Reuters, 2/6/25

Summary

-Task force was focused on sanctions enforcement, seizing assets

-Department switches focus to border and drug cartels

-Foreign bribery enforcement also implicated

WASHINGTON, Feb 6 (Reuters) – The U.S. Justice Department under President Donald Trump is disbanding an effort started after Russia’s 2022 invasion of Ukraine to enforce sanctions and target oligarchs close to the Kremlin.

A memo from Attorney General Pam Bondi, issued on Wednesday during a wave of orders on her first day in office but not previously reported, said the effort, known as Task Force KleptoCapture, will end as part of a shift in focus and funding to combating drug cartels and international gangs.

“This policy requires a fundamental change in mindset and approach,” Bondi wrote in the directive, adding that resources now devoted to enforcing sanctions and seizing the assets of oligarchs will be redirected to countering cartels.

The effort, launched during Democratic President Joe Biden’s administration, was designed to strain the finances of wealthy associates of Russian President Vladimir Putin and punish those facilitating sanctions and export control violations.

It was part of a broader push to freeze Russia out of global markets and enforce wide-ranging sanctions imposed on Moscow amid international condemnation of its war in Ukraine.

The task force brought indictments against aluminum magnate Oleg Deripaska and TV tycoon Konstantin Malofeyev for alleged sanctions busting, and seized yachts belonging to sanctioned oligarchs Suleiman Kerimov and Viktor Vekselberg.

Cases investigated by the task force are likely to continue, but the work will no longer be centralized at Justice Department headquarters.

“Are we going to suddenly see a surge of sanctioned oligarch wealth flood into the United States? I don’t think so,” said Andrew Adams, the first leader of the task force who is now at law firm Steptoe. “What you will see is a sharp decline in the pace of charges that target facilitators that are specific to Russia.”

Prosecutors assigned to the task force will return to their previous posts. The changes will be in effect for at least 90 days and could be renewed or made permanent, according to the directive.

Trump has spoken about improving relations with Moscow. He has previously vowed to end the war in Ukraine, though he has not released a detailed plan.

The emphasis on drug cartels comes after Trump designated many such groups as terrorist organizations, part of a crackdown on illegal immigration and fentanyl trafficking.

The shift also implicates enforcement of a U.S. foreign bribery law that has led to some of the Justice Department’s largest corporate cases over the last decade. The unit enforcing that law, known as the Foreign Corrupt Practices Act, will now prioritize bribery investigations related to cartels, according to the memo.

A wide range of multinational firms has come under Justice Department scrutiny over the law, including Goldman Sachs, Glencore and Walmart.

“It is a radical move away from traditional FCPA cases and toward a narrow subset of drug and violent crime related cases that have never been the focus of FCPA enforcement,” said Stephen Frank, a lawyer at law firm Quinn Emanuel Urquhart & Sullivan who worked on FCPA cases as a federal prosecutor.

By Peter Korotaev & Volodymyr Ishchenko, Al Jazeera, 1/23/25

Over the past few months, Ukraine has increasingly been under pressure from its Western allies to start mobilising young men under the age of 25. This came after the mobilisation law passed in April did not deliver the expected number of recruits. Even the lowering of medical requirements – allowing men who had had HIV and tuberculosis infections to serve – did not help much.

Some pro-Western Ukrainian officials, like Roman Kostenko, the secretary of Ukraine’s parliamentary security committee, have also pressed for lowering the age. Kostenko said he is being constantly queried by members of the US Congress why the Ukrainian government asks for weapons but isn’t willing to mobilise its youth.

So far President Volodymyr Zelenskyy has refused to move forward. Part of the reason is demographic fear: Sacrificing young men en masse in a prolonged conflict risks condemning Ukraine to an even bleaker future, where demographic decline undermines its ability to rebuild economically, socially, and politically.

But the Ukrainian president also fears public anger. There is growing and palpable reluctance among Ukrainians to fight in the war. And this is despite the fact that their leaders and civil society frame it as an existential struggle for survival.

Many Ukrainians are indeed fatigued after nearly three years of full-scale war, but their war-weariness is not just a matter of exhaustion. It stems from pre-existing fractures in the nation’s sociopolitical foundations, which the war has only deepened.

Public opinion polls, Ukrainian media reports, and social media posts we have examined, as well as in-depth interviews we have conducted with Ukrainians as part of our research on the consequences of post-Soviet revolutions and wars, help elucidate some of these dynamics.

The post-Soviet social contract

Like in all post-Soviet and post-communist states, a new social contract emerged in the 1990s that reflected the new sociopolitical realities in Ukraine. State-citizen relations were reduced to the following: the state won’t help you, but in return, the state won’t harm you either.

Meanwhile, politics became animated by the dramatic Maidan revolutions of 2004 and 2014. The opportunities created by these uprisings were repeatedly co-opted by narrow elite groups – oligarchs, the professional middle class, and foreign powers – leaving large portions of Ukrainian society excluded and their interests underrepresented.

Before 2022, this situation was tolerable for many Ukrainians to an extent. The borders were open, so millions were able to emigrate. In 2021, Ukraine occupied the eighth place in the ranking of countries with the most international migrants – more than 600,000 left in that year alone. Remittances from the emigrants helped those who stayed behind maintain an acceptable standard of living.

