Weekly Overview Cables - Ukraine War, strategic challenges and implications to Putin arising from the Moscow terror attack.
Ukraine War Updates.
1) Zelenskyy goes fully transparent about the dire conditions facing Ukraine.
In an interview with the Washington Post, Ukrainian President Volodymyr Zelenskyy revealed that delays in American security assistance are compromising Ukraine's ability to maintain initiative on the battlefield: highlighting the critical dependence of Ukraine's defense on American air defense systems, missiles, electronic warfare jammers, and 155mm artillery shells.
Zelenskyy warned that ongoing material shortages might lead to Ukraine gradually losing more territory and population, as maintaining a smaller but stable frontline is preferred over a broader, vulnerable one susceptible to Russian breakthroughs.
He mentioned efforts to avoid retreats from certain frontline areas and noted stabilization efforts near Avdiivka, Donetsk Oblast.
The Ukrainian President emphasized that the planning and execution of counteroffensive operations hinge on the certainty of US military aid, suggesting that without knowledge of forthcoming assistance, strategic decisions are hindered.
Zelenskyy revealed that Ukraine is conducting strikes against Russian oil refineries and other strategic targets as a form of retaliation against Russian attacks on Ukrainian energy infrastructure.
(side note: and Russia’s attacks on power plants last week underscored the importance of America’s air defense support in protecting Ukraine’s core infrastructure from Russian strikes. Ukraine's leading private energy company, DTEK, reported significant damage due to Russian aggression: five out of six power plants are either damaged or destroyed. As a result of two weeks of missile and drone strikes by Russia, DTEK has lost 80% of its power generation capacity. Repair efforts for the devastated energy infrastructure could extend up to 18 months, according to DTEK officials. The recent Russian attacks targeted both thermal and hydroelectric power facilities across central and western Ukraine, with the strikes occurring overnight on Friday.)
2) Russia continues to introduce innovative battlefield technology
There is now ample footage of Russia deploying UGVs (unmanned ground vehicles) Armed with AGS-17 Grenade Launchers west of Bakhmut.
Such vehicles aim to absorb the brunt of the most hazardous aspects of the ground assault operations.
We have frequently discussed how Russia’s recent battlefield success has come at an inordinate cost in both blood and treasure.
As an example, Russia lost hundreds of tanks (364 - 1.5x more than the entire tank arsenal of the UK) and other armored vehicles (748) and sustained casualties north of 47k during the capture of Avdiivka.
But Russia is also adapting technologically, and continues to introduce new innovative tools to minimize casualties.
In addition to UGVs, there are unmanned aerial systems like the Orion, capable of performing intelligence gathering missions, and the RB-341B Leer-3 electronic warfare system, which delivers cell tower jammers via drones.
And ground unmanned systems are not limited to those with assault roles: there is for example the Uran-6 mine-clearing robot.
(side note: lack of mine-clearing equipment was one of the major tactical reasons for the failure of Ukraine’s counteroffensive in the summer of 2023: Ukrainian soldiers were frequently stuck in the first and second lines of the Surovikin line..)
3) Ukraine’s deep strike capabilities face a new challenge.
The Russian military is creating mobile fire groups aimed at combating Ukrainian drone threats: these groups will be equipped with thermal imagers, electronic warfare systems, and machine guns on pickup trucks, targeting drone attacks.
Attacks on valuable military targets deep within Russia have thus far been very successful (more on that later below), but Moscow is now racing to adopt new solutions to counter this threat.
Crocus City Hall attack presents major strategic dilemmas and challenges for Moscow going forward:
1) Redirecting resources to tackle terrorism.
In Russia, FSB is the agency traditionally in charge of anti-terrorism.
The war in Ukraine redirected a lot of resources towards covert operations in support of the Russian army.
This will either: 1) need to change (and FSB will once again redirect its resources towards its traditional anti-terrorism objectives) or, 2) no substantial reallocation of resources will take place - and Russia will remain vulnerable to future/further terrorist attacks.
But the potential reallocation of resources will not end there: although it is unlikely that formal Russian troops would be redirected towards the middle east, Africa or Afghanistan, this is not necessarily the case with mercenaries like the Wagner group.
Wagner is already present in Africa and Syria - although their numbers have been dwindling (weakening Russia’s promises of a security support to countries like Mali and Niger that ditched the West in favor of Moscow).
