Weekly Overview Cables - Ukraine war updates and evaluating Mike Pompeo's ''A Trump Peace Plan For Ukraine".
Ukraine war updates.
1) Russia advances.
Russia made some advances towards a key logistics hub in the Donetsk region/oblast of Pokrovsk - a bulwark against a Ukrainian collapse in the region and a main target of Russian forces.
2) Russia doubles-down on recruitment sweeteners.
Russian opposition publication Meduza now reports that residents of Moscow are now being offered 1.9 million rubles ($21,777) upon signing a contract with the Russian Defense Ministry.
According to the city administration, this brings total payments for the first year of service to over 5.2 million rubles ($59,599) - a figure that is approximately 4x of the median annual salary in Russia.
But manpower losses (and difficulty replacing them) aren’t the only pressing issue: the rate at which Russia continues to lose hardware is much faster than their replacement rate.
According to The Economist report, most intelligence agencies estimate that after the first two years of the war Russia had lost about 3,000 tanks and 5,000 other armored vehicles.
In 2023 Russian defence industry delivered 1,530 “new” tanks had been delivered in the course of the year - but, 85% of them, (according to an assessment by the International Institute for Strategic Studies), were actually old tanks that were taken out of storage and refurbished (mainly t-72s, also t-62s and even some t-55s dating from just after the second world war).
Since the invasion, about 175 reasonably modern T-90M tanks have been sent to the front line.
The IISS estimates that annual production this year could be approaching 90.
However, Michael Gjerstad, an analyst with the IISS, argues that most of the t-90Ms are actually upgrades of older T-90As.
As those numbers dwindle, production of newly built t-90ms this year might be no more than 28.
The Washington-based Centre for European Policy Analysis, reckons that Russia can build only 30 brand-new tanks a year: when the Ukrainians captured a supposedly new T-90M last year, they found that its gun had been made in 1992.
3) Ukraine funding sees a boost.
The EU and US are nearing an agreement to equally share a $50 billion loan to Ukraine.
Each would provide $20 billion, with the UK, Japan, and Canada contributing the remaining amount.
A deal would enable the Western alliance to provide the loan to Ukraine before the end-of-year deadline.
The loan could be used for various purposes, including defense and humanitarian needs.
In addition, The European Commission finally transferred the first installment funding of $1.6 billion to Kyiv from profits on frozen Russian assets to fund weapons for Ukraine.
After lengthy negotiations in Brussels, the EU sent the first installment of funding to Kyiv.
Ninety percent of the funds will be used for military purposes, with the remainder allocated to humanitarian aid.
The proceeds come from investing $209 billion of immobilized Russian assets held by Euroclear.
Naturally, the Kremlin spokesperson Dmitry Peskov called the move "illegal" and announced plans for a response.
Evaluating “A Trump Peace Plan for Ukraine” - Mike Pompeo’s op-ed on Ukraine war policy.
Former Secretary of State Mike Pompeo co-published an article in WSJ entitled ‘‘A Trump Peace Plan For Ukraine’’.
First off, if Pompeo is speaking on behalf of Trump like this, it is pretty likely that he will either get his old job back as Secretary of State or secure himself another senior NatSec role - whether that is a National Security Adviser or Head of Pentagon or CIA etc.
It is great that Pompeo published this and quieted down a lot of speculation around what Trump’s return could mean for Ukraine - since there has been a lot of Catastrophizing going on of late.
With that said, let us now unpack and evaluate the main points of the ‘‘plan’’.
1) Refuting notions of abandonment.
“Pundits claim that if Donald Trump is re-elected, he will cut off aid to Ukraine, give away its territory, and deal directly with Vladimir Putin to impose an ignominious “peace” on the country.
There’s no evidence that such capitulation will be part of President Trump’s policy and much evidence to the contrary. It was Mr. Trump who in 2017 lifted the Obama administration’s arms embargo on Ukraine, providing it with the Javelin missiles that helped save Kyiv in the earliest days of Russia’s invasion. More recently, Mr. Trump gave political cover to House Speaker Mike Johnson when he maneuvered to pass additional military aid. Helping Ukraine while revitalizing the American defense industrial base in Alabama, Pennsylvania and Virginia is good policy—and good politics. [emphasis added]”
First part is true and regular readers will know that for the sake of accuracy and fairness, we frequently highlighted how the Trump admin’s stance on Russia (in spite of his personal rhetoric) was much harsher than the previous Obama admin.
