RT: Ukraine asked for POWs to be placed in prison it shelled – Russia

The shelled prison facility in Yelenovka in the People’s Republic of Donetsk. © Sputnik / Russia’s defense ministry

RT, 8/4/22

Russia’s Defence Ministry has accused Ukraine of deliberately targeting a prison in Donbass where it knew dozens of its own POWs were being held.

The Ukrainian authorities were aware that their soldiers, who surrendered to Russian forces at the Azovstal steel plant, were being held at the prison in the village of Yelenovka, as Kiev itself insisted on them being placed there, Russian Deputy Defense Minister Aleksandr Fomin said on Wednesday.

The shelling of Correctional colony No.120 in the Donetsk People’s Republic (DPR) in late July killed 50 inmates and left 73 others wounded. The facility held members of the infamous Azov neo-nazi battalion, who were captured in May after being holed up for weeks at the Azovstal steelworks during the Russian siege of the Ukrainian port city of Mariupol.

“On May 20, 2022, the surrendered servicemen of the Azov nationalist battalion were taken to the pre-trial detention center in the village of Yelenovka. The Ukrainian side insisted on this particular place for their detention,” Fomin said during a briefing for foreign military attachés in Moscow.

Kiev’s attack on the prison was deliberate, with “the Ukrainian leadership giving the order to carry out the missile strike because the Azov fighters started giving testimonies exposing their crimes, including those perpetrated against peaceful civilians,” he insisted.

Another reason for Ukraine hitting Yelenovka was to scare its own troops on the battlefield and “deter them from surrendering,” the Russian defense official said. Many Ukrainian soldiers have been recently laying down their arms, he added.

Aleksandr Fomin denied Ukraine’s “groundless” claims that Moscow struck the prison itself to pin the blame on Kiev, saying all the evidence shows that the missiles came from the north-western direction, where Kiev’s forces were located.

Last week, RIA Novosti news agency cited an unnamed high-ranking Pentagon official, who suggested that if Ukraine did shell the prison in Yelenovka, then it did so unintentionally.

The Russian deputy defense minister insisted that those words were nothing but “a clumsy attempt to justify the provocation by the Kiev regime.”

The attack on the detention facility was carried out with HIMARS multiple rocket launchers, supplied to Ukraine by the US, and the Americans have been claiming that those are “high-precision systems, which hit the targets they were meant to hit,” he said.

Also, in planning its strikes, the Ukrainian military actively relies on space and air reconnaissance data provided by the US and its allies, Fomin added.

In a bid to curb further speculation, the Russian Defense Ministry said on Sunday that it had officially invited experts from the UN and the International Red Cross Committee to carry out an impartial investigation into the incident in Yelenovka.

Russia sent troops into Ukraine on February 24, citing Kiev’s failure to implement the Minsk agreements, designed to give the regions of Donetsk and Lugansk special status within the Ukrainian state. The protocols, brokered by Germany and France, were first signed in 2014. Former Ukrainian President Pyotr Poroshenko has since admitted that Kiev’s main goal was to use the ceasefire to buy time and “create powerful armed forces.”

In February 2022, the Kremlin recognized the Donbass republics as independent states and demanded that Ukraine officially declare itself a neutral country that will never join any Western military bloc. Kiev insists the Russian offensive was completely unprovoked.

Related piece of interest below. Bolding for emphasis is mine. – Natylie

US Department of Defense, July 29, 2022

Senior Defense Official and Senior Military Official Hold a Background Briefing (excerpt)


Q: Yeah, thanks. Just one quick follow-up on the prison and then I have an unrelated question.

I know you can’t say definitively what happened but one of the claims is by the Russians that a HIMARS system was used to strike the prison. Can you say definitively that HIMARS were not used?

SENIOR MILITARY OFFICIAL: I don’t know that we can say definitively about any of it. I — but, you know, what I will — and listen, I haven’t seen all of the reporting but I am told that the Russians, you know, have made claims that they have pieces of HIMARS that were used in the strike. Listen, the Russians have a lot of pieces of HIMARS, right?

I mean, the Ukrainians have been, you know, sending a lot of HIMARS their way. So that would not surprise me. What would also not surprise me is if the Russians would — would lead us astray, in terms of information, and tell us that the Ukrainians had done this.

Here’s the last thing I’d say, if it happened to be a Ukrainian strike, I promise you, number one, they didn’t mean to do that, right? They certainly care about their own people and they care about the civilians and military in uniform of their own army.

And then the last piece would be, just from a practical perspective in terms of our conversations, whenever we talk to the Ukrainians, we’ve spent a great deal of time back and forth about, you know, reassuring — or them reassuring us about the loss of land warfare. They clearly understand that.

So anyways, we’ll see where this goes but I would just tell you, as you approach this in your reporting, you know, we’ll find the right side of this but I wouldn’t believe it’s the Russians right away.

Stephen M. Walt: Does Anyone Still Understand the ‘Security Dilemma’?

By Stephen M. Walt, Foreign Policy, 7/26/22

The “security dilemma” is a central concept in the academic study of international politics and foreign policy. First coined by John Herz in 1950 and subsequently analyzed in detail by such scholars as Robert Jervis, Charles Glaser, and others, the security dilemma describes how the actions that one state takes to make itself more secure—building armaments, putting military forces on alert, forming new alliances—tend to make other states less secure and lead them to respond in kind. The result is a tightening spiral of hostility that leaves neither side better off than before.

If you’ve taken a basic international relations class in college and didn’t learn about this concept, you may want to contact your registrar and ask for a refund. Yet given its simplicity and its importance, I’m frequently struck by how often the people charged with handling foreign and national security policy seem to be unaware of it—not just in the United States, but in lots of other countries too.

Consider this recent propaganda video tweeted out from NATO headquarters, responding to assorted Russian “myths” about the alliance. The video points out that NATO is a purely defensive alliance and says it harbors no aggressive designs against Russia. These assurances might be factually correct, but the security dilemma explains why Russia isn’t likely to take them at face value and might have valid reasons to regard NATO’s eastward expansion as threatening.

