Defence Minister Sergei Shoigu: Comrade Supreme Commander-in-Chief,
Since June 19, formations and units of the Centre Group under the command of Colonel General Alexander Lapin, in co-operation with units of the Second People’s Militia Corps of the Lugansk People’s Republic and supported by the southern group of forces led by Army General Sergei Surovikin, have successfully carried out an offensive operation to liberate the Lugansk People’s Republic.
Within two weeks, they encircled and destroyed the groups in the Gorskoye cauldron, around Lisichansk and Severodonetsk. Twenty-five localities have been taken under control, the largest of which are Severodonetsk, Zolotoye, Gorskoye and Volcheyarovka. The operation ended yesterday with the liberation of Lisichansk, one of the largest towns in the Lugansk People’s Republic. A total of 670 square kilometres of territory were taken under control during the active offensive.
The total losses of the Ukrainian armed forces amounted to 5,469 personnel, including 2,218 killed and 3,251 wounded; 196 tanks and other armoured vehicles, 12 aircraft, one helicopter, 69 drones, six long-range surface-to-air missile systems, 97 multiple rocket launchers, 166 field and mortar artillery pieces and 216 vehicles of various purposes.
When retreating from Lisichansk, the enemy abandoned 39 tanks and other armoured vehicles, 11 guns and mortars, 48 Javelins and NLAW anti-tank missile systems, 18 Stinger systems, and three unmanned aerial vehicles.
Today the demining of the city of Lisichansk and its environs is underway, as is the delivery of humanitarian cargo, as well as the provision of medical assistance to civilians.
The Russian Armed Forces are continuing the special military operation.
President of Russia Vladimir Putin: Good. Thank you.
As you know, Colonel General Alexander Lapin and Army General Sergei Surovikin also reported to me today on the progress in fulfilling their tasks and presented their proposals for the development of offensive operations. Both the Defence Ministry and the General Staff are considering the proposals of the field commanders.
The units that took part in active combat operations and achieved success and victories in the Lugansk direction, of course, should rest and build up their combat capabilities. Other military formations, including the East Group and the West Group, must carry out their tasks according to the previously approved plans, according to the single scheme, and I hope that everything will happen in their directions in the same way as it has happened in Lugansk.
I agree with your proposal to award Commander of the Centre Group Colonel General Lapin and Deputy Commander of the 8th Army of the Southern Military District Major General Abachev the title of Hero of Russia. The corresponding Presidential Executive Order will be signed today.
I would also ask you to recommend for state decorations all military personnel who distinguished themselves in the course of these combat operations. Based on your daily reports, I know that the Russian army has many such brave, professional soldiers, daring – in a good way – warriors, and they should all be honoured with corresponding state decorations of their Motherland.
My congratulations and words of gratitude also go to the soldiers of the 2nd Army Corps of the LPR People’s Militia. I know that they worked actively and competently, too, and showed courage and heroism in the truest sense of the word, when liberating their native land.
I congratulate all of you and wish you further success.
The war in Ukraine is the culmination of a 30-year project of the American neoconservative movement. The Biden Administration is packed with the same neocons who championed the US wars of choice in Serbia (1999), Afghanistan (2001), Iraq (2003), Syria (2011), Libya (2011), and who did so much to provoke Russia’s invasion of Ukraine. The neocon track record is one of unmitigated disaster, yet Biden has staffed his team with neocons. As a result, Biden is steering Ukraine, the US, and the European Union towards yet another geopolitical debacle. If Europe has any insight, it will separate itself from these US foreign policy debacles.
The neocon movement emerged in the 1970s around a group of public intellectuals, several of whom were influenced by University of Chicago political scientist Leo Strauss and Yale University classicist Donald Kagan. Neocon leaders included Norman Podhoretz, Irving Kristol, Paul Wolfowitz, Robert Kagan (son of Donald), Frederick Kagan (son of Donald), Victoria Nuland (wife of Robert), Elliott Cohen, Elliott Abrams, and Kimberley Allen Kagan (wife of Frederick).