More interestingly, Pompeo claims that it was Trump that gave the political cover to Mike Johnson to pass the bill: this is largely true, but also something that was previously implicit and Trump never really boasted about this.
But Pompeo is now making this quite explicit: did Trump agree to this? Or is this a deliberate move to pin Trump to this stance? (since it would be far costlier for Trump now to disavow his previous support than to go along with it.)
Pompeo is also reiterating the focus on strength - lest there is any confusion to his intent:
“While Mr. Biden stumbled into war through weakness, Mr. Trump could re-establish peace through strength.”
Once again, note the necessary implication/corollary: getting to peace without show of strength is naturally going to be a display of weakness (this should allay concerns that Trump would just give up on Ukraine and let Russia blast through the frontlines.)
In addition, if Pompeo is truly willing to paint Biden’s policy as weak, then the stakes for what will be strong are now higher.
The standard is now much higher..
He then goes on to list specific policies (comments under each policy proposal in bold):
• Unleash America’s energy potential. This will fire up the U.S. economy, drive down prices and shrink Mr. Putin’s war-crimes budget.
Sounds good but this is not really different from what the Biden admin is already doing.
Trump might claim that Biden is anti-oil/gas but this is not borne out by facts.
First of all, the US is now the biggest producer of crude oil under Biden - not Trump.
In December of 2023, the US set a new monthly record of 13.3m barrels per day - amounting to 20.1% of global crude production.
No other country produces as much oil as the US.
And this fact has real-world commercial implications for the oil & gas industry corporations of America - they have hit their max market capitalization and revenue under the current admin.
Secondly, Biden has granted oil drilling licenses even when facing strong pressure from the left (e.g. Willow oil drilling project in Alaska worth $8bn).
And finally, Trump’s own billionaire oil/gas tycoon supporters admit that the industry is operating at its maximum capacity and there is little place to go further.
Here is for example, a Trump supporter and a shale billionaire Harold Hamm saying that the industry is already producing ‘‘everything we can”.
In other words: great! Full support to Pompeo, but realistically, there is not much more to do here.
Any further inducements that could expand investment would most likely need to come from global conditions (where OPEC’s action has more weight), than through any specific policy that the Federal government could introduce.
• Rebuild ties with Saudi Arabia and Israel and work together against Iran. This will stabilize the Middle East, ease the Gaza crisis, and create an opening for the Saudis to join the U.S. in squeezing Russia out of global energy markets.
Very peripheral - also, something that the Biden admin is also doing.
In fact, it is this admin that is ready to offer security guarantees to Saudi Arabia (at least some version of it that doesn’t amount to a treaty level commitment requiring a Senate ratification.) and is trying hard to secure an agreement between Saudis and Israelis - even though at the moment conditions on the ground (caused by enormous toll of the Gaza war - which is yet to be concluded) do not really lend themselves to this goal
• Impose real sanctions on Russia. The Biden administration’s sanctions sound good on paper but are hollow. The Treasury, for example, exempts Russian banks from U.S. sanctions if their transactions are related to energy production—the most important revenue source for the Kremlin’s war machine.
This is semi-true.
Sanctions are getting tougher - and as of December, secondary sanctions on Russian financial institutions have now been imposed.
But yes, too many financial institutions are doing very well (there is for example, no convincing explanation on why the very top Russian banks like the Sberbank are not facing the full brunt of secondary sanctions and are still allowed to operate quite profitably) - so full support on this.
• Bulk up America’s defense industry. We must show our adversaries, especially Russia and China, that they can’t compete with U.S. defense capabilities. Russia’s economy is smaller than Texas’. We can’t allow China to match and surpass the U.S.
This is being done (arguably, at insufficiently high pace) - but once again, nothing to argue against here.
• Revitalize the North Atlantic Treaty Organization. This includes making Europeans pay their fair share. It is time to raise the bar on spending to 3% of member countries’ gross domestic product.
This is a good sentiment politically, but is quite unrealistic.
Even steadfast allies like the UK (which meets the 2% figure) will struggle with this measure.