Adding new members to NATO may have made some of these states more secure (which is why they wanted to join), but it should be obvious why Russia might not see it this way and that it might do various objectionable things in response (like seizing Crimea or invading Ukraine). NATO officials might regard Russia’s fears as fanciful or as “myths,” but that hardly means that they are completely absurd or that Russians don’t genuinely believe them. Remarkably, plenty of smart, well-educated Westerners—including some prominent former diplomats—cannot seem to grasp that their benevolent intentions are not transparently obvious to others.

Or consider the deeply suspicious and highly conflictual relationship among Iran, the United States, and the United States’ most important Middle East clients. U.S. officials presumably believe that imposing harsh sanctions on Iran, threatening it with regime change, conducting cyberattacks against its nuclear infrastructure, and helping organize regional coalitions against it will make the United States and its local partners more secure. For its part, Israel thinks assassinating Iranian scientists enhances its security, and Saudi Arabia thinks intervening in Yemen makes Riyadh safer.

Not surprisingly, according to basic IR theory, Iran sees these various actions as threatening and responds in its own fashion: backing Hezbollah, supporting the Houthis in Yemen, conducting attacks on oil facilities and shipments, and—most important of all—developing the latent capacity to build its own nuclear deterrent. But these predictable responses just reinforce its neighbors’ fears and make them feel less secure all over again, tightening the spiral further and heightening the risk of war.

The same dynamic is operating in Asia. Not surprisingly, China regards America’s long position of regional influence—and especially its network of military bases and its naval and air presence—as a potential threat. As it has grown wealthier, Beijing has quite understandably used some of that wealth to build military forces that can challenge the U.S. position. (Ironically, the George W. Bush administration once tried to tell China that pursuing greater military strength was an “outdated path” that would “hamper its own pursuit of national greatness,” even as Washington’s own military spending soared.)

In recent years, China has sought to alter the existing status quo in several areas. As should surprise no one, these actions have made some of China’s neighbors less secure, and they have responded by moving closer together politically, renewing ties with the United States, and building up their own military forces, leading Beijing to accuse Washington of a well-orchestrated effort to “contain” it and of trying keep China permanently vulnerable.

In all these cases, each side’s efforts to deal with what it regards as a potential security problem merely reinforced the other side’s own security fears, thereby triggering a response that strengthened the former’s original concerns. Each side sees what it is doing as purely defensive reaction to the other side’s behavior, and identifying “who started it” soon becomes effectively impossible.

The key insight is that aggressive behavior—such as the use of force—does not necessarily arise from evil or aggressive motivations (i.e., the pure desire for wealth, glory, or power for its own sake). Yet when leaders believe their own motives are purely defensive and that this fact should be obvious to others (as the NATO video described above suggests), they will tend to see an opponent’s hostile reaction as evidence of greed, innate belligerence, or an evil foreign leader’s malicious and unappeasable ambitions. Empathy goes out the window, and diplomacy soon becomes a competition in name-calling.

To be sure, a few world leaders have understood this problem and pursued policies that tried to mitigate the security dilemma’s pernicious effects. After the Cuban missile crisis, for example, U.S. President John F. Kennedy and Soviet Premier Nikita Khrushchev made a serious and successful effort to reduce the risk of future confrontations by installing the famous hotline and beginning a serious effort at nuclear arms control.

The Obama administration did something similar when it negotiated the nuclear deal with Iran, which it saw as a first step that that blocked Iran’s path to the bomb and opened up the possibility of improving relations over time. The first part of the deal worked, and the Trump administration’s subsequent decision to abandon it was a massive blunder that left all the parties worse off. As the former Mossad chief Tamir Pardo has observed, Israel’s extensive efforts to convince then-U.S. President Donald Trump to withdraw from the deal was “one of the most serious strategic mistakes since the establishment of the state.”

As the writer Robert Wright recently pointed out, then-U.S. President Barack Obama’s decision to not to send arms to Ukraine after the Russian seizure of Crimea in 2014 showed a similar appreciation of security dilemma logic. In Wright’s telling, Obama understood that sending Ukraine offensive weapons might exacerbate Russian fears and encourage the Ukrainians to think they could reverse Russia’s earlier gains, thereby provoking an even wider war.

Tragically, this is pretty much what happened after the Trump and Biden administrations ramped up the flow of Western weaponry to Kyiv: The fear that Ukraine was slipping rapidly into the Western orbit heightened Russian fears and led Putin to launch an illegal, costly, and now protracted preventive war. Even if it made good sense to help Ukraine improve its ability to defend itself, doing so without doing very much to reassure Moscow made war more likely.

So, does the logic of the security dilemma prescribe policies of accommodation instead? Alas, no. As its name implies, the security dilemma really is a dilemma, insofar as states cannot guarantee their security by unilaterally disarming or making repeated concessions to an opponent. Even if mutual insecurity lies at the core of most adversarial relationships, concessions that tipped the balance in one side’s favor might lead it to act aggressively, in the hopes of gaining an insurmountable advantage and securing itself in perpetuity. Regrettably, there are no quick, easy, or 100 percent reliable solutions to the vulnerabilities inherent in anarchy.

Instead, governments must try to manage these problems through statecraft, empathy, and intelligent military policies. As Jervis explained in his seminal 1978 World Politics article, in some circumstances the dilemma can be eased by developing defensive military postures, especially in the nuclear realm. From this perspective, second-strike retaliatory forces are stabilizing because they protect the state via deterrence but do not threaten the other side’s own second-strike deterrent capability.

For example, ballistic missile submarines are stabilizing because they provide more reliable second-strike forces but do not threaten each other. By contrast, counterforce weapons, strategic anti-submarine warfare capabilities, and/or missile defenses are destabilizing because they threaten the other side’s deterrent capacity and thus exacerbate its security fears. (As critics have noted, the offense-versus-defense distinction is much harder to draw when dealing with conventional forces.)

The existence of the security dilemma also suggests that states should look for areas where they can build trust without leaving themselves vulnerable. One approach is to create institutions to monitor each other’s behavior and reveal when an adversary is cheating on a prior agreement. It also suggests that states interested in stability are usually wise to respect the status quo and adhere to prior agreements. Blatant violations erode trust, and trust once lost is hard to regain.