But in the long term, this path did not seem sustainable. In 2020, Prime Minister Denys Shmyhal admitted that the state will struggle to pay state pensions in a decade and a half. After years of declining state capacity and de-development, Ukrainians were unsurprised. The news was received as another indication that one should save up American dollars and try to emigrate.

The war put the already weak social contract to the test. All of a sudden, a state that had hardly been present in Ukrainians’ lives demanded that they sacrifice themselves for its survival.

In the wake of the failure of Russia’s initial invasion plan, the surge of unity fuelled a wave of volunteerism. However, as the war ground on, a stark realisation emerged: the state is distributing the burdens and benefits of the war unequally. While some segments of society gain materially or politically, others bear disproportionate sacrifices, fuelling a growing sense of alienation within a large part of the Ukrainian population.

The state has done little to strengthen its relations with citizens in the face of waning war enthusiasm. Instead, government officials have bombarded the population with messaging about self-reliance.

In September 2023, Minister of Social Policy Oksana Zholnovich called on citizens not to remain dependent on benefits, since this makes them “children”. She proposed a “new social contract” in which citizens accept social spending cuts and live independently as “free swimmers”.

In September 2024, the government announced it was not going to increase the minimum wage and social security payments in 2025 despite inflation reaching 12 percent.

A crisis of motivation

As the third year of the war is about to wrap up, the consequences of this weak social contract are becoming increasingly apparent. The narrative of fighting an existential war no longer seems to move the majority of Ukrainians.

The words of one of our interviewees are quite illuminating. This person fundraises for non-lethal military equipment for the army – but not drones or other weapons, because he believes that “the state completely failed in its most critical role of preventing war”. He told us: “I don’t understand why this war should fully become my war in the truest sense of the word.”

He said he found it hard to be open about his views: “When you want to live as you wish, you only speak openly in close circles. Either you have to let go of all ambitions, part of your identity, or consider emigration because this country will ultimately become completely foreign to you.”

The attitude that this is not “our war” can be seen reflected in polls conducted throughout the past year, in which a silent majority does not seem ready to mobilise to fight.

In an April 2024 poll, only 10 percent of respondents said that most of their relatives were ready to be mobilised. A June survey showed that only 32 percent “fully or partly supported” the new mobilisation law; 52 percent opposed it, and the rest refused to answer.

In a July poll, only 32 percent disagreed with the statement “mobilisation will have no effect other than increased deaths”. A mere 27 percent believed that forced mobilisation was necessary to solve issues at the front line.

According to another July poll, only 29 percent considered it shameful to be a draft dodger.

A consistent pattern can be seen in these surveys: those supporting the continuation or strengthening conscription only constitute about a third of the population; a significant minority evade responding to such questions, reflected in the large number of “hard to say” or “don’t know” answers; and the rest openly reject mobilisation.

These attitudes on conscription may seem at odds with results from “victory” polls. The majority in such surveys still indicate that “victory” for Ukraine should mean reclaiming all territories within its 1991 borders and rejecting any concessions to Russia.

But there is really no contradiction here. It is evident that while most Ukrainians would like to see “total victory”, they are unwilling to sacrifice their lives for this goal and empathise with others who feel the same. That is why the majority also supports a negotiated peace as soon as possible.

The lack of motivation to fight is also apparent in the rates of draft dodging. Per the April mobilisation law, all men eligible for mobilisation were to submit their details to the draft offices by July 17. By the deadline, only 4 million men had done so, while 6 million had not.

And of those who entered their details, various officials have said that from 50 to 70-80 percent had medical or other reasons allowing them to legally avoid mobilisation.

Meanwhile, groups and channels have proliferated on Telegram to alert people to the presence of mobilisation officers in certain areas; they have continued to run despite some members getting arrested.

The mobilisation authorities have launched investigations against 500,000 men for draft evasion so far.

Socioeconomic tension

Draft dodging has not only revealed the scope of the crisis of motivation but also the extent to which the war has massively deepened class divides.

Over the past year, there have been regular news reports of officials accepting massive bribes in exchange for exempting men from military service.

In one case made public in early October, a top medical official who also served on a local council representing the ruling Servant of the People party, amassed a fortune taking bribes to facilitate draft-dodging through disability slips. The local police said it found $6m in cash and released a photo of a family member who had photographed themselves on a bed with piles of dollars.

Less than two weeks later, Ukrainian media reported that nearly all prosecutors in the region where the medical official operated were registered as “disabled”. In the aftermath of the scandal, Zelenskyy sacked some officials and triumphantly abolished the institution responsible for giving out disability slips. Uncomfortable questions about why top officials didn’t notice these corrupt schemes were dismissed.

Those who do not have thousands of dollars to pay for a medical exemption or bribe border police, attempt dangerous journeys at Ukraine’s western borders. As a result, a significant portion of Ukraine’s border patrol is stationed on the “peaceful” western borders.

Since 2022, 45 Ukrainians have drowned in the Tysa River on the border with Romania and Hungary in desperate attempts to flee. There have been multiple cases of Ukrainian men trying to escape the country shot and killed by their own country’s border patrol. In March, a video went viral of a border patrol guard madly shooting into the Tysa to demonstrate what he does to draft dodgers, saying: “$1000 to cross this river isn’t worth it”.

