whether Moscow will concede or keep playing regional powers against each other is another question.
And the answer to this question will largely depend on to what extent will Washington succeed in creating clearer fault lines between its regional allies and the incipient Russia-Iran alliance.
For that to happen, and for Arab autocrats to fall in line, a confident exercise of leverage, power, and disincentives will be needed more than the pathetic fist bumps with the Saudi Crown Prince MBS.