Lastly, the logic of the security dilemma (and much of the related literature on misperception) suggests that states should work overtime to explain, explain, and once again explain their real concerns and why they are acting as they are. Most people (and governments) tend to think their actions are easier for others to understand than they really are, and they are not very good at explaining their conduct in language that the other side is likely to appreciate, understand, and believe. This problem is especially prevalent at present in relations between Russia and the West, where both sides seem to be talking past each other and have been surprised repeatedly by what the other side has done.

Giving bogus reasons for what one is doing is especially harmful, because others will sensibly conclude that one’s words cannot be taken seriously. A good rule of thumb is that adversaries will assume the worst about what you are doing (and why you are doing it) and that you must therefore go to enormous lengths to persuade them that their suspicions are mistaken. If nothing else, this approach encourages governments to empathize—i.e., to think about how the problem looks from their opponent’s perspective—which is always desirable even when the opponent’s view is off-base.

Unfortunately, none of these measures can fully eliminate the uncertainties that bedevil global politics or render the security dilemma irrelevant. It would be a more secure and peaceful world if more leaders considered whether a policy they believed was benign was unintentionally making others nervous, then considered whether the action in question could be modified in ways that alleviated (some of) those fears. This approach won’t always work, but it should be tried a more often than it is.

Dmitriy Kovalevich: July update: A promised counteroffensive by Kiev in southern Ukraine on behalf of foreign interests

ukrainian flag waving in wind with clear sky in background
Photo by Nati on Pexels.com

By Dmitriy Kovalevich, New Cold War, 8/3/22

In his monthly report from Ukraine, Dmitriy Kovalevich provides details of the military and political situation in Ukraine during July including from the Russian and Ukrainian perspective.

July was the sixth month of full-scale war in Ukraine. Russia calls its intervention a “special military operation”. In late June, the entire territory of the former Luhansk region of Ukraine was taken by Russian and Lugansk defense forces. The fall of the twin cities of Severodonetsk and Lysichansk sealed the victory for the Lugansk People’s Republic, which was declared in 2014 and took full shape in the years following Ukraine’s refusal to implement its side of the ‘Minsk 2’ ceasefire agreement of February 2015.

Russia has taken an operational pause following the heavy fighting in Lugansk in June. But its operation to take the Donetsk region of Donbass, together with Donetsk republic defense forces, continues. Rocket attacks by Russian forces have become more frequent as ground combat has lessened. Throughout Ukraine, air raid alerts are sounding four or five times a day. Russia’s main targets, according to its military command, are the depots storing Western weapons, especially the American ‘HIMARS’ multiple rocket launchers and their ammunition. These have begun to cause trouble for the Russian military, forcing it to disperse its own ammunition depots.

Using its missiles, Russian forces are trying to strike U.S.-supplied weapons at the point of transportation once they arrive in Ukraine. They are using intelligence received, in part, from the Ukrainian security forces. Constant leaks of information from Ukraine government agencies led to the dramatic firings in July of the heads of the SBU (Ukraine’s security service), the prosecutor general and a number of heads of military departments.[1] The formal reason for the firings is the high number of Ukraine personnel in these departments said to be cooperating with the Russia military and thereby disrupting the military operations of the Armed Forces of Ukraine.

Announced ‘counteroffensives’ by Kiev

Ukraine authorities continued in July to promise a military counteroffensive, continuing similar promises made since April. Richard Moore, the head of the UK spy agency MI6, has lately joined in making these promises.[2]

Kherson city and region are said to be the main target of the planned counteroffensive, recognizing that Russian military forces are concentrating their efforts further east in the Donbass region (now focused on the Donetsk republic). Russian forces grouped on the right (west) bank of the Dnieper River are said by Ukraine to be vulnerable and could be partially cut off if bridges across the river are destroyed.

Kherson city lies on the Dnieper River. It was founded by Russia as its first port and shipbuilding center on the Black Sea, nearly 250 years ago.

The strangest thing in the Ukrainian announcements of such ‘counteroffensives’ as in Kherson is their prolonged duration. According to the logic of military operations, such announcements should be kept secret and not announced days or weeks in advance. Yet the promised, imminent ‘counterattack’ on Kherson has been announced almost every day for the past three months. For Ukrainians, it has become a joke.

To launch its ‘counteroffensive’, Ukraine would need a minimum threefold superiority over Russia in manpower and weapons. On the manpower side, the simple numbers may be there for the Armed Forces of Ukraine. But Ukraine’s soldiers are inexperienced, with many unwilling to fight. Many have been forcibly seized on the streets as part of Ukraine’s obligatory military service. Meanwhile, in firepower, Russian forces have multiple advantages, allowing them to move forward even in the midst of their declared, operational pause.

The state of the Ukrainian military

In an interview for a Ukrainian publication at the end of July, an officer of the Armed Forces of Ukraine spoke about the real state of affairs in southern Ukraine. He said, “The Russians have concentrated their forces on our sector of the front and they are significantly superior to ours–in the number of personnel and, especially, in the number of artillery pieces, tanks and other heavy weapons.

“Moreover, in some areas, our troops have retreated. These have been short distances – up to 10 kilometers – in what our military calls ‘leveling the frontline’. Every day, our positions are under constant fire. There are days when there is no way to get to the surface for fresh air. We sit in basements and dugouts for days on end, being strongly hit.”[3]

This situation, the officer says, causes problems of psychological fatigue of Ukraine’s military. There are practically no rotations of personnel. In many units, there are personnel shortages of up to 40 per cent due to losses and illnesses. Many fighters, having spent a month or more at the front, become tired, lose their morale and look for any way to get to the rear. Some even refuse orders to advance to front line positions.

The officer explained that many conscripts suffer from serious, chronic diseases. “It is a huge mystery to me how some have passed the medical examination upon conscription. For example, they recently sent me a conscript with minus-mine myopia. Without glasses, he cannot see anything at all. When I asked him how he passed the medical examination at the military registration and enlistment office, he replied that the optometrist did not even examine him.”