In fact, the new Labour government is facing major fiscal constraints and as is expected to be announced by their new Chancellor (Treasure Sec) they are facing a major $26bn budget shortfall..
It is unrealistic that other major countries like Spain or Italy would follow suit either.
Only a few countries like Poland, Lithuania, and Estonia - those that face barbarians at the gate - would likely meet this figure consistently.
• Create a $500 billion “lend-lease” program for Ukraine. Instead of saddling U.S. taxpayers with more bills, let Ukraine borrow as much as it needs to buy American weapons to defeat Russia. This is how we helped Britain in World War II before Pearl Harbor. It’s how we can send a clear signal to Mr. Putin that he will never win.
The lend-lease vs bills to taxpayer framing is shrewd politics: it attempts to defang the misguided arguments like ‘‘we have so many problems here, how can we afford all this massive spending for some faraway country?”.
So then, one could argue that if this is going to be the practical way to unleash a significant amount of funds and would help to silence the extreme isolationist/MAGA wing of the GOP then so be it: whatever works.
But couple of things to note here:
1) Contrasting the loan with ‘‘saddling US taxpayers with more bills’’ is good politics in the short-term, yes - but has dangerous long-term implications.
This is because it concedes the rhetorical arena to the misguided critics of the US aid for Ukraine.
By accepting the cost frame, Pompeo cedes the ground to those that are against helping Ukraine regardless of the ROI.
He also legitimizes the issue of cost - without mentioning that the real cost to US taxpayers will be the multitude of those borne out today if Ukraine was cut off the US aid and Russia was to succeed.
Today, the US is helping Ukraine to decimate Russian military at a minuscule 0.25% of its GDP - the EU has overtaken the US in support for Ukraine, and the Federal government loses approximately 5x amount of money in erroneous payments ($247bn) than in what it costs to help Ukraine.
And leaving aside the ethical reasons for support - what an astonishing Return on Investment (ROI) this support has been: Russia’s military has lost thousands of tanks, armored vehicles, major ships and aircraft, and it is now struggling to induce men into joining the army.
Consider what would happen if Russia was allowed to win?
What would be the cost to US citizens in both treasure (and likely, also blood) if Russia was allowed to prevail?
A Russian army strong and intact, with its imperialist leader even more confident - how long before the US would need to spend much more to contain this revitalized and even more powerful Russia?
How much harder will it then become to contain China?
A country with an even more powerful and more confident military ally?
This is the real financial and strategic cost being avoided here: something that Pompeo did not really tackle at all, and by implication legitimized the (totally misguided) voices of detractors.
2) Pompeo uses the example of helping Britain under Lend Lease, but it is important to remember that Britain never really fully paid back for what it had borrowed under Lend-lease.
The terms of the Lend-Lease Act specified that the materials were provided with the understanding that they would either be returned after the war or compensated for if they were destroyed or otherwise used up.
(side note: this is different from the Anglo-American loan borrowed by the UK government in 1945 - this was different from Lend-Lease: it was used for post-war reconstruction and was paid in annual installments - with the final installment made in 2006.)
Naturally, a similar outcome is fine here too - but it is important to remember what exactly we are talking about here: Pompeo is deliberately skipping out on this aspect for the purposes of political persuasion - but full analytical honesty requires us knowing exactly what we are getting ourselves into.
With that said, there is nothing inherently bad about the proposal - in fact, precisely because of such tactical acrobatics, Ukraine can get its hands on a huge sum of money: something that would most definitely deter Russians.
If Putin was to face Ukraine that not only has access to around $60-70bn a year total in combined G7, NATO and EU funds, but also the ability to borrow up to $500bn in funds, then that is a massive game-changer: at that point, continuing this war at pace of today’s territorial gains (or even 3x faster) would be unacceptable given all the costs in manpower and materiel.
It is therefore beyond all reasonable doubt that a $500bn loan facility for Ukraine would definitely affect the calculus in Moscow.
3) The amount itself is very large - how politically viable is this?
Well - the democrats will probably go along with this, and the Trump admin can add certain provisions to make it palatable to most of the GOP.
For example: placing an annual ‘‘loan’’ limit of say $50-70bn (essentially, replacing the current annual figures with a ‘‘loan”).