The main message of the neocons is that the US must predominate in military power in every region of the world, and must confront rising regional powers that could someday challenge US global or regional dominance, most important Russia and China. For this purpose, US military force should be pre-positioned in hundreds of military bases around the world and the US should be prepared to lead wars of choice as necessary. The United Nations is to be used by the US only when useful for US purposes.
This approach was spelled out first by Paul Wolfowitz in his draft Defense Policy Guidance (DPG) written for the Department of Defense in 2002. The draft called for extending the US-led security network to the Central and Eastern Europe despite the explicit promise by German Foreign Minister Hans-Dietrich Genscher in 1990 that German unification would not be followed by NATO’s eastward enlargement. Wolfowitz also made the case for American wars of choice, defending America’s right to act independently, even alone, in response to crises of concern to the US. According to General Wesley Clark, Wolfowitz already made clear to Clark in May 1991 that the US would lead regime-change operations in Iraq, Syria, and other former Soviet allies.
The neocons championed NATO enlargement to Ukraine even before that became official US policy under George W. Bush, Jr. in 2008. They viewed Ukraine’s NATO membership as key to US regional and global dominance. Robert Kagan spelled out the neocon case for NATO enlargement in April 2006:
[T]he Russians and Chinese see nothing natural in [the “color revolutions” of the former Soviet Union], only Western-backed coups designed to advance Western influence in strategically vital parts of the world. Are they so wrong? Might not the successful liberalization of Ukraine, urged and supported by the Western democracies, be but the prelude to the incorporation of that nation into NATO and the European Union—in short, the expansion of Western liberal hegemony?
Kagan acknowledged the dire implication of NATO enlargement. He quotes one expert as saying, “the Kremlin is getting ready for the ‘battle for Ukraine’ in all seriousness.” The neocons sought this battle. After the fall of the Soviet Union, both the US and Russia should have sought a neutral Ukraine, as a prudent buffer and safety valve. Instead, the neocons wanted US “hegemony” while the Russians took up the battle partly in defense and partly out of their own imperial pretentions as well. Shades of the Crimean War (1853-6), when Britain and France sought to weaken Russia in the Black Sea following Russian pressures on the Ottoman empire.
Kagan penned the article as a private citizen while his wife Victoria Nuland was the US Ambassador to NATO under George W. Bush, Jr. Nuland has been the neocon operative par excellence. In addition to serving as Bush’s Ambassador to NATO, Nuland was Barack Obama’s Assistant Secretary of State for European and Eurasian Affairs during 2013-17, where she participated in the overthrow of Ukraine’s pro-Russian president Viktor Yanukovych, and now serves as Biden’s Undersecretary of State guiding US policy vis-à-vis the war in Ukraine.
The neocon outlook is based on an overriding false premise: that the US military, financial, technological, and economic superiority enables it to dictate terms in all regions of the world. It is a position of both remarkable hubris and remarkable disdain of evidence. Since the 1950s, the US has been stymied or defeated in nearly every regional conflict in which it has participated. Yet in the “battle for Ukraine,” the neocons were ready to provoke a military confrontation with Russia by expanding NATO over Russia’s vehement objections because they fervently believe that Russia will be defeated by US financial sanctions and NATO weaponry.
The Institute for the Study of War (ISW), a neocon think-tank led by Kimberley Allen Kagan (and backed by a who’s who of defense contractors such as General Dynamics and Raytheon), continues to promise a Ukrainian victory. Regarding Russia’s advances, the ISW offered a typical comment: “[R]egardless of which side holds the city [of Sievierodonetsk], the Russian offensive at the operational and strategic levels will probably have culminated, giving Ukraine the chance to restart its operational-level counteroffensives to push Russian forces back.”
The facts on the ground, however, suggest otherwise. The West’s economic sanctions have had little adverse impact on Russia, while their “boomerang” effect on the rest of the world has been large. Moreover, the US capacity to resupply Ukraine with ammunition and weaponry is seriously hamstrung by America’s limited production capacity and broken supply chains. Russia’s industrial capacity of course dwarfs that of Ukraine’s. Russia’s GDP was roughly 10X that of Ukraine before war, and Ukraine has now lost much of its industrial capacity in the war.