There have been cases of dozens of men attempting to cross the border at a time. Once caught, photographs of these “shameful draft dodgers” have been shared on social media, with the captions often stating that they are being sent to the front.

Thus, those who make it to the front line are usually too poor or too unfortunate to have been caught by draft officers. As parliamentarian Mariana Bezuhla put it in mid-September after visiting the front lines near Pokrovsk, the people there were mainly those who could not “decide things” with a bribe. In a November TV interview, a military commander said that 90 percent of those at the front are “forcibly mobilised villagers”.

Army officers often complain of the low quality of these “busified” troops, the term referring to the minibuses into which draft-age men are dragged off the streets. No wonder there have been hundreds of arson attacks against these vehicles.

The effect of such violent coercion unleashed onto mostly impoverished Ukrainian men is the extremely low morale at the front line. As of November 2024, there were four mobilised soldiers for every volunteer.

Mass desertions by mobilised soldiers have been leading to constant retreats. In recent weeks, reports have surfaced that hundreds of “busified” men in the 155th brigade deserted before they were deployed to stop the advance of the Russians near Pokrovsk.

In a July Facebook post, a mobilised Ukrainian journalist bemoaned the lack of patriotism among his fellow conscripts. He wrote that most of the people he served with were from poor, rural regions and were more interested in discussing government corruption than anything else. His attempts to remind them of their patriotic duty failed to convince them:

“A significant portion of the people openly state: Over my 30-40-50 years, the state hasn’t given anything except a Kalashnikov. Why should I be a patriot?’” he observed.

These soldiers certainly aren’t insufficiently acquainted with the realities of war. They aren’t distant civilians tired of frontline footage on the television. But they have good reasons to be suspicious of patriotic imperatives.

Morale problems are compounded by the abuse recruits suffer during mobilisation and deployment. Each month sees a new case of someone beaten to death in the mobilisation stations. In December, media revelations pointed to systemic torture and extortion within the ranks of the Ukrainian army.

In a September interview with a local media outlet, Ukrainian officer Yusuf Walid claimed that 90 percent of officers treat the mobilised “like animals”.

Walid also said that the generation of those born in the 1980s and ’90s are “hopeless” in terms of their patriotic commitments – all they care about is economic survival. This is hardly surprising, given that the post-Soviet Ukrainian social contract convinced individuals to focus on their own survival rather than asking for “handouts” from the state.

The ‘warrior elite’

While the rural poor are coerced into fighting at the front lines, there is a well-off urban minority that lives a relatively protected, comfortable life in Kyiv and Lviv. This “warrior elite” – composed of activists, intellectuals, journalists and NGO workers – maintains the patriotic narrative that Ukraine must fight till victory.

Yet, it seems many members of this elite appear to be reluctant to join the fight at the front line. There have been a number of high-profile patriotic journalists and activists who have called for mass mobilisation, while themselves seeking exemptions on medical or other grounds.

Among them is Yury Butusov, a very well-known military journalist, who reportedly sought an exemption on the grounds of being a father of three children, and Serhiy Sternenko, a prominent nationalist “activist”, who claimed disability exemption for “bad eyesight”.

In June, the employees of 133 NGOs and enterprises receiving foreign funding were granted official exemption from mobilisation. Many of these organisations are not involved in maintaining any critical infrastructure.

While enthusiastically supporting the pro-war narrative of fighting until total “victory”, Ukraine’s patriotic intelligentsia blames all corruption and the growing failures of the state on the statist Soviet past.

In their view, the solution is simply to continue to diminish the role of the state. But austerity has not only done little to endear Ukrainians to their government, especially in times of war, but has also largely failed in terms of its stated aims.

One just has to look at the various corruption scandals in enterprises run by highly paid “reform” officials, who are supported by Western allies. These “reformed” companies mainly wage the struggle against corruption by keeping the rest on minuscule wages, like state railway company Ukrzalyznytsia, or letting go of their workers.

The anticorruption rhetoric is blind to the class divides that it helps entrench. Ordinary Ukrainians often joke about the high salaries received by “anti-corruption observers” and young “reform” members of the board of directors of top state companies.

Anticorruption serves more often than not as a justification for neoliberal policies that favour the business interests of international capital. Ironically, the dismantling of state enterprises driven by such considerations severely weakened Ukraine’s massive Soviet-era military-industrial complex after 2014, which affected its war capabilities.

But instead of blaming themselves for the current state of affairs, the nationalists tend to blame the Ukrainian people. Dmytro Kukharchuk, a well-known nationalist officer, gave a long interview in July about Ukraine’s dim military prospects. According to him, “there are many more khokhols [the Russian “colonial” slur against Ukrainians] today” than there are “true” Ukrainians. He defines “khokhols” as those unwilling to fight for Ukraine’s territorial integrity.

Kukharchuk belongs to the leadership of the extreme-right National Corps party and commands a battalion in a brigade linked to the Azov movement. The sentiments he expresses might seem confined to the fringe, but his rhetoric is far from unique. It echoes a narrative that has dominated Ukrainian, and more broadly, post-Soviet, national-liberal civil society and intelligentsia since the 1990s. This narrative, repeated endlessly, derides the majority of the population – dismissively labelled as bydlo, or “cattle”.

