Weekly Overview Cables - Ukraine war updates, Russia is the main winner from the G20 Summit fiasco in Delhi.

Ukraine war updates.

• 1) Ukrainian forces continue to advance.

• Both in Zaporizhia (in particular, south of Robotyne) and Bakhmut axis.

• 2)Blinken’s surprise visit to Kyiv.

• With unannounced in-person meeting with President Zelensky, The US Secretary Of State, Antony Blinken engaged in an important signaling - calling the counteroffensive progress “very encouraging” amounts to an important rebuttal of the hitherto pessimistic (and extremely uncalled for) assessments from certain US officials (unsurprisingly, preferring to remain anonymous).

• Together with an announcement of additional $1bln in US assistance, this is an important signal to Putin - that the Biden admin is not discouraged and remains strongly behind Ukraine, and that he is erroneous in his belief that Washington is losing heart.

• (side note: there is also some talk that the US is finally going to supply ATACMS . Separately, in the upcoming post, we shall also discuss the other side of the issue - how Russia is increasingly reliant on North Korea and what to do about it)

• 3) Cuba speaks out against Russia.

• Cuba has caught everyone by surprise, after openly and publicly criticizing Russia for its efforts to recruit Cuban citizens to fight in Ukraine (through a human trafficking ring).

• The Cuban government condemned this move, underlining that the country was “not part of the war conflict in Ukraine”, and that it did not want to be ‘‘complicit in these actions”.

• Good for Cuba - and this act of public distancing should certainly be seen as an ‘‘invitation to treat” aimed at Washington.

• Naturally, normalization with Cuba is a complex and lengthy topic of discussion, suffice it say however, an opening may be there if there was a sufficient interest to explore from Washington (and there may be plenty of good reasons not to do so).

• (side note: contrary to official Kremlin narratives, this is also a further sign of Russia’s desperation, and evidence of an obvious struggle to recruit enough soldiers for its war)

• 4) Elon Musk’s sabotage of a Ukrainian naval assault.

• This is certainly not actual ‘‘news’’ and we have indeed covered this last year, when the news was first broken by a reporter of The Economist magazine.

• But the new biography of Musk (outlining how Musk ordered his engineers to disable his Starlink satellite-enabled communications (reaffirming his previously set internal company policy) near the coast of Crimea - leading to a failed naval assault by Ukraine), is a good reminder of why we should not have billionaires wielding so much power - especially when it comes to matters of national security and defense.

• Musk of course defended his actions - that apparently, causing the failure of the Ukrainian attack on the Russian Navy in Sevastopol was necessary to prevent SpaceX’s involvement in ‘‘major act of war and conflict escalation”.

• A good response to this was from Ukrainian Presidential Adviser Mykhailo Podolyak:

• “By not allowing Ukrainian drones to destroy part of the Russian military fleet via Starlink interference, Elon Musk allowed this fleet to fire Kalibr missiles at Ukrainian cities. As a result, civilians, children are being killed”.

• Also, what did Musk expect when he offered these satellites to Ukraine?

• They were sent with a clear explicit mission of enabling Ukrainian soldiers to communicate and coordinate effectively on the battlefield.

• Ukrainian commanders and soldiers trusted Starlink to deliver - by cutting off their access right at the moment of attack, Musk breached this trust and caused major harm to Ukraine’s war effort.

• It is good that Starlink exists, and to be fair, Musk’s overall net contribution to Ukraine has been positive, but we should not leave this much power in the hands of one man.

• Kyiv must insist that all contractors offering services to its military must sign clear agreements with very precise service-level agreement (SLA) as part of this agreement - with specific commitments to certain performance expectations.

• In addition, all providers of software/satellite services must agree to having a separate/siloed account management team dealing with Ukrainian officials separately from the rest of the company operations.

• And this is good for all parties involved, since it will also provide necessary cover for the billionaires as well.

• If this was in place back in 2022 with Starlink, Musk could have claimed that he no longer had control over this particular deal, and that a siloed team was in charge.

• This would have preserved his optionality vis-à-vis future relationships and thus, business deals with Russia (which he surely desired to maintain).

• It is great that some billionaires can create companies that build incredible tools beneficial to our allies in war.

• But we should not expect them to remain idealistic, reliable, and loyal when things get tough..

• And so there must be fail-safe measures in place to mitigate this major risk.

• 5) EU overtakes the US as the biggest donor for Ukraine.

• The new “Ukraine Support Tracker” update from the Kiel Institute for the World Economy provides some good and bad news.

• First the good news: Europe has now overtaken the US as the primary backer of Ukraine:

  

• In addition, and combined, the UK and Germany’s bilateral commitments (outside of the EU) are already providing (or have committed to provide) 50% of the aid offered by the US:

  

• This is very very good - since it;

• 1) Finally puts an end to the worn-out arguments that Washington is subsidizing Ukraine when Europeans are unwilling to pull their own weight and are instead, acting as free riders;

• 2) Insures Ukraine against an event of a sharp political change in Washington (ie if Trump or some outright looney like that Vivek guy comes to power, reverses course, and decides to appease Putin instead of backing Ukraine. Or if for some unforeseen reason, Biden admin loses heart - hopefully a very unlikely scenario);

• 3) Defeats Putin’s strategy of ‘‘waiting it out’’ until a Ukraine-skeptic comes into power in the US in 2024;

• 4) Reaffirms the futility of backing Russia - by showing to Beijing that Europe is strongly behind Ukraine and that betting on Moscow and supporting it with arms and treasure in earnest, is something that must be (in line with the current status quo) avoided.