Obviously, in this state of affairs a Ukrainian counteroffensive is impossible. Any such attempt would be suicidal. ButUkrainian authorities are under great pressure to report military ‘achievements’ to Western sponsors. This is in order to receive and then plunder Western aid. That ‘aid’ is provided on credit, or with guarantees of repayment using Ukrainian assets as collateral.

Western ‘aid’ finances Ukraine’s military… and its budget deficits

Kiev is drafting Ukrainian men into military service thanks to financial aid from various Western governments and militaries. According to the Ministry of Finance of Ukraine, in the first half of 2022, Ukraine received $12.2 billion for its government budget.[4] Its major sponsors were the USA, at US$4 billion; the IMF and World Bank, $2.3 billion; the European Union, $2.1 billion; Germany, $1.4 billion; Canada, $1.4 billion; Japan, $600 million; Great Britain, $600 million; and France, $300 million.

Here we see the essence of the countries of the Western imperialist elite, whom populations Russians increasingly refer to as ‘The Golden Billion’.[5] President Vladimir Putin himself used the term in his speech to Russian and foreign business people attending the St. Petersburg International Economic Forum in June.

Of these Western funds, $ 7.7 billion went directly to payments to the military personnel of the Armed Forces of Ukraine. In other words, the Ukrainian army is not primarily funded by the state of Ukraine but, rather, appears as a group of mercenaries in the pay of the West.

Such funding by Western taxpayers makes Zelensky fawn before the leaders of the U.S., Canada and Britain. Former British prime minister Boris Johnson became a special idol for Zelensky. Some streets in Ukraine have even be renamedafter him. In July, a petition was registered on Zelensky’s website with a proposal to award Ukrainian citizenship to Johnson.[6] But here is the irony: a ‘Ukraine citizen Boris Johnson’ (born in 1964) could be a formally summoned to military service and sent off to the trenches to dodge Russian missiles.

Economic woes

In July, Ukraine’s budget deficit grew significantly. The National Bank of Ukraine was obliged to devalue the national currency by 25 per cent.[7] Accordingly, the prices of most goods have skyrocketed.

Against the backdrop of a US$50 billion budget deficit[8], the devaluation of the hryvnia, rising prices for fuel, goods and services, and a military conflict that is moving into a protracted phase, it is becoming increasingly difficult for Ukraine to pay its state employees. If the conflict escalates, then everything will worsen. Experts are predicting a “hole” in the budget in the amount of $80 billion (which is more than 60 per cent of the country’s GDP). This risks completely destroying the already shaky economy of the country.[9]

Despite sharply rising prices, the Ministry of Finance of Ukraine has no plan to raise the minimum wage. It sits at 6,700 hryvnia ($150) per month. That hasn’t stopped the deputies in the Verkhovna Rada (Ukrainian legislature) from voting in July to raise their salaries (financed by Western financial assistance).[10]

As a result of the worsening economy, the number of Ukrainians traveling to Russian-controlled territory in search of work is growing. Every day, up to 200 cars cross the front lines in the Zaporozhye region. “Ukrainians say they are returning not only to reunite with their families but also in search of work that they could not find on Ukrainian territory,” reports Euronews.[11]

Now that Ukrainians are offered Russian citizenship on a simplified basis (facilitating their search for employment in Russia), Ukrainian authorities are resorting to repression to block this. A draft law has been submitted to the Verkhovna Rada providing for up to 15 years in prison for Ukrainian citizens who accept Russian citizenship.

“Rada deputies are discussing the strengthening of criminal liability for all categories of the population that receive these passports,” said Anatoly Stelmakh, Deputy Minister for the Reintegration of Uncontrolled Territories of Ukraine.[12]“The bill that we are currently processing sets the range of punishment from a fine to 15 years in prison.”

Ukrainian officials allege that Russian authorities are imposing Russian citizenship on Ukrainians by force. But these same officials are threatening 15 years in prison for people they allege were ‘forced’ to obtain the forbidden fruit of Russian citizenship (along with much improved social services, wages, pensions and employment opportunities). Westernmedia does not bother with such logical inconsistencies. The life task of Ukrainians has been set by them as as dying for the interests of Western corporations, and paying for this with loans and accrued interest.

According to an official of Russia’s National Defense Control Center, a total of 2.8 million people have moved to Russia from Donetsk and Lugansk and from other Ukrainian or former Ukrainian territories since the beginning of Russia’s military operation. Many of these movements were made in advance and anticipation of the military operation.

The number of Ukrainians leaving for western Europe or moving internally is also in the millions, though contrary to Western media reporting, these are not all due to the war. Millions of Ukrainians are in year-long queues for work permits and citizenship applications in neighbouring Poland or further west in Europe because they have no faith in social and economic improvements in the country.

RIA Novosti reported on July 28 that some 300,000 Russians have left their country to live in the West. Their average age is 32 and their incomes are higher than the Russian average. The RIA columnist describes the departed Russian citizens as “in love with something imaginary”.

“They loved something imaginary, this ‘European lifestyle’, with its high salaries for ‘creative work’ and its capacity to make one feel like a ‘man of the world’, a ‘cosmopolitan’ surrounded by people like themselves with similar tastes and views. So unlike the many ‘cattle’ they left behind in Russia.”


[1] https://meduza.io/feature/2022/07/22/zelenskiy-uvolil-dvuh-vliyatelnyh-silovikov-genprokurora-ukrainy-i-glavu-sbu-svoego-blizhayshego-druga-v-ukrainskoy-vlasti-raskol

[2] https://www.euronews.com/2022/07/21/uk-ukraine-crisis-britain-intelligence

[3] https://ctrana.online/news/400178-chto-proiskhodit-na-linii-fronta-pod-khersonom-rasskaza-ofitsera-vsu.html

[4] https://www.epravda.com.ua/rus/news/2022/07/26/689648/

[5] https://en.wikipedia.org/wiki/Golden_billion

[6] https://petition.president.gov.ua/petition/151380

[7] https://www.reuters.com/markets/rates-bonds/ukraines-central-bank-devalues-hryvnia-by-25-against-us-dollar-2022-07-21/ [8] https://gmk.center/en/news/state-budget-deficit-in-2022-may-reach-50-billion-zelenskys-

Ben Aris: A financial crisis has begun in Ukraine

dirty vintage luck table
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By Ben Aris, Intellinews, 8/2/22

A financial crisis has begun in Ukraine. The currency is in free fall to the point where the national bank has just ordered exchange kiosks to stop displaying the exchange rate. The government is running a deficit it can’t cover and the leading state-owned companies have started defaulting on their debt. And the economy is on course to contract by over a third by the end of this year – a catastrophic crash, worse than any of the multiple crises seen since the collapse of the Soviet Union.