This disparaging term targets those who, in the view of these elites, cling to “Soviet” habits, prioritise personal wellbeing, value state-provided welfare, and resist self-sacrifice for nation-building. Such discourse is not only ethnonationalist but profoundly classist, painting a large segment of the population – primarily workers, poor people, and pensioners – as obstacles to reactionary-defined social progress while valourising a narrow, self-defined vanguard of the nation.

The disconnect

Ukraine’s growing setbacks in the war cannot be attributed to Russia’s overwhelming power or insufficient Western aid. History provides numerous examples of nations overcoming far stronger adversaries in protracted conflicts, often with little or no military or financial support from powerful allies like NATO.

Consider not only Vietnam in the 1960s and 1970s and Afghanistan 1979 – 2021, but also revolutionary France after 1789 and revolutionary Russia after 1917, both of which successfully repelled counter-revolutionary interventions by other great powers. These revolutionary movements not only survived but went on to dominate large parts of Europe.

Time and again, social revolutions and national liberation struggles have demonstrated the ability to forge stronger and more mobilised states against all odds.

According to the dominant narrative, Ukraine should fit into this pattern: a nation emerging from Russian and Soviet oppression, driven by successive national liberation movements, dissident intelligentsia, Maidan revolutions, and the resistance to Russia’s “hybrid war” in the Donbas. This story culminates in the unity and resilience of the Ukrainian people repelling the full-scale invasion of 2022. But this narrative appears fundamentally flawed.

This may be because Ukraine’s is simply one of many post-Soviet trajectories shaped by the modernising successes and later the degradation of the Soviet revolution. Like in many other countries in the region, the state after independence was captured by predatory and comprador elites who prioritised their own interests over the public good.

This failure to deliver meaningful opportunities and protections for the majority of Ukrainians has left the state unable to demand much from them in return. As a result, today, Ukraine is unable to fully mobilise its people who are divided by a profound sociopolitical disconnect.

Contrary to the popular narrative of national unity, there has been no cohesive project of national development to bridge the divide between those bearing the brunt of the war and the political and intellectual elites who claim to represent them both at home and abroad. This disconnect undermines the idea of a shared purpose driving the nation forward.

More and more, it seems the only emotion truly uniting the fragmented Ukrainian nation is fear. Not the lofty ideals of nation-building, but the visceral dread of personal and communal devastation. This fear stems from the apprehension of losing one’s home if the front line comes close, the anguish of becoming precarious refugees, or the terror of enduring months in basements, hiding from relentless shelling and street battles. Even for those whose homes remain intact, fear persists – of lawlessness, looting, murder, sexual violence – the grim realities that often accompany military occupations.

If Ukrainians are united only by a fundamentally negative coalition – by shared fears rather than shared aspirations – then what happens when these fears begin to shift and compete? Some people start weighing them against one another. The fear of losing one’s home to invasion is measured against the fear of enduring forced conscription, becoming cannon fodder in a war that seems increasingly difficult to win.

There is the fear of repression under occupation, juxtaposed with the fear of being arrested in a state where civil society and government increasingly diverge from their own views of freedom and human rights. There is the fear of being humiliated as a khokhol by Russians or as a Russian-speaking mankurt (a disparaging term for someone who has lost touch with their roots) by your own nationalists.

These shifting fears drive the Ukrainian population, but they do not unite it.

We talked to a Ukrainian man in his 50s who did not leave his town in the Kharkiv region even when the front line got just a few kilometres from it and there was regular shelling by the Russians. He could have left for a safer part of Ukraine, but he did not and stayed to help, distributing humanitarian aid to his neighbours.

He is not a coward; he is a patriot. But as he said, he is not willing “to die for the state we have now. Not for that Ukraine which is imposed on us now …This is my country, but this is not my state.”

YouTube link here.

I post, you decide. Personally, I’ll believe all this talk about a deal to end the Ukraine war when I actually see it happen. – Natylie

Trump reveals he’s spoken with Putin by phone, says Russian president ‘wants to see people stop dying’ in Ukraine war

By Miranda Devine, New York Post, 2/8/25

President Trump has spoken to Russian leader Vladimir Putin on the phone to try to negotiate an end to the Ukraine war, he told The Post in an exclusive interview aboard Air Force One Friday.

“I’d better not say,” said Trump when asked how many times the two leaders have spoken.

But he believes Putin “does care” about the killing on the battlefield.

“He wants to see people stop dying,” said Trump.

“All those dead people. Young, young, beautiful people. They’re like your kids, two million of them – and for no reason.”

The three-year-old war “never would have happened” if he had been president in 2022, Trump asserted.

“I always had a good relationship with Putin,” he said, unlike his predecessor.

“Biden was an embarrassment to our nation. A complete embarrassment.”

Trump said he has a concrete plan to end the war.

“I hope it’s fast. Every day people are dying. This war is so bad in Ukraine. I want to end this damn thing.”

Addressing National Security Advisor Mike Waltz, who joined him in his study aboard Air Force One Friday night, the president said: “Let’s get these meetings going. They want to meet. Every day people are dying. Young handsome soldiers are being killed. Young men, like my sons. On both sides. All over the battlefield.”

Vice President Vance will meet Ukraine’s President Volodymyr Zelensky at the Munich Security Conference next week.