This will likely have to change - more mercenaries are likely to be redeployed to Africa to target IS offshoots in the region.
In addition, it is likely that Russia would intensify its support for the Taliban in a campaign against ISIS-K.
Russia was already providing arms to the Taliban - there may now be other resources on the way as well.
It would not be too surprising to see Russian mercenaries on the ground acting as advisers.
The threat from ISIS-K is acute: failure to prevent future repeat attacks of similar nature/magnitude could result in a significant dent in Putin’s popularity and impose high political costs on his regime.
As such, and no matter how inconvenient, Russia will likely redirect a lot of hard power resources towards a campaign against ISIS - weakening its hand in Ukraine.
2) Immigration and Labor.
Putin has always pursued a very liberal immigration policy.
At a first glance, this is a pretty surprising attitude towards immigration for someone so overtly cloaked in traditionalism, nationalism, and imperialism.
But this permissive immigration policy was borne out of necessity not nobility: Russia is suffering from a long-term demographic decline and is in want of additional labor to close the capacity gaps in its economy.
Russia’s demographic challenges are not new: it has been a long-term issue, with the number of births declining significantly from 2.5 million in 1987 to 1.2 million by the end of the 20th century.
The situation has worsened significantly since then however: Russia’s fertility rate stands a meager 1.5 per woman (and is ranked 171st globally) - well below the replacement rate of 2.1 needed to maintain the current population size.
The rate of population decline has accelerated in recent years, with Russia’s statistics agency Rosstat reporting a decrease of 430,000 people in its latest demographic report in 2021 - marking the largest natural population decline since the end of the Soviet Union in 2021.
This decline has been nearly tripled since 2020, highlighting the severity of the situation
And there is not much to look forward to either: current projections indicate that Russia's population will decrease by more than 7 million over the next two decades, a trend that has been ongoing for several years and is exacerbated by the country's high mortality rates, particularly among working-age males
As a result of these demographic/labor market challenges, Putin has pursued a conspicuously liberal immigration policy for the last couple of years.
Immigrants from the former soviet union and central Asia in particular play an outsized role in this policy.
And this applies to Tajiks as well (nationality of the terrorists detained for the Crocus City Hall terror attack) - there are more than 1 million of them residing in Russia (or 10% of the entire population of Tajikistan), and just in 2022 alone, 200k Tajiks acquired a Russian citizenship.
But naturally, Friday’s terror attack will put an immense pressure on Putin to cut down on this immigration: a lot of Russians were already unhappy with the previous status quo of rapid immigration, but this terrorist attack will ignite the pre-existing negative sentiments even further.
And for Putin, this presents an unpalatable dilemma: appeasing the crowd and cutting down on immigration will be dangerous right at this moment.
First off, because Russia needs labor directly for its defense industry - and now that Russia is in the war of attrition, it will need to recruit and train labor to address long-term worker shortages.
Granted that many of these workers will not be skilled enough to work as say manufacturing engineers, they could however still be trained to become production floor assistants, or assembly workers after months of training.
Secondly, there is an issue of inflation and overall labor shortages: now that a lot of productive resources (and labor especially) are being redirected towards defense production sector, there is a shortage of workers to do everything else - as a result, there is a high risk of a cost-push inflation (currently at 8%) becoming entrenched.
Unemployment is at a record low, and there is not much slack in the labor market to absorb further stimulus without leading to a rise in inflation.
And most of the stimulus is yet to be spent and absorbed.
The stimulus itself is also quite unprecedented: Russia has approved a significant increase in its defense spending for the year 2024, with an almost 70% rise compared to the previous year.
The overall defense budget is set to reach nearly 11 trillion rubles, which is approximately $118 billion USD (or 6% of its GDP - 3 x NATO’s minimum spend requirements that members struggle to meet).
This increase will account for almost a third of the country's total budget expenditures for 2024, marking the highest share of the economy dedicated to military spending since the collapse of the Soviet Union.
The overall context is also very favorable: with Ukraine’s continuous attacks on Russian oil refineries, the price of AI-95 standard petrol in Russia has risen to its highest level at $661 a tone as of March 13.
(side note: Ukraine targeted three oil refineries in the cities of Ryazan, Kstovo, and Kirishi, which are among Russia's largest refineries. And according to a Reuters investigation the share of the oil refining capacity in Russia knocked out by Ukrainian drone attacks has reached 14% of the total figure)
Putin was already worried about risks of rising fuel prices and cost-push inflation back in September - when he prohibited exports of refined petrochemicals to bring down the prices on standard petrol.