The war with Russia is the main cause, but the paucity of financial help from the West is making the collapse of Ukraine’s economy worse. As bne IntelliNews has reported, Ukraine is running out of money. During a call on August 1, President Volodymyr Zelenskiy asked his French counterpart Emmanuel Macron to help release the EU’s second tranche of macro-financial assistance to Ukraine worth €8bn. Earlier, European Commission spokesperson Arianna Podesta said there are currently insufficient funds to provide Ukraine with the second tranche. The government has to cover enormous military spending, the fiscal deficit stands at approximately $5bn per month, and without external help, which Ukraine is not getting, it cannot sustain this spending.

According to the estimates of IER experts, real GDP dropped by about 46% year on year in March 2022, and over the next three months, the rate of GDP contraction stabilised at the level of 39-40% y/y. In the worst of the 2014 Euromaidan revolution the economy contracted by 17% in the second quarter of that year, but then began to bounce back and was back in the black by the start of the following year.

In June, the contraction of real gross value added in the agricultural sector accelerated. This was primarily a result of the temporary occupation of the Kherson oblast and part of the Zaporizhia oblast, which substantially contributed to crop production (grain, vegetables and fruits) in June 2021. However, in the second half of this year, the IER forecasts a gradual improvement in the economic situation, depending on how the war goes. As a result, real GDP is estimated to decline by about 30% y/y in 2022.

However, the GDP contraction may be much higher if inflation accelerates further, logistics do not improve and hostilities intensify.

The physical economy is bearing the brunt of the war and has shown itself to have some resilience, but the financial system is starting to buckle. The central bank hiked its prime rate to 25% on June 2 and intends to keep it there for two years. The National Bank of Ukraine (NBU) also devalued the currency on July 21 from around UAH28 to the dollar to UAH36, a drop of 25%, to bring the official rate in line with the cash rate on the street. But the currency immediately fell further to UAH41 and will continue to slide. (chart)

The government is running a deficit of around $5bn a month, which is being financed almost entirely by the NBU’s printing presses. This is not sustainable. The Western donors have sent a total of $12.3bn since the start of the war five months ago – about $2.75bn per month – but this is insufficient to cover the funding gap. The EU and the US have promised another $16bn but the distribution of this money has been dogged by bureaucratic delays, and in the meantime the economy is in a slow crash.

The shortfall is already having an impact on the NBU’s reserves, which have fallen by about $5bn in the last two months, further undermining the value of the hryvnia. And the government has ordered all the state-owned companies to delay their debt payments to “preserve cash.” As a result, Naftogaz defaulted on a $335mn bond, despite having the money to hand and management wanting to pay to preserve the company’s credit history.

Grain exports resumed on August 1, which will bring some badly needed revenues, but as grain shipments are only expected to earn some $1bn a month, the numbers still don’t add up. Kyiv got some relief as the Paris Club of sovereign creditors agreed to delay all payments on sovereign debt for at least one year, but the private investors are less enthusiastic. The holders of Naftogaz’s bond were advised to reject the company’s request to delay redemptions and coupon payments as the company was “still a going concern” and had the cash to pay on its balance sheet.

The government is in a very difficult place now. With much of its manufacturing industry and infrastructure damaged or destroyed and with insufficient income to cover the budget, it is in a poor position to sustain what increasingly looks like a long fight. Kyiv is now entirely dependent on the West’s supplies, especially materiel, but the West is running down its stocks of ammunition and its manufacturing sector is not able to quickly produce more. The US in particular has compensated by sending more powerful weapons, such as the US M142 High Mobility Artillery Rocket Systems (HIMARS), that have had a devastating effect on Russian forces, but these are not game-changers, as the Russian military machine keeps grinding on.

In two ominous signs in July the Kremlin cancelled the second Russia-Africa Summit, due to be held in November, and at the end of July Kyiv ordered the evacuation of the parts of the Donetsk region it still controls, nominally to avoid problems in the winter. Both suggest that the fighting will continue into November and possibly beyond and that Russia continues to make steady, albeit very slow, progress in its campaign to take control over the whole of the greater Donbas region.

The government has limited capacity to raise resources to cover its funding gap via taxes (the economy is weak) or debt (international capital markets are closed for Ukraine; at the internal capital market, the Ministry of Finance is unwilling to sell debt at new higher interest rates which distort monetary transmission).

This situation is not sustainable. Although the NBU can provide direct support to the government, this comes at a cost of burning foreign exchange reserves at a fast pace. In June alone, the central bank sold approximately $4bn of its reserves to support the hryvnia and the NBU predicted a decrease in international reserves in the second half of 2022 by 8.6% – from $22.8bn to $20.8bn by the end of the year.

With limited resources and instruments, the central bank is caught on the horns of a dilemma, but cannot simultaneously defend the exchange rate, print money (UAH225bn, or $6.1bn, since the beginning of the war) to cover fiscal deficits, and support the stability of the financial system. Something will have to give – and the value of the currency is probably the first thing that will go. In the past few days the NBU has forbidden exchange kiosks from reporting the exchange rate, in an effort to “shield” the population from the rapidly collapsing currency.

A financial crisis is already upon us. The projected funding from the international community for the second half of 2022 is about $18bn. With monthly foreign exchange interventions of about $4bn and external debt payments (principal and interest) of $3bn in the rest of 2022, more defaults are on the cards, otherwise foreign exchange reserves could decline to a dangerously low level of $12-15bn, say experts – far below the level needed to support the value of the hryvnia.