Trump has said he wants to strike a $500 million deal with Zelensky to access rare-earth minerals and gas in Ukraine in exchange for security guarantees in any potential peace settlement.

On Iran, Trump told The Post:  “I would like a deal done with Iran on non-nuclear. I would prefer that to bombing the hell out of it. . . . They don’t want to die. Nobody wants to die.”

“If we made the deal, Israel wouldn’t bomb them.”

But he would not reveal details of any potential negotiations with Iran: “In a way, I don’t like telling you what I’m going to tell them. You know, it’s not nice.”

“I could tell what I have to tell them, and I hope they decide that they’re not going to do what they’re currently thinking of doing. And I think they’ll really be happy.”

“I’d tell them I’d make a deal.”

As for what he would offer Iran in return, he said, “I can’t say that because it’s too nasty. I won’t bomb them.”

***

The Coming Threat of Major Trade War
By Oliver Boyd-Barrett, Substack, 2/9/25

How About We Lift Sanctions

The first also relates to a story in the New York Post, a Murdoch paper that has been described as the “paper of wreckage,” that claims that President Donald Trump has told The Post that he has talked with Russian President Vladimir Putin and that the two are agreed that they will talk.

There is certainly room for doubt as to the accuracy of this story but Mercouris is inclined to believe the general thrust of it. Further, his Moscow source is telling him that there are conversations in the Duma as to the likely content of the US starting position. A fairly dramatic one, as one might expect from Donald Trump, which is that the US would remove all or almost all sanctions on Russia and allow Russia to resume pipeline gas supplies to Europe by Nord Stream, in return for a Russian ceasefire.

But, that if Russia does not agree to this, then the US will launch an all-out trade war against Russia and all countries that deal with Russia. According to Mercouris’ source, and it is the assessment of Mercouris himself, as it is mine, many Russians are disinclined to think that the Kremlin should take this seriously.

Calling the Bluff

First of all, why would they believe any promise that the US makes, given the country’s litany of failed promises in the past (Minsk, Istanbul)? Especially, why would they think Washington would be OK with a resumption of pipeline supplies when Washington has so adamantly opposed these ever since Putin and Merkel embarked on Nord Stream, and when Washington remains desperate to beef up revenues from the sale of LNG to Europe?

Second of all, an all-out trade war would force China and India, both of them heavily dependent on Russian oil and gas, to take sides between Washington and Moscow and there is nothing about either of these two countries that would lead one to expect that they are about to abandon the meta-program of the BRICS or to abandon Russia to its fate at the hands of the US (as they know that the US will be coming for them, too). They would be simply giving up to Washington their dream of a multi-polar world.

Thirdly, many Russians suspect that the US is bluffing and that Russia must call its bluff. An all-out trade war would help develop a stronger coalition of anti-US forces (which may now include former US allies such as Canada and Mexico) to combat its trade measures; it would prompt Russia to undertake a total mobilization for an economic and military war; it would greatly elevate prices of energy world-wide and on practically everything else, and this would be very damaging for US consumers and the US economy.

Fourthly, there is nothing being said by Washington at this time, that patently and in good faith picks up on the broader challenge of an agreement that would meet Russia’s legitimate security interests and addresses the issue of a European security architecture (or, as I have said several times in recent days) a global security architecture that would also address China’s legitimate security interests.

Finally, it is every day more obvious that Trump wants to get the US out of Ukraine. The US is even giving up the chair of the next NATO meeting in Ramstein, a position that is being eagerly seized by (“friends with Ukraine for 100 years) the UK in the form of its defense minister, so is unlikely to want to press very hard on any deal he is offering Russia.

Iran Deal Redux

A second issue that is touched upon both in the New York Post story of Trump’s interview and also by Mercouris’ source, has to do with Iran, in the light of recent statements by its Supreme Leader,Ali Khameini that repeat the long-standing prohibition by fatwa against Iran’s development of nuclear weapons something that has also been confirmed over many years both by the CIA and by the UN’s IAEA but that has been spread about ad nauseum for the past twenty years by Netanyahu and is every so often seized upon and amplified by elements of the Israeli lobby and its mainstream media mouthpieces as just recently in a New York Times article that claims that Iranian scientists are discussing a short-cut route to nuclear weapons.

Trump claims he wants to do a deal with Iran that would give Washington and Israel the security (which in effect it already has) that Iran will not develop nuclear weapons in return for which Washington will lift some or all of the sanctions that it has imposed on Iran.

Khameini, however, is saying, quite understandably, that Iran will not enter into negotiations with the US. Why would it? The last time it did so (leading to the JCPOA), Trump in his first term welched on the deal. However, Iran and Russia now have a strategic partnership arrangement which puts the lid on the possibility of Iran acquiring nuclear weapons. Russia, therefore, is now in a position where it can offer guarantees to Washington that Iran will not develop nuclear weapons in return for which Washington can remove its sanctions on Iran and, at the same time and in the context of a package deal, remove sanctions on Russia and accept Russian conditions for a ceasefire deal on the Ukraine conflict (Istanbul Plus, the terms laid out by Putin in July 2024).