• (side note: France stands out for its lack of bilateral support - so much for the talk of Europe’s “Strategic Autonomy”, yet unwilling to pull its weight in securing the peace on the continent that it inhabits. There is absolutely no reason why a country as large, powerful, rich, and geopolitically ambitious as France, should be providing only about half the amount offered by Norway - a country of 5 million..)

The G20 Summit declaration on Ukraine was a major win for Russia, and a significant embarrassment for the West.

• This year’s G20 Summit was held at Delhi, India.

• Whereas the declaration from last year’s summit (held at Bali, Indonesia) condemned “Russian aggression” against Ukraine, and called on Russia to withdraw its troops, this year’s declaration in Delhi merely refers to the ‘‘war in Ukraine’’ - this neutral language is unacceptable, since it implies equal complicity in the war.

• In fact, this year’s declaration was notable in what was removed - in contrast to the Bali Declaration in 2022, crucial, powerful statements like these were taken out:

• “We reiterated our national positions as expressed in other fora, including the UN Security Council and the UN General Assembly, which, in Resolution No. ES-11/1 dated 2 March 2022, as adopted by majority vote (141 votes for, 5 against, 35 abstentions, 12 absent) deplores in the strongest terms the aggression by the Russian Federation against Ukraine and demands its complete and unconditional withdrawal from the territory of Ukraine [emphasis added]” ;

• “Most members strongly condemned the war in Ukraine and stressed it is causing immense human suffering and exacerbating existing fragilities in the global economy - constraining growth, increasing inflation, disrupting supply chains, heightening energy and food insecurity, and elevating financial stability risks [emphasis added].”

• These were all removed..

• And instead of calling for Russia’s ‘‘complete and unconditional withdrawal from the territory of Ukraine” , this year’s declaration merely notes that there will be a united “endeavour to address the adverse impact of the war on the global economy and welcome all relevant and constructive initiatives that support a comprehensive, just, and durable peace in Ukraine”.

• From get your troops out of Ukraine, to let’s work on a durable peace…

• Naturally (and these cables have gone over this extensively), any ‘‘peace’’ talks without a corresponding demand that Russia withdraws its troops from annexed and occupied 15% of Ukrainian territories is not going to lead to a ‘‘just and durable’’ one - far from it: it will freeze and solidify Russia’s territorial gains, reward Moscow for its invasion, and incentivize Russia to recoup and try again for additional chunk of Ukrainian territory later on and once again, at a time of its choosing..

• After all, why wouldn’t they do exactly that?

• If at the end of the road, the only thing awaiting them is yet another ‘‘just and durable” peace that confirms their new territorial gains, then why not push on?

• How did we get here? How did the consensus and demands on Russia change so dramatically within a year?

• Well, there are many reasons - including surely, a very weak and hesitant diplomacy from the West.

• But primarily, the main change is in the facts on the ground.

• Recall how last year’s summit took place mere six days after Russia announced its withdrawal from Kherson.

• It was easy to align with the direction of the wind - when Russian forces were being decimated in Kherson and Kharkiv counteroffensives, when the momentum was on Ukraine’s side, and when Russia was increasingly resorting to panicky threats to use tactical nuclear weapons, it was easy to take sides against Russia.

• Situation now is quite different.

• Although Ukraine has successfully breached the initial lines of the Surovikin defense in Zaporizhia (whether you call it first line or second line - each analyst uses a different term. So we will say the initial layers for now), it certainly appears that the overall pace of the counteroffensive is still not fast enough (hoping to be wrong here) to breach the remaining obstacles and capture significant territory within the next 6-7 weeks (before wetter season brings mud and added difficulty for mechanized armor maneuvers).

• Add to that, next year’s elections in the US, and changing rhetoric around Ukraine, it is now a much safer bet for the ‘‘fence-sitter’’ states to align with the new direction of the wind, and go much softer on Russia.

• Now, the crucial and deliberate omissions from this year’s statement are very consequential.

• This is because, instead of being merely symbolic, the G20 declarations have a concrete effect on how all stakeholders perceive the current status quo.

• If status quo ante was a demand that Russia must withdraw completely and unconditionally, then the new status quo deliberately avoids pinning the blame on a particular party (using the term “war in Ukraine” vs “Russian aggression”) and calls for pie in the sky notions of peace vs specific demand - that Russia withdraws.

• And this new status quo has a major signaling effect on all stakeholders involved: the West, Ukraine, ‘‘fence-sitting’’ states of the “global south”, Russia, and China:

• 1) For the West, it is a reminder that not much has been done to sway the swing states that insist on remaining unaligned.