Some of that pressure has been removed after the Paris Club of sovereign creditors gave Ukraine a one-year delay on payments in July, but the private creditors have not been as forgiving, and on July 26 the state-owned gas company Naftogaz defaulted on a $335mn bond redemption, despite having the cash to meet its obligation. The government has ordered the state-owned banks to delay their payments to “preserve cash.”

In addition to the debt another big call on the budget will be the need to buy more gas for the winter. Ukraine currently has the lowest level of gas storage in all of Europe, with the tanks only 22% full as of the last week in July. Naftogaz says it needs to buy another 5bn cubic metres of gas in an extremely tight market at an estimated cost of $7.8bn. It is not clear where the companies will find either the gas or the money to buy it with.

But there is some good news. Economic activity has begun recovering in Ukraine after a significant drop at the beginning of the full-scale invasion, according to Deputy Chairman of the National Bank Serhii Nikolaychuk. This does not mean that the GDP is growing but that the depth of the fall is decreasing, he said in July.

The economy’s recovery can be seen in the following indicators: revitalisation of trade networks, increase in restaurant turnover, and a drop in the number of non-working businesses. In addition, exports are also gradually recovering and the end of the blockade on Ukrainian ports should make a very big difference to Ukraine’s balance of payments.

Nevertheless, NBU predicts a 2022 drop in GDP of more than a third and an increase in inflation to more than 30%. The national bank estimates that the economy will decline by 40% in the first half of this year and will end the year down by 30-35%. At the same time, analysts of the regulator believe that the economy of Ukraine will show a recovery of 5-6% in 2023-2024. This will become possible if the active phase of the war ends and the Black Sea ports are unblocked.

The regulator expects inflation to return to the goal of 5% in 2025. According to the NBU forecast, inflation will decrease to 20.7% in 2023 and 9.4% in 2024.

Steve Sweeney: Reporters Without Borders launches campaign to censor Russian media

Reporters Without Borders logo.

By Steve Sweeney, Morning Star, 7/24/22

AJOURNALIST has accused press freedom group Reporters Without Borders (RSF) of “abetting genocide” after it launched a controversial appeal for funds to censor Russian media.

Canadian journalist Eva Bartlett accused RSF of silencing the voices of the Donbass region’s inhabitants.

The group launched an appeal on Friday (July 22, 2022) with an email from Jeanne Cavelier, head of the RSF Eastern Europe and Central Asia desk, asking for donations.

She claimed that several Russian television channels, including Rossiya 1, Perviy and NTV, were spreading “disinformation and content that in effect condones war crimes and incites violence and hatred, legitimising the invasion of Ukraine and the Russian army’s crimes.”

When pressed by the Morning Star, RSF was unable to point to any specific examples of such activity by the organisations cited in its appeal.

General secretary Christophe Deloire responded by saying that the channels were “created to destabilise our democracies in a context of information war” and had lied by describing Russia’s intervention as defensive.

“In short, they serve the interests of a repressive, censorious and propagandist state.”

He said that Russian media has challenged the dominant narratives on the bombing of a hospital in the Ukrainian port city of Mariupol and the massacre of civilians in the town of Bucha and also suggested that the US had funded “a secret network of biological laboratories used to design chemical weapons.”

But journalists say that it is right to scrutinise such incidents and seek to cut through the fog of war.

The appeal called for French authorities to act against Eutelsat, which RSF claims is profiting from broadcasting Russian media outlets and “deriving dividends from disinformation and censorship.”

It accused the satellite operator, in which the French state is a major shareholder, of “acting as an intermediary for the Russian war propaganda apparatus.

“Help us to get Eutelsat to comply with the international convention that requires respect for the right to freedom of expression and information,” it said above a donation button.

Mr Deloire denied that RSF was calling for censorship but accused the Russian outlets of promoting “propaganda and lies,” saying that “Eutelsat should rather broadcast independent Russian channels.”

He insisted this case was different from the state bans on RT and others which RSF opposed, but was about the jurisdiction of governments.

“We call on France and other signatory countries of the Eutelsat convention to impose the respect of the principles of this convention,” he said.

But Ms Bartlett told the Morning Star: “What RSF is actually doing is censoring the people of the Donetsk and Lugansk people’s republics, who have been living under Ukrainian bombing for over eight years.

“Ukraine has increased its shelling in the past four months, heavily hitting civilian areas and infrastructure, including schools, markets and hospitals.

“Russian media and those able to publish reports on sites like RT is giving those terrorised civilians a voice and holding Ukraine accountable for its war crimes,” she said.

“RSF is clearly working hand in hand with Ukraine in obfuscation of its murder of 754 civilians from January 2022 to July 21 2022 alone. That is in addition to the nearly 8,000 civilians alone Ukraine has killed over the past eight years.

“In covering this up, RSF is abetting genocide,” Ms Bartlett said.

RSF refused to comment on reports of journalists deemed to be “pro-Russian,” including Ms Bartlett, being placed on kill lists and declined to speak out about her case.

“Our team did not have the capacity to investigate the case. We need to get sources from all sides, and make sure that they provide information and not lies,” Mr Deloire said.

He denied that such appeals create a climate that puts journalists at risk, after some raised concerns that RSF is “placing a target on our backs.”

“On the contrary,” he said, “denouncing propaganda media is a way to defend the independence of journalists, whatever the editorial lines of their media,​​​​​” adding that RSF does not have any political bias.

The press freedom organisation was founded in 1985 by French journalist Robert Menard and others.

Mr Menard is now mayor of the southern city of Beziers, having been elected in 2014 following a campaign backed by the far-right National Front.

RSF has received funds from US regime change outfit the National Endowment for Democracy and USAID, among others.

It has been accused of targeting countries that the US has criticised or sanctioned as part of a new cold war and regime change efforts, including China, Russia, Syria and Venezuela.

In 2008, a number of its activists were arrested for attempting to disrupt the flame ceremony at the Beijing Olympics.

Difference Group founder Dr Dan Steinbock said that RSF has previously supported coups against Hugo Chavez in Venezuela, Jean-Bertrand Aristide in Haiti, Evo Morales in Bolivia and Manuel Zelaya in Honduras when those leaders held office.