Russian Security

In brief, Russia’s diplomatic status in the Middle East, which appeared wobbly after the implosion of Assad in Syria, is now strengthened, first because of the strategic partnership agreement with Iran and second because the latest news from Damascus suggests that the new Turkish-backed and Western-supported terrorist leader of Syria, al-Jolani now favors the continued presence of Russia in Syria and the maintenance of its naval base in Tartous and its military base in Khmeimim. This could pave the way to coordination between Russian and Turkish forces in Syria, making life more challenging for Kurds to the northeast and east, and Israel to the south and to suppression of the worst feature of HTS rule, their vengeful aggressions towards Alawites and Christians. As things stand HTS has very little control over Syria beyond Damascus, and the economic and security situation of the country is fast deteriorating.

Washington-Moscow Deal on Tehran

In the context of Iran, therefore, it is not implausible that a solution to what for Washington is the “problem” of Iran could be resolved by an agreement between the US and Russia, one in which the voices of China and India would at a later date need to be heard. Similarly, in the context of Ukraine it is not implausible that a solution to what for Washington is the “problem” of Russia’s SMO could be resolved by an agreement between Washington and Moscow, which at a later date would involve China and possibly India, while the voices of Europe and Ukraine would be marginalized since neither bloc at this time seems capable of addressing the root causes of the problem or of negotiating in good faith.

Israeli Obduracy

Of course, none of this will placate Israel for whom the issue is nothing really to do with nuclear weapons – these are just a pretext weilded by a country, Israel, that has hundreds of nuclear weapons. What worries Israel is that Iran is a threat to Israel’s regional supremacy and that one day Iran could revert back to being Washington’s BFF, as it used to be before the 1979 revolution. And that Iran could be an obstacle to Zionist ambitions for a Greater Israel. Iran’s support for (but not control of) Hezbelloh in Lebanon and Syria, and of Hamas in Gaza, is a strong additional consideration. Israel will not be pleased that Hezbollah will once again enjoy a presence in the Lebanese parliament.

And even as it pretends to take Trump seriously on the US taking ownership of Gaza, Isreal prepares for further war and genocide.

Israeli Defense Minister Katz has ordered the IDF to prepare for the “departure” of Palestinians from Gaza, while framing this as “voluntary.” The plan will include “exit options via land crossings, as well as special arrangements for departure by sea and air.” Katz wants countries who have been critical of Israel’s genocide to allow Gazans to enter their territory. Not to do so, he claims, would be hypocritical. In other words, it is not just Egypt and Jordan that Israel would like to take Palestinians but also western countries like Ireland or Norway. Palestinians, Jordan and Egypt and other Arab countries are strongly opposed to such ideas as they are to a US takeover of Gaza. There is loose talk by the Trump administration about Palestinians leaving so that the land can be cleaned up for their return, but nobody seriously believes that Palestinians would ever be allowed to return.

Peace Talks, Zel and Europe

The prospect of being excluded from talks, along with clear indications from Washington that it wishes to get rid of Zelenskiy, if necessary by insisting that he call national parliamentary and presidential elections before the end of 2025, appears to be behind recent extremist statements from Zelenskiy about how Ukraine can develop its own dirty nuclear bomb and his persistent demands for more Western missiles and other weapons.

Zelenskiy appears not to want to proceed just yet with a bill that has already been prepared in the RADA that would lower the age by which men can be mobilized to 18, but instead favors a measure that would boost voluntary recruitment by offering better rewards. This may be because Zelenskiy understands that the mobilization measure would be deeply unpopular, and that if it led to the deaths of very large numbers of young people, as it well might, then he would be even less likely to survive than he already is. Also Zelenskiy must wonder whether the war will last for long enough to make it worthwhile for him to start an expensive, coercive mass mobilization right now.

Europe’s weakness continues to be undermined by turbulence in Germany over the flirtation between the CDU and its leader – and likely soon to be next chancellor – Merz, and AfD, which would conceivably give AfD some element of veto power over a continuation of the war with Russia over Ukraine.

In France the government of Francois Bayrou has just passed a budget by decree – the same, virtually, that brought down the previous government. The new measure has not, as was at first expected, led to a successful vote of no confidence, since it was not supported by Melanchon’s leftist bloc (now falling apart) with whom Bayrou had previously consulted and which has no reason to think it would do very well in a likely ensuing election to replace Macron at this time, while Marine Le Pen’s National Rally also calculated that its interests would not be best met if there were to be presidential elections just yet. Another vote of confidence is anticipated very soon in relation to government immigration proposals.

By Richard Connolly, RUSI, 1/22/25

Russia’s economic resilience is defying expectations, enabling the Kremlin to sustain its war efforts in Ukraine despite mounting challenges, and raising doubts about hopes for a swift resolution.

Russia regained the momentum on the battlefield in Ukraine last year. Although Russian progress remains slow and costly, the outlook for the year ahead is bleak. Ukraine’s energy system has been heavily damaged by Russian air strikes, and its forces continue to lose ground in southern Donetsk, where the heaviest fighting is taking place.

Perhaps most importantly, political shifts in some of Kyiv’s key allies – especially the US – could result in crucial financial and military aid being substantially reduced in the year ahead. Together, these trends raise the prospect of Ukraine being forced to accept a crushing defeat after three years of heroic resistance.