And Ukraine’s drone strikes against these refineries aren’t going away any time soon.
So this presents a very tough dilemma for Putin: either he:
1) Cracks down on immigration and causes further cost-push inflation at the time of rising fuel prices, and general lack of labor (and by doing so, creates a dent in living conditions of the general public - let alone hampering his own wartime production capacity), or;
2) He maintains the status quo, angers the general public and most likely, probably also makes it much more challenging to deal with a security challenge emanating from mass Central Asian immigration (and although the video of tortured Tajik terrorists will deter many copycats, there will undoubtedly be many that will be incentivized to avenge these atrocities: a perfect recruitment pool for ISIS. Indeed, the FSB already declared that three additional Central Asian migrants were detained for allegedly planning a terrorist attack at a mass gathering in Stavropol Oblast.)
So far, he is going with option 1: Following the March 22 attack at Crocus City Hall, Russian authorities have ramped up legal actions against migrants, leading to a surge in deportations and voluntary exits from Russia.
Launched by local authorities, this large-scale initiative aims to identify and deport migrants who have allegedly violated migration laws.
Law enforcement agencies have been actively raiding hostels and apartments, leading to overcrowded temporary detention centers in St. Petersburg.
On March 28, 64 migrants were deported, with flights indicating the deportation of many more.
Over 400 officers from the St. Petersburg police and Rosgvardia are involved, inspecting paperwork of nearly 1,500 foreign citizens, resulting in hundreds of administrative violations and 10 criminal cases.
St. Petersburg courts have mandated the forcible deportation of 418 migrants and fined an additional 48, requiring them to voluntarily leave Russia for migration law violations.
The Deputy Minister of Labor, Migration, and Employment of Tajikistan reported a significant departure of Tajik migrants from Russia due to fear and panic post-Crocus attack.
With all this said however, it is still unclear whether this was a one-off crowd appeasing ‘‘crackdown’’ or a longer-term change in policy: as discussed above, if it is the latter, it will come with significant costs to Putin’s ability to prosecute this war.
3) Challenges with allies.
Russia’s campaign against ISIS will require redirection of resources and this is already challenging enough without the Kremlin adding an extra layer of difficulty: blaming the US and Ukraine for having a role in this attack.
Although on a tactical level, this nonsense can create a little buzz in the already Putin-friendly audiences in the West and amongst the fervently paranoid groups in Russia, on a strategic level it is incredibly costly and counterproductive.
First off, it puts the obvious allies like China in a bind: if Beijing supports this rhetoric then it risks discrediting itself on the global stage (and unlike Russia, China has global aspirations and cannot afford to waste this political capital as easily)
Secondly, other lesser partners (like India and the UAE) will now find it more awkward to hedge their bets and play all sides in the open - by spewing total nonsense, Putin is adding to significant political costs of working with Moscow.
Finally, Russia will most likely want to secure actual help from its allies in a campaign against ISIS.
For example: China itself suffers from ISIS-K attacks in Afghanistan, but thus far, it was willing to coast as a free rider: preferring that the US (and now, Russia-Taliban) take on the task of establishing a basic level of security.
Moscow will likely push for a bigger Chinese role in Afghanistan - it is already not providing overt (and significant) support for Russia’s campaign in Ukraine (unlike say, Iran or North Korea), so the very least it can do is to help Russia with a campaign against ISIS-K.
And this ask is then likely to lead to some friction between Beijing and Moscow.
With all this said however (and as discussed in previous cables), Russia’s propaganda will have some effect: there will be not so insignificant amount of people both in the US and in the global south that will buy into the Kremlin’s nonsense.
As such, and in order to nip this narrative in the bud, Washington must be aggressive in countering the falsehoods spread by Russia.
Calling Russian diplomats ‘‘manure salesmen’’ is good for rhetorical effect - but not sufficient.
The US should consider releasing (as long as there is no threat to legitimate national security objectives) full details and written records of their March 7 warning to Russia.
The world should be reminded that Russia’s incompetence in anti-terrorism intel is their problem - not ours, and that as a benevolent superpower (and when civilian lives are at risk), America is willing to help even outright adversaries like Russia and Iran.