The most likely outcome of the current fighting is that Russia will conquer a large swath of Ukraine, perhaps leaving Ukraine landlocked or nearly so. Frustration will rise in Europe and the US with the military losses and the stagflationary consequences of war and sanctions. The knock-on effects could be devastating, if a right-wing demagogue in the US rises to power (or in the case of Trump, returns to power) promising to restore America’s faded military glory through dangerous escalation.
Instead of risking this disaster, the real solution is to end the neocon fantasies of the past 30 years and for Ukraine and Russia to return to the negotiating table, with NATO committing to end its commitment to the eastward enlargement to Ukraine and Georgia in return for a viable peace that respects and protects Ukraine’s sovereignty and territorial integrity.
The seasonally adjusted S&P Global Russia Manufacturing Purchasing Managers’ Index (PMI) was back in the black in June, posting 50.9, in line with 50.8 registered in May, as Russia’s economy stabilises after the initial shock of Western sanctions starts to wear off.
Any result above the no-change 50 represents an expansion in activity. The positive result signals “a slight upturn in the health of the Russian manufacturing sector midway through 2022,” S&P said in a note. The rate of expansion was also close to the long-run series average, the consultant added.
The positive manufacturing result comes on the back of the latest RosStat results that showed Russia’s economy was stable, but various sectors have been deeply wounded. Automotive production, for example, has completely collapsed with production down 97% in May. However, that was offset by growth in other sectors, mostly raw materials, and especially oil production, which returned to growth in May on the back of high global demand.
June’s PMI data signalled a marginal improvement in operating conditions across the Russian manufacturing sector, amid a return to growth in new orders, S&P said.
“Nonetheless, output continued to decline amid a further steep fall in exports and shortages of raw materials,” S&P said.
Inflation also remains a problem. The CBR doubled the prime rate to 20% only days after the invasion of Ukraine to head off inflation and instability in the exchange rate and the move seems to have been effective as the regular has cut rates four times since then to bring the rate back to the pre-war 9.5% on June 10 as inflation pressures rapidly eased. Analyst expect the CBR to continue to cut rates as the focus switches from containing inflation to promoting growth.
S&P reports its panellists are still seeing price rise pressures, due to input price rises stemmed from hikes in imported material costs, which have been affected by sanctions.
“That said, the rate of cost inflation eased to the slowest since February 2020, which fed through to the first fall in output charges since March 2017,” S&P added.
Inflation in May remains at a high 17.1%, putting pressure on the cost of living and leaving Russia with a deeply negative real interest rate, but economists believe it will keep falling in the coming months and the CBR is predicting inflation will return to its target rate of 4% by 2024.
Unemployment has been another bright spot, with RosStat reporting the official jobless rate has fallen to a post-Soviet low of 3.9% in May. However, analysts believe the low rate is artificial, as the state is preventing state-owned companies from sacking employees made idle by the sanction-related problems. Exiting foreign companies – around 200 foreign companies have either left the Russian market or suspended operations according to a study by Yale – have largely kept their local employees on the payroll for the meantime. Foreign-owned companies account for a total of about 10% of the Russian workforce. During the coronavirus (COVID-19) crisis unemployment rose to a peak of 8.1%, and unemployment is expected to rise to at least that level later in the year if state support is withdrawn.
In the meantime, S&P’s panellists report that employment was actually growing in June as firms stepped up their hiring activity to meeting new orders and domestic demand as imported goods disappeared from the shelves in a low-level import substitution drive.
“Longer-term, sentiment was also buoyed by greater new order inflows as business confidence ticked up to the highest since February,” S&P said. “Supporting the headline figure was a renewed rise in new orders received by Russian manufacturers during June. The increase in new sales was marginal overall but followed four successive monthly contractions. Where new order growth was noted, firms linked this to greater domestic demand and the agreement of new projects.”
An informal survey carried out by academic Maria Snegovaya of how sanctions have affected people’s everyday lives found that while the sanctions were noticeable, most ordinary Russian reports that their lives have not changed much.