• Certainly, the Biden admin’s efforts in the Pacific are commendable - but the focus on China, and the fact that most of these countries were already allies on the side of Ukraine (and the remaining few are too small/insignificant enough to sway things at the G20 level), means that the countries that had to be targeted the most were not in Washington’s focus.

• But it is certainly also true that there are at least three G20 members over which Washington enjoys a lot of leverage: India, Argentina, and Saudi Arabia.

• In relation to Argentina, the Biden admin’s concessions on the IMF loans should have produced results.

• Likewise, Saudi Arabia had already hosted the Ukraine peace summit (refusing to invite Russia) and (as part of the negotiations to normalize relations with Israel) is in the midst of seeking major (and unrealistic) security guarantees from Washington.

• And indeed, it does certainly seem like these two countries were not the problem..

• Instead, it appears like a coalition of non aligned nations - India, Brazil, South Africa and Indonesia were behind the deliberate attempt to dilute this language.

• This is very unfortunate and at least in relation to India, Washington should have used its greater leverage to push back against this plan.

• Perhaps, President Biden was too worried about raising tensions ahead of the upcoming drone deal with India, or maybe the US delegation simply did not want to come across heavy handed at a conference held to Delhi, but either way, it certainly appears like insufficient pressure was applied by the members of G7 to keep the G20 on previous year’s course.

• (side note: strategists in DC must remember that India needs the US more than the reverse: yes we would like them as a check on China, but: 1) They will already do that out of their own volition/interest , 2) They are not going to be a true military ally vs Beijing anytime soon and, 3) The plan to wean Indian military off Russian hardware is currently crashing against the reality that most of the advanced American platforms are simply too costly for Delhi - this will be a slower than desired endeavor and, 4) They still are, and will be buying cheap Russian crude. In the meantime, India wants to capitalize and capture on the manufacturing/supply chain shifts, and earn the business of many Western (especially US) firms leaving China. In the short to medium term therefore, Washington has a ton of leverage)

• 2) For Ukraine, the pressure to perform will become stronger - they already had all the incentive in the world to maximize gains in the east, but will now worry that the longer this war drags on, the harder it will be to pushback against pro-Kremlin narratives of the war (where both parties are implied to be on the same moral playing field..).

• 3) For the global south,

• The pressure to align with the West will weaken, and sensing reversing geopolitical winds, many more countries will be willing to deal with/trade with/refuse to implement sanctions on Russia.

• Countries like Kazakhstan, Armenia and the UAE - hubs for re-export trade: where all Russian needs (from electronics (and microchips), consumer goods, and money transfers) are met, will now have fewer qualms about carrying on in the same vein.

• (side note: particular bilateral developments with Washington may change the precise identities of these re-export countries, but there will now constitute an even bigger market to engage ‘‘facilitation’’ play)

• 4) For China.

• This is a signal that Russia has managed to become less of a burden, and that perhaps, if the counteroffensive fails/stalls and the pro-Ukraine rhetoric in the US (especially from the GOP wing) sours further, Moscow may regain initiative.

• This may alter Beijing’s calculus and increase the viability of supporting Putin.

• (side note: once again, and as discussed above, this is why EU stepping up and regaining leadership in funding Ukraine is so important - it acts as an insurance against Beijing’s change of heart and decision to prop up Russia in earnest.)

• 5) For Russia.

• This is not only a symbolic, diplomatic or political win at a conference that they chose not even attend..

• More than that, this is an important signal of what is about to come: in the near term, what is the maximum/the worst that can happen on the international arena?

• This is a crucial indicator of a global mood - implying further the ease with which Moscow could get rid of/evade sanctions.

• And the fact that this has happened after Russia cozying up to Iran and North Korea (major change since the Bali G20 in 2022), is a further signal for Russia that a close cooperation with Pariah states may not after all be all that costly on the global stage..

• Unfortunately, Putin is going to infer the wrong lessons from this summit - when we want him convinced that Russia’s future (under the current trajectory) is bleak, he will arrive at an opposite conclusion: his confirmation bias will kick into overdrive - convincing him that he is indeed on the right track..

• And this is very unfortunate indeed, since for the most of this year, the West maintained the diplomatic initiative: G7 oil price caps, Beijing’s hitherto refusal to back Russia in earnest, a major peace summit in Jeddah that excluded Russia (and where China did not really act as a Russian ally), Russia’s withdrawal from the Black Sea grain deal (that lead to a fiasco of a Russia - Africa summit in St Petersburg, with a huge drop of attendance and accusations of backstabbing from a major African state), attempted coup by Prigozhin and another well-liked General (Popov) speaking up about corruption in the Russian military..

• With all that momentum going into this summit, this one was for the West to lose - and we did.

• The US and its allies must regain the initiative and reclaim the narrative that Russia is increasingly weakened and isolated on the global arena.

• Africa and the Middle East in particular provide a fertile opening ground for vigorous diplomacy: with Wagner’s demise and Russia’s continuous refusal to abide by the grain deal, the scene is ripe for the West to take advantage and turn a lot of countries of the “Global South” against Moscow.

• The West must not squander such opportunities - we must not match Russia’s peculiarly consistent success in alienating the world, with our own inability to seize on diplomatic openings.