Against this lugubrious backdrop, many analysts have seized on what appears to be a rare bright spot: Russia’s faltering ‘war economy’, which – according to some – is ‘Putin’s greatest weakness’. An acute labour shortage, persistent and rising inflation caused by soaring military expenditure, and ever-tightening sanctions will – it is claimed – finally bring about an economic crisis that will force Moscow to abandon its maximalist aims in Ukraine and bring about an end to the war on terms more acceptable to Kyiv and its allies.

Sadly, these hopes are likely to prove misplaced. Russia’s economy has confounded expectations throughout the war and, despite suffering several complications, remains well-placed to support the Kremlin’s ambitions in Ukraine and beyond.

Dashed Hopes…

This is not the first time that Kyiv’s supporters have placed their hopes in Russia’s economy proving to be its Achilles’ heel. In the early months of the war, analysts forecast that Russia would suffer a severe and long recession that would cause living standards to slump and the state’s fiscal resources to dwindle. Moscow, it was hoped, would be forced to make an embarrassing retreat with potentially fatal consequences for President Vladimir Putin and the ruling elite.

But these hopes were soon dashed. The imposition of capital controls, a surge in federal expenditure, and the successful reorientation of foreign trade at breakneck speed arrested the signs of economic distress observed in the first months of the war.

Although Russia did not avoid a recession in 2022, it was much shallower than expected (GDP fell by only 1.9%) as the economy adapted to its new circumstances. Growth exceeded nearly all expectations in 2023 (3.6%), with this momentum continuing into 2024. Output is likely to have expanded by 3.6–4% last year.

…Raised Again

Nevertheless, the quantitative expansion of the last two years has been accompanied by growing signs of weakness on several important economic indicators, raising questions over the quality and sustainability of Russia’s better-than-expected performance.

Mounting labour shortages, fuelled by the demands of war, are just one factor that threatens to derail growth. The massive expansion of the military and defence-industrial production has drawn large numbers of men away from the civilian labour force.

Although Russia undoubtedly faces significant challenges, there is little to suggest that these will result in any significant political consequences that might prompt the Kremlin to rein in its ambitions in Ukraine

Along with rising demand from other sectors of the briskly growing economy, this has caused the supply of labour to tighten considerably. Unemployment reached 2.3% in October, a post-Soviet record low. Maintaining the current rate of economic growth will only be possible if Russia utilises its existing labour force more efficiently.

Labour shortages are not the Kremlin’s only problem. Western sanctions and a shrinking trade surplus contributed to a sharp depreciation of the ruble last year, causing import prices to rise and amplifying inflationary pressures.

At the end of November, the Central Bank of Russia (CBR) recorded an annual inflation rate of 8.9%, well above the bank’s target rate of 4%. Even this rate likely understates the real extent of price growth, with some staple goods registering price increases in excess of 70%.

In an attempt to quell inflationary pressures, the CBR raised the key rate throughout the year, setting it at a post-Soviet high of 21% in October. Many businesses now find the cost of borrowing prohibitive.

Many analysts have attributed these signs of overheating to elevated spending on the war in Ukraine, pointing to record-high military expenditure which is expected to have reached over 7% of GDP in 2024. With defence spending expected to rise by nearly 25% this year, accounting for around 40% of federal government expenditure, some have raised the prospect of Russia slipping into ‘stagflation’, combining high inflation with low to no growth.

Finally, with new UK and US sanctions targeting Russia’s oil industry, and G7 states seeking to tighten the enforcement of the oil ‘price cap’, some hope that Moscow’s vital hydrocarbon revenues will be crimped even further, exacerbating the losses caused by the collapse of Russian gas exports to Europe and flagging coal sales.

Desperate but not Serious

Unfortunately, hopes of an imminent economic crisis are unlikely to be realised. Although Russia undoubtedly faces significant challenges, there is little to suggest that these will result in any significant political consequences that might prompt the Kremlin to rein in its ambitions in Ukraine.

The tight labour market has benefitted many Russians used to stagnant income growth in the decade before the war. Real wages have soared since 2022, fuelling the fastest sustained growth in consumer spending in over a decade. Soaring military production and record-high wages for soldiers have helped reduce some of Russia’s chronic regional inequalities.

Crucially, the absence of a large pool of latent labour need not constrain growth so long as labour productivity continues to rise. Russia’s low-productivity economy means that there are plenty of easy wins available for firms prepared to undertake simple organisational changes or investment in new machinery.

Inflation also has its advantages. Rising prices send important signals to firms to expand supply by investing in areas where prices are growing fastest. Investment – chronically low for most of the post-Soviet period – has grown faster than GDP since the war began. Rising prices have also helped swell public coffers, with turnover taxes like VAT growing at record levels and boosting the Kremlin’s fiscal position.

The CBR’s record-high key rate is not as damaging as it might be in a Western economy, either. Large swathes of Russian business – including those in strategically important sectors – can access state-subsidised loans at considerably lower interest rates. Even those firms unable to access subsidised loans will be able to use record-high retained earnings to finance investment.

Russian consumers have also benefitted from state support. Most mortgages offered during the recent housing boom were taken on at subsidised rates.

Even the extent to which Russia has a ‘war economy’ is exaggerated. While the broad NATO measure of military expenditure is likely to account for around 40% of federal spending this year, this will amount to closer to 20% of Russia’s consolidated state spending (that is, including both regional and national expenditure).