“There are sharp regional disparities. Moscow and St. Pete are doing much better than the regions. This is reminiscent of Soviet times,” Snegovaya said in a social media post. “Both choice and quantity of goods are declining, substitution (if at all) mainly with lower quality products. Substituted either with lower-quality domestic or Chinese goods. Rising prices on almost everything. Plenty of closed stores. Worst situation is with car spare parts, imported appliances and clothes. Groceries are more or less OK, especially seasonal ones. However, the situation is not critical, many people in big cities do not even notice any change.”
Obviously exports have been one of the categories to be most affected by sanctions, S&P’s panellists confirmed, as export orders contracted further from the previous month. “The rate of decline was the slowest since February but remained steep, and was attributed to the impact of sanctions and the suspension of contracts with customers in Europe,” S&P said.
As bne IntelliNews reported in a recent blog, the West’s sanctions regime has significant leaks that have allowed Russia to continue to export significant amounts of oil in particular so that the state is currently running its largest current account surplus on record. However, sanctions have dramatically curtained imports, especially of spare parts and technology, so that “the only thing that Russia is importing at the moment is money”, many commentators on social media have quipped. That has caused the ruble to rise dramatically in value against the dollar, giving Russia a nasty dose of the Dutch Disease.
Output levels also decreased again in June. The pace of decline quickened from May and was solid overall, as firms stated that challenges sourcing raw materials due to shortages and higher imported input costs had hampered efforts to step up production.
Finally, output expectations regarding the year ahead across the Russian manufacturing sector remained upbeat in June. The degree of confidence was the strongest since February amid hopes of greater client demand and a stabilisation in economic conditions.
Reporting from Ukraine, Dmitriy Kovalevich the New Cold War’s regular contributor and analyst, describes the catastrophe unfolding on the frontline and the stark realities behind the recently granted EU candidacy status.
During June, Ukraine experienced the fourth month of the war, which has been marked by a sharp increase in the losses of Ukrainian military personnel. Estimates of the losses vary, but at the beginning of the month, President Zelensky said that 100 soldiers were being killed every day; while Mikhail Podolyak, the head of his Office, spoke of 200 being killed daily, and the head of the Zelensky ‘Servant of the people’ party faction, David Arakhamia, announced that about a thousand were killed and wounded daily.[1]
The daily figure reported by the Russian military is even larger. Considering that during military conflicts it is usual for the losses of the enemy to be exaggerated, while underestimating one’s own, we can conclude that the truth lies somewhere in the middle.
Increasing front line losses, draftees being seized from streets
Against the background of growing losses in Ukraine, about a million people have already been drafted. As a rule, these people are untrained and quickly die under massive artillery fire. The drafted Ukrainian infantrymen complain that they are used at the front as ‘bait’ for the Russian military during the counter-battery fight.[2] Virtually unarmed, they are thrown into the front lines, waiting for the Russians to detect them with drones, and hit them with heavy artillery and aircraft, after which Ukrainian artillerymen can detect Russian artillery positions. Such a tactic in itself leads to huge losses, which are replenished due to the fact that the police began to capture males aged 18 to 60 on the streets of cities on a massive scale.[3]
Men are literally seized on the streets, so many enterprises in the country that are not related to law enforcement agencies and defense have stopped working. Men simply try not to go outside; only their wives, daughters or mothers go to shops, pharmacies or banks.
Ukrainian border guards report that about a hundred men are caught every day trying to leave with forged documents, and about 30 more are caught daily trying to flee across the border through forests or swim across rivers.[4] The number of those who managed to escape successfully is naturally not included in the statistics.
With this mass capture of males in June, solidarity groups have formed in every city. Using anonymous Telegram channels, citizens provide tip offs as to exactly where or on which street they see police ambushes, so that Ukrainian men who do go out can avoid these locations.[5] Police ambushes are also monitored with the help of small drones. Many are gratified only by the fact that the police themselves are reducing in numbers – vast numbers of ordinary policemen are also being thrown into the trenches.
The situation on the ground
At the end of June, the Ukrainian military lost control over a number of cities in Donbass, in particular in the Luhansk region. Russian troops and the army of the LPR captured Severodonetsk, while the last city controlled by Kyiv in the region, Lisichansk, was surrounded. Both cities, like Mariupol, played an important role in the economy of Ukraine as industrial centers. The General Staff of Ukraine officially calls the retreat and the loss of cities “maneuverable defense.”[6] According to the Russian military, hundreds of mercenaries from various European countries and North America fought in this area, a significant proportion of whom have been killed or gone missing.