So if costs are spread out and few other provisions are added to sweeten the deal (like certain % of funds have to be spent on sourcing from US manufacturers only - creating jobs in the US etc.) then this is definitely a viable proposal.
But just to be clear, for the sake of analytical honesty - most of these ‘‘loans’’ will never be repaid.
But that is actually fine: the ROI is still amazing for the US.
• Lift all restrictions on the type of weapons Ukraine can obtain and use. This will re-establish a position of strength, which Mr. Putin will understand means the war must end. He will face rising costs and no chance of further gain.
This is great: Ukraine currently faces major restrictions on the types of long-range missiles it can acquire, and missiles like the ATACMS (with a 190 mile reach) come with significant targeting restrictions.
With that said, Pompeo did not address the specific issue of targeting reach.
Current US policy limits the range of targets and the geography that Ukraine can target with US missiles: only bases close to Ukraine’s own borders are fine to target.
And this unjustified limitation is extremely consequential in its negative impact on Ukraine’s military operations, and something that we have discussed for a very long time now.
To sum up: current policy on Ukraine deep strikes is that Kyiv can strike bases/air fields that are being used to attack Ukraine - but not any military target within Russia is ok’d for a Ukrainian strike using American ammo.
The current policy from Washington is therefore untenable and logically incoherent: Ukraine can use US weapons to defend itself from an attack, but it must first wait for Russians to amass into a large fighting force and display clear evidence of impending attack
In other words, currently, Washington wants Ukraine to first wait for Russia to assemble all of its invasion force and firepower might before launching a defensive strike.
This amounts to Ukraine fighting with one hand tied behind its back: it has to bear the burden of proving that a specific military target is indeed about to hit Ukraine and should therefore be neutralized first.
(side note: it is also important to note that this policy is not being followed by other major NATO powers like the UK or France: both allow Ukraine to use Storm Shadows/SCALP-EGs to target any military facility within Russia - without having to carry the burden of proof.)
Crucially, this means that Russia would enjoy an enormous tactical advantage: it can prepare and amass power relatively unscathed, and launch glide bombs and hypersonic missiles to soften Ukrainian targets prior to invasion.
Russia already had an upper hand in terms of manpower, and pure firepower, and now, due to Washington’s incoherent policy, it also enjoys an asymmetry of reach.
In essence, Ukraine has to take punishment and await Russian troops’ arrival on its territories before its hands are finally untied.
This is a ridiculous situation that grants perverse incentives to aggressive nuclear powers everywhere in the world.
Exactly what is the message being sent?
Is it that precisely due to a possession of a nuclear weapon (and America’s hesitance in letting its conventional weapons to be used against such a power on its own turf), any other aggressive/revisionist nuclear power can also use stand-off range weapons to attack its other victims, and America will not allow a proportional counter-strike on aggressor’s territory due to ‘‘escalation concerns’’?
So then, what if China uses its DF-26 ballistic missiles to destroy crucial airfields and defensive installations in Taiwan?
What would happen then?
Would it be that as long as there is no actual invasion, America would not let Taiwan use any of US-made weapons to counter-strike missile launchers located in China?
To conclude then, Pompeo’s call to lift all limits on armaments is very welcome indeed: one hopes that it will be followed with calls to lift all targeting restrictions as well.
Given other policies advocated by Pompeo, one could assume a similar decisive stance on lifting targeting restrictions: but still, being explicit wouldn’t hurt.
Pompeo’s end-game in Ukraine.
Pompeo: “These steps would position Mr. Trump to set the terms of a deal: The war stops immediately. Ukraine builds up substantial defense forces so Russia never attacks again. No one recognizes Russia’s occupation and claimed annexation of any Ukrainian territories—just as we never recognized the Soviet incorporation of the Baltic states and withheld recognition from East Germany until 1974. Crimea is demilitarized. Ukraine rebuilds with reparations from Russia’s frozen central-bank reserves, not U.S. taxpayer dollars.
On the one hand, Pompeo's proposed end game could not possibly be inspiring to leaders in Kyiv.
For a start, there is no talk of Ukrainian victory or Ukraine retaking the 18% of its lands currently occupied by Russia.