He claimed that the group has admitted co-operating with the US State Department against Cuba, Bolivia, Venezuela and Nicaragua, while pursuing similar joint interests in Libya, Iran and Iraq.

MK Bhadrakumar: Ukraine war is losing its sparkle. Where’s the Lady with the Lamp?

ukrainian flag waving in wind with clear sky in background
Photo by Nati on Pexels.com

By MK Bhadrakumar, Indian Punchline, 8/2/22

The Russian Defence Ministry announced yesterday that at around 9.20 a.m. Moscow time, Razoni, ship flying the flag of Sierra Leone, left Odessa port in Ukraine as part of the recent grain deal. Razoni is carrying a cargo of maize to Istanbul port.

The MOD said the “control of the humanitarian operation for the departure of the first ship carrying agricultural products was planned with the active participation of Russian officers who are part of the Joint Coordination Centre in Istanbul.”

Meanwhile, Secretary of State Antony Blinken said yesterday, “this is a good and important first step” that the first ship with 26-, 27,000 tons of grain sailed out of Odessa.

Searching for the needle in a haystack is exciting, as there could be sudden surprises. There are growing signs that the diplomatic front on Ukraine conflict is livening up.

On Monday, the US President Joe Biden offered talks with Russia. In his statement ahead of the tenth Non-Proliferation Treaty (NPT) review conference, Biden reiterated the US’ “shared belief” with Russia that “a nuclear war cannot be won and must never be fought” and that “my administration has prioritised reducing the role of nuclear weapons in our national security strategy.” 

Biden continued:

“I’ve worked on arms control from the earliest days of my career, and the health of the NPT has always rested on meaningful, reciprocal arms limits between the United States and Russian Federation. Even at the height of the Cold War, the United States and the Soviet Union were able to work together to uphold our shared responsibility to ensure strategic stability. Today, my Administration is ready to expeditiously negotiate a new arms control framework to replace New START when it expires in 2026. But negotiation requires a willing partner operating in good faith. And Russia’s brutal and unprovoked aggression in Ukraine has shattered peace in Europe and constitutes an attack on fundamental tenets of international order. In this context, Russia should demonstrate that it is ready to resume work on nuclear arms control with the United States.”

Simultaneously, Blinken also alluded to Russia’s key role for “making sure that countries with nuclear weapons, including the United States, pursue disarmament; making sure that countries that don’t have nuclear weapons do not acquire them by upholding and strengthening nonproliferation; and making sure that countries can engage in the peaceful use of nuclear energy, something that is even more vital as we deal with the challenges posed by climate change.”

Blinken has had a makeover lately pushing back an avalanche of hawkish opinion represented by House Speaker Nancy Pelosi, US Senate, Ukraine’s president Volodymyr Zelensky and the Ukrainian Parliament who demand that Russia be formally designated a state sponsor of terrorism, a label reserved for North Korea, Syria, Cuba and Iran.

Indeed, Blinken’s phone call to Russian FM Sergey Lavrov on prisoner exchange was a US-Russia re-engagement since February and therefore a subtle messaging in itself. (Biden’s offer of talks has come within the week.)

These fresh tidings need to be seen alongside the trend of the “collective West” lately working to ease the anti-Russian sanctions. The following developments suggest a pattern:

-Canada announced on July 9 — on Germany’s request and Washington’s backing — while also ignoring Ukraine’s objections, a waiver of sanctions that allowed the return of equipment for Nord Stream 1 pipeline so as to support Europe’s access to “reliable and affordable energy”;

-European Union issued a guideline on July 13 (in relation to the Russian exclave of Kaliningrad) “that the transit of sanctioned goods by road with Russian operators is not allowed under the EU measures. No such similar prohibition exists for rail transport” (via Lithuania.)

-On August 1, the UK eased some restrictions to allow companies to provide insurance and reinsurance to Russian entities, which have implications for shipping and aviation industries.

-The EU also allowed “exemption (for Russia) from the prohibition to engage in transactions with certain state-owned entities as regards transactions for agricultural products and the transport of oil to third countries.”

-Bloomberg had reported on June 13 that “US government is quietly encouraging” agricultural and shipping companies to buy and carry more Russia’s fertilizer, whose exports are down 24% this year as “many shippers, banks and insurers have been staying away from the trade out of fear they could inadvertently fall afoul of the rules… and (Washington) is in the seemingly paradoxical position of looking for ways to boost them (Russian exports.)”

However, on the war front, Russia’s special military operations to grind the Ukrainian forces are continuing, albeit without significant changes on the battlefield. The current frontline in Donbass appears to be along the Bakhmut –Soledar-Seversk line where Ukrainian forces try to slow down the Russian offensive on the cities of Slavyansk and Kramatorsk from the eastern direction.

Positional battles are also going on along the entire frontline in Eastern and Southern Ukraine. The western media, prompted by the Kiev regime, is hyping up an imminent Ukrainian “counteroffensive” in the southern region of Kherson, but that is a stretch. In fact, in the weekend, Ukraine’s 128th Mountain Assault Brigade in Zaporozhye direction reportedly suffered such heavy losses that demoralised troops began abandoning combat positions and desertion from the frontline.

Although Razoni sailed out yesterday, Russian strikes also destroyed one launcher of US-made anti-ship Harpoon missile system in Odessa Region while high-precision strike also destroyed 2 advanced US rocket launchers of HIMARS in Kharkov.

Against such a convoluted backdrop, an opinion is building up in the US that the Kiev regime is stringing the West, and needs to be firmly told that all good things must come to an end.

Reflecting this nascent thinking, the National Interest featured a piece last week by two influential American think tankers close to the Democratic Party circles who had served in the White House and State Department under the Obama administration.

Conceivably, there is a convergence here with Russia’s grouse that but for Kiev’s intransigence, peace talks are possible. Putin has invited Turkish president Recep Erdogan to meet up at Sochi on Friday. (here, here.)  Erdogan had said he hoped the recent grain deal would be a turning point for the resumption of political talks between Ukraine and Russia to end the armed conflict.  (here)

Tara Reade Interviews Independent German Journalist, Alina Lipp, Who is Facing Prosecution by Berlin for Her Reporting in Donbass

*Interview starts at around 16 minute mark.