Although this is high, it is comparable to US military spending during the Vietnam War. The militarisation of the economy has undoubtedly grown. However, it remains well below the crippling levels observed in the ‘hyper-militarised’ Soviet economy.

Importantly, many of the features of true war economies – such as price controls, the centralised allocation of resources, and widespread nationalisation of private sector assets – have yet to appear in Russia. 

Sources of Resilience

If Russia’s weaknesses are not as severe as many hope, its sources of strength and durability also remain impressive.

Take the country’s balance sheet. Despite fighting the most intense war in Europe since 1945, Moscow has managed to fund the war with staggeringly modest budget deficits of between 1.5–2.9% of GDP since 2022. As a result, the Kremlin has barely had to borrow to fund the war. At around 15% of GDP, Russia has the smallest state debt-to-GDP ratio of the G20 economies.

Despite being cut off from most external sources of capital, Russia remains more than capable of financing domestic investment and government expenditure with its own resources. Over the past two years, Russia has recorded a surplus on its current account – that is, the gap between aggregate savings and investment – of around 2.5% of GDP. For as long as Russia can continue to export large volumes of oil, this is unlikely to change.

Designed to ensure that the Kremlin can pursue a sovereign foreign policy against the interests of the collective West, Russia’s economic system is doing its job

Crucially, the Kremlin’s fiscal position remains very healthy. Tax revenues generated by domestic activity have soared since the war began. Oil and gas revenues are forecast to account for 28% of federal government tax receipts in 2024, significantly lower than the 53% recorded in 2018.

Even if export revenues slump, perhaps due to a looming trade war or China’s spluttering economy, Russia has plenty of resources it could tap to maintain elevated levels of state spending. The largely state-owned banking system is sitting on piles of cash that could be paid as dividends to their owner: the state. Banks could also be directed to buy government bonds, as they were at the end of 2024. If all else fails, the CBR could buy government bonds.

Importantly, Russia’s resilience is not purely financial in nature. The foundations of the market economy built in the turbulent 1990s remain strong. Much of Russia’s unexpected adaptability has come not only from its well-trained and professional economic managers, but also from its large and growing class of private business.

Accustomed to operating in an often hostile and challenging business environment, privately owned firms have exploited the opportunities created by sanctions to supply soaring demand from the government and consumers. The number of registered private businesses has grown briskly since the war began, reaching a record high in 2024. It is this strong base of commercially oriented firms that will enable Russia to continue adapting to sanctions and the demands of war.

Calibrating Expectations

To be clear, Russia’s economic prospects are far from rosy. Property rights remain weak, and the state’s role in the economy is high and growing. The vagaries of the international oil market always retain the potential to generate a strong external shock. Western sanctions will also continue to raise the cost of doing business and restrict the flow of know-how to Russian businesses. As a result, Russia is unlikely to join the ranks of high-income countries any time soon.

However, the country’s poor long-term prognosis should not lead us to overlook its short-term resilience. Throughout its 500-year history, Russia’s economic system has rarely delivered broad-based growth or economy-wide innovation for long. Instead, the needs of the market have usually been subordinated to the needs of the state, often to enable the Kremlin to pursue security-related objectives.

Today’s system is no different. Designed to ensure that the Kremlin can pursue a sovereign foreign policy against the interests of the collective West, it is doing its job. The market is strong enough to give the system adaptability and dynamism. And the state is strong enough to ensure that sufficient resources are mobilised towards achieving its security objectives.

For as long as this equilibrium remains intact, Russia will be able to generate the necessary economic resources to sustain enough military power to wage war in Ukraine and, over the longer term, to rearm for a prolonged confrontation with the West. Any hopes that its economic vulnerabilities will bring it to the negotiating table are therefore unlikely to be realised.

YouTube link here.

USAID Funded Censorship, Smears of Americans (Excerpt)

By Lee Fang, Substack, 2/4/25

…The sprawling agency [USAID] has financed groups that have engaged in smear campaigns and efforts to silence prominent American dissident voices…

But most troubling, the foreign assistance agency has financed a network of groups in Ukraine that have spread unsubstantiated claims that American voices in favor of peace negotiations with Russia are agents of the Kremlin.

American government entities face restrictions on spreading such propaganda against domestic targets. The foreign nexus of USAID provides a convenient loophole. American grants and contracts flow, often through third-party intermediaries, to a network of foreign recipients, which can push to silence American journalists and politicians through outside advocacy.

In Ukraine, USAID, through its contractor Internews, supports a network of social media-focused news outlets, including New Voice of Ukraine, VoxUkraine, Detector Media, and the Institute of Mass Information. These news outlets have produced a series of videos and reports targeting economist Jeffrey Sachs, commentator Tucker Carlson, journalist Glenn Greenwald, and Professor John Mearsheimer as figures within a controlled “network of Russian propaganda.”

The influence of these outlets extends far beyond the borders of Ukraine. VoxUkraine, for instance, is an official fact-checking partner to Meta and helps the social media giant censor so-called disinformation. Detector Media similarly produces English-language disinformation reports widely circulated through western media.

Despite branding as independent outlets, these organizations are heavily reliant on USAID…

Full article available here. (I have a paid subscription to Lee Fang’s Substack, so I think this full article may be behind a pay wall for non-subscribers. You can read his in-depth article from April of 2024 on this topic for free at Real Clear Investigations. – Natylie)