Indeed, the fact that Pompeo calls for a demilitarized Crimea (not retaken) clearly implies that he is unconvinced of Ukraine's ability to recapture the peninsula.
(side note: which although understandable, is also not really borne out with facts. If anything, as of right now, Ukraine is better-placed to retake Crimea than any major cities in Donbas. Kyiv has conducted relentless attacks against the Russian Navy based in Crimea (all but driving them out) and since May 2024, a number of critical air defense assets defending the peninsula (like the S-300/400s) have been successfully destroyed with US ATACMs missiles.)
Secondly, Pompeo wants the war to stop ‘‘immediately’’ - without delving into crucial details like the status of the Russia-occupied territories.
Or rather, he avoids saying it explicitly - but the mere promise that no one would ‘‘recognize’’ the occupied territories, implies that the territories would indeed remain under Russian control.
And at this point, one might very well ask the following question: given the ultimate end-goal of freezing current frontlines, how is this proposal for peace any different than other calls for Ukraine to cede territory in return for a ceasefire?
Well, as part of the package, Pompeo proposes the following:
Ukraine joins NATO as soon as possible so all European allies assume the burden of protecting it. NATO should establish a $100 billion fund for arming Ukraine, with the U.S. share capped at 20%, as is the case with other alliance common budgets. The European Union should swiftly admit Ukraine and help it modernize and develop its economy.
Ukraine joining NATO and securing a $100bn fund for armament is indeed significant - but how is it meaningfully different than the current status quo trajectory?
But for Pompeo’s proposal, Ukraine is already on track to be part of NATO in any case.
In addition, the funds are already being allocated to help rearm Ukraine - from $43 bn NATO-wide commitment just for next year, to $54bn EU funds, and $50bn G7 loans for Ukraine (collateralized from interest income from frozen Russian assets).
The $100 bn fund for armament will be allocated to Ukraine one way or another: and this is simply because the alternative of not doing so would lead to unacceptable outcomes to too many powers with stakes in this conflict.
And once again, when it comes to joining NATO - there is really not much that the new admin can promise to expedite things and make sure that it really does happen “as soon as possible”.
NATO membership requires unanimous approval, and just one member - Hungary - will drag its feet for quite some time..
So all in all then, even though the part about $500bn funding (although itself politically challenging) and lifting weapons restrictions was great, overall, the end game is not very different to what isolationists have been calling for all along: that Ukraine must cede territories for peace.
But perhaps the most important part of Pompeo’s article was the final paragraph:
To those who doubt: The last thing Mr. Trump wants in a second term is a foreign-policy failure that distracts from his domestic agenda and makes Mr. Biden’s botched withdrawal from Afghanistan look like a success in comparison.
In other words: we will not let Ukraine to collapse and for Russia to conclude its successful invasion of the entire country.
In addition, a lot can change between now and January 2025: Ukraine may start regaining momentum, and European allies may reject the plan to offer Russia to ‘‘freeze their territorial conquest’’ and be rewarded for aggression - other NATO allies may offer enough help for Ukraine to continue for as long as their people would want to fight to retake their lands.
And perhaps herein lies the shrewd politics of Pompeo’s plan: if Ukraine was to receive significant funds and face no restrictions on its weapons, then there technically is no reason for Kyiv to accept the proposed ‘‘peace plan’’ - perhaps that is the goal all-along: to provide a political cover for Ukraine to continue its fight with even more vigor.
After all, the Trump admin would be able to add ‘‘our funding is based on loans-and doesn’t cost US taxpayers” in addition to the obvious argument than no US soldiers are fighting on Ukraine’s behalf: at that point, the domestic opposition to further US involvement would surely reduce (at least logically, it should).
But all of these are speculations - it is too soon to tell.
For now, Ukraine and European allies have now received the much-needed reassurance that serious people will be back at leading the US policy and Kyiv would not face the risk of an imminent collapse.
And as a corollary, Putin will also receive a wake-up call that Trump’s return may not be as advantageous as once hoped.
Since to reiterate once again: with Ukraine receiving an assurance of being well-funded going forward, there is really no strong leverage that Putin can hope to exercise over Kyiv: if his hope was that Trump would force the country into submission at the risk of future US help, well that hope got significantly dimmer after Pompeo’s article.