YouTube link here.

Rumble link here.

“German journalist Alina Lipp said she was facing three years in prison in her home country for her reporting on crimes committed by Ukrainian forces against civilians. She also said that Germany would hold court hearings without her. They will not allow her to present her case as it would hamper the process. She is accused by the German authorities of supporting the Russian invasion of Ukraine and faces three years in prison under article 140 of the constitution or a monetary fine.” – India Today

Ted Snider: Is Russia Expanding Its Goals in Ukraine?

Map of Eurasia

By Ted Snider, Antiwar.com, 7/28/22

On July 20, Russian Foreign Minister Sergei Lavrov said that Russia’s war aims had been altered and that Russia might have to push further west. “Now the geography is different,” he said, “it’s far from being just the DPR and LPR [Donetsk and Luhansk People’s Republics], it’s also “Kherson and Zaporizhzhia regions and a number of other territories.”

Is Russia expanding its war goals? Are Lavrov’s comments “confessing dreams to grab more Ukrainian land,” as Ukraine’s foreign minister said?

Western commentators confidently declare that Lavrov’s comments reveal war aims larger than those declared at the start of the war. Reuters’ headline announces that “Russia declares expanded war goals,” and The New York Times’ headline declares that “Russia Signals That It May Want a Bigger Chunk of Ukraine.” That’s not surprising, though, the Times continues, because “Western officials have always scoffed at Moscow’s claims that its invasion is anything less than an act of expansion.”

Their interpretations display a confidence that ignores that they do not know what is going on in Putin’s mind. One reasonable component of interpreting Lavrov’s and Putin’s words would be to listen to what they have actually said.

Though the Times repeats the accepted Western accusation that Putin has ambitions to expand Russia and recreate the Soviet Union, there is no evidence, John Mearsheimer, has argued to support that accusation.

Though western commentators often quote Putin’s 2005 line that “Whoever does not miss the Soviet Union has no heart,” they frequently amputate it from the line that follows: “Whoever wants it back has no brain.”

Though we cannot know Putin’s thoughts, we might at least consider and analyze his words. And he seems never to have expressed a goal of conquering or absorbing Ukraine. “There is no evidence in the public record,” Mearsheimer argues, “that Putin was contemplating, much less intending to put an end to Ukraine as an independent state and make it part of greater Russia when he sent his troops into Ukraine on February 24th.”

Instead, when Putin announced Russia’s invasion of Ukraine, Mearshemeir reminds, he said, “It is not our plan to occupy Ukrainian territory.” Then, seemingly articulating his goals, he added, “Russia cannot feel safe, develop, and exist while facing a permanent threat from the territory of today’s Ukraine.”

Putin listed a number of goals at the start of the invasion, including the protection of ethnic Russians in the Donbas. The primary goal that he demanded repeatedly was that Ukraine neither became a member of NATO nor a base for NATO “weapons systems that threaten us in close vicinity to Russian territory.”

The military focus on the Donbas region was sufficient to keep NATO from Russia’s border and to keep weapons out of the vicinity from which they could threaten Russian territory. But that changed when the US sent Ukraine long range High Mobility Artillery Rocket Systems (HIMARS) that carry missiles with a range of 50 miles and have the capacity to strike Russian territory.

Western reports of Lavrov’s July 20 announcement omit his crucial line that “If Ukraine receives long-range weapons from Western countries, then the geographical tasks of the special operation of the Russian troops will change.” Lavrov did not say there was a change or expansion in Russia’s goals: he said the same task remains: “The President said very clearly, as you quoted him – denazification, demilitarization in the sense that there are no threats to our security, military threats from the territory of Ukraine , this task remains.”

The task is the same. The geography has changed because, with the US insertion of long range HIMARS into Ukrainian territory, the Donbas is no longer wide enough to ensure that there are no “weapons systems that threaten us in close vicinity to Russian territory.”

Lavrov’s message is not new. In early June, Lavrov warned that “the longer the range of weapons you supply, the farther away the line from where [Ukraine] could threaten the Russian Federation will be pushed.” Lavrov’s July message reiterated the same point. Russia’s war aims may have to extent west “Because we cannot allow the part of Ukraine that Zelensky will control or whoever replaces him to have weapons that will pose a direct threat to our territory. . . .”

The US has not only inserted those weapons into Ukraine. According to the same New York Times article that says Russia has expanded its goals and wants a bigger chunk of Ukraine, “American military officials said Wednesday that they planned to send four more of the M142 HIMARS multiple-rocket launch vehicles, as well as more of the guided rockets they fire and more guided artillery ammunition.”

Ukrainian officials have also suggested that those US supplied HIMARS will be used against targets in Crimea. Vadym Skibitskyi, representative of the Chief Intelligence Directorate of the Ministry of Defense of Ukraine, said on July 16 that both Crimea and Russia’s Black Sea Fleet are targets.

The huge majority of Russians and Crimeans see Crimea as Russian territory. No Russian government could tolerate an attack on Crimea or the loss of Crimea. An attack on Crimea would be seen by Putin – or by any Russian administration – as an attack on Russia. Sending Ukraine HIMARS that can reach Russia and Ukraine’s statement that they can be used to strike Crimea mean that the geography has changed and that the line from where Ukraine could threaten Russia might be moved further west.

Former president and current Deputy Chairman of the Russian Security Council Dmitry Medvedev said on July 17 that if Ukraine attacks Crimea, the Ukrainian leadership “will be faced with a doomsday, very quick and tough, immediately.”

Though Western commentators have insisted that Lavrov’s comments signal a change and expansion of Russia’s goals in Ukraine, it is impossible to know Putin’s thoughts. Putin’s and Lavrov’s words suggest another possible interpretation. The goal has not changed: only the geography for accomplishing the goal has changed. And that geography has been changed by the insertion by the US of long range HIMARS rocket systems into Ukraine.

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