Kyiv loses in terms of firepower, so it has to put a stake on lightly armed infantry deployed in the trenches against hundreds of powerful long-range artillery systems.[7] The supply of Western weapons in this regard does not play a significant role. According to the Ukrainian military, they need many more heavy weapons and people, at a magnitude that exceeds both the capacity of Western countries and the Ukrainian population.
Reality behind granting of EU status
Against the backdrop of defeats on the battlefield, the Ukrainian authorities presented as their ‘victory’ at the end of June, the granting by the EU of candidate status to Ukraine and Moldova. By itself, this decision will not play any role for ordinary Ukrainians, but allow the Ukrainian authorities to receive large sums from the EU budget for various reforms. As Ukraine’s political scientist Ruslan Bortnik explains: “We are talking about very big money that Ukraine can count on – a ‘candidate’ fund, big sums of money. At one time, at the candidacy stage, Poland received about 80 billion euros from it – Ukraine can count on much larger sums.”[8]
But Turkey, for example, has had candidate status for 23 years. North Macedonia and Albania have also been held in this status for many years. Commenting on the decision of the European Parliament, Prime Minister of Albania Edi Rama on June 23 called it “a completely fraudulent process,” where “decisions are postponed indefinitely under far-fetched pretexts.”[9]
At any moment, the status of a candidate can be revoked, but for the EU authorities this decision was important, precisely as a symbolic gesture, since the Ukrainian authorities, losing on the battlefield, needed at least some positive informational occasion. The main thing that is important to understand about joining the EU is that it is impossible while the country is at war. This has been repeatedly stated by European leaders. Kyiv has promised to fulfill all the conditions by the end of the year. And here it is necessary to understand that in this context, this is either just an empty promise from Kyiv, or it is ready to give up at least a quarter of its territory, unless, of course, the Russian authorities agree to this.
Irreconcilable differences, global food crisis
In June, Western leaders once again showed some disagreement about the prospects for peace in Ukraine. If EU leaders like France and Germany want an end to hostilities and sanctions as soon as possible, the Kyiv authorities are under the direct control of London. Britain’s position is the most irreconcilable, and Boris Johnson has even become the idol of Ukrainian nationalists and neo-Nazis, as the British authorities regularly encourage them, describing the prospects for the imminent collapse of Russia and the victory of Ukraine in the future.
At the same time, Kyiv and London, in order to attract Third World countries to their side, continue to repeat in unison that the actions of the Russian Federation in the Black Sea threaten a global food crisis. Foreign ships and tons of grain are blocked in the ports of Ukraine, causing an increase in grain prices. However, in June the Russian Federation made several announcements regarding the opening of humanitarian corridors, but not a single ship left. The President of the Russian Federation said that it was not the Russians who had mined the ports. The Ukrainian side claims that the only way to unblock the ports is through military force, in effect, by attempting to draw the NATO fleet into a conflict with the Russian Federation.
In June, negotiations were held twice in Turkey, at which it was decided to open humanitarian corridors, but each time, under pressure from Liz Truss, Britain’s Foreign Secretary, Ukraine refused to agree to them. In reality, Kyiv is pursuing a policy of blackmail, the purpose of which is to set the countries of Africa and Asia against the Russian Federation, seeking to isolate Russia, even through starvation in these countries. Yet, it is worth noting that such a policy has not borne fruit, and the President of Senegal and the head of the African Union, Macky Sall, called on Ukraine to clear the Odessa ports of mines in order to resume grain exports.[10]
Regrettably, it should be noted that at the beginning of July Ukraine has not come one step closer to peace, and the global economic crisis will only grow during the coming months. The daily death of hundreds of people on the battlefield is being justified in the West as a desire to improve Kyiv’s negotiating position, although any remotely adequate military expert admits that they will only continue to get worse. Nevertheless, with the current situation absolutely nothing depends on Kyiv.
