By Katie Bo Lillis, Jeremy Herb, Natasha Bertrand and Oren Liebermann, CNN, 4/20/22
Washington (CNN) – The US has few ways to track the substantial supply of anti-tank, anti-aircraft and other weaponry it has sent across the border into Ukraine, sources tell CNN, a blind spot that’s due in large part to the lack of US boots on the ground in the country — and the easy portability of many of the smaller systems now pouring across the border.
It’s a conscious risk the Biden administration is willing to take.
In the short term, the US sees the transfer of hundreds of millions of dollars’ worth of equipment to be vital to the Ukrainians’ ability to hold off Moscow’s invasion. A senior defense official said Tuesday that it is “certainly the largest recent supply to a partner country in a conflict.” But the risk, both current US officials and defense analysts say, is that in the long term, some of those weapons may wind up in the hands of other militaries and militias that the US did not intend to arm.
“We have fidelity for a short time, but when it enters the fog of war, we have almost zero,” said one source briefed on US intelligence. “It drops into a big black hole, and you have almost no sense of it at all after a short period of time.”
In making the decision to send billions of dollars of weapons and equipment into Ukraine, the Biden administration factored in the risk that some of the shipments may ultimately end up in unexpected places, a defense official said.
But right now, the official said, the administration views a failure to adequately arm Ukraine as a greater risk.
Because the US military is not on the ground, the US and NATO are heavily reliant on information provided by Ukraine’s government. Privately, officials recognize that Ukraine has an incentive to give only information that will bolster their case for more aid, more arms and more diplomatic assistance….
Turkey wants to negotiate an end to the conflict in Ukraine, while some other NATO members would like to see it drag on as a way to harm Russia, Ankara’s Foreign Minister Mevlut Cavusoglu said on Wednesday in a TV interview. In a lengthy appearance on CNN Turk, Cavusoglu addressed Turkey’s decision not to sanction Moscow and why the Istanbul talks between Russia and Ukraine failed, among other things.
“There are countries within NATO that want the Ukraine war to continue. They see the continuation of the war as weakening Russia. They don’t care much about the situation in Ukraine,” Cavusoglu said.
While he did not name any names, US President Joe Biden said earlier this month that the conflict in Ukraine “could continue for a long time,” which was echoed by the former CIA chief of Russian operations.
German Chancellor Olaf Scholz said after a phone call with G7 leaders on Tuesday that the West is united in not allowing Russia to win and determined to “continue to arm the Ukrainian military so that it can continue to defend itself against [Russian] attack.”
Turkey has decided not to join the US-led sanctions against Russia because they are unilateral, unlike the “binding sanctions decided at the UN,” Cavusoglu told CNN Turk. Ankara articulated its position on the first day of the Ukraine conflict, which is to continue diplomatic contacts with both sides, as “a country that both sides trust.”
While Turkey did not expect much after the first Russia-Ukraine talks in Antalya, “hopes were high” after the follow-up talks in Istanbul, Cavusoglu revealed. However, Ukraine backtracked from the agreement reached there after images of the alleged massacre in Bucha, which Kiev blamed on Russian troops. Moscow has denied the allegations.
Cavusogly also shed light on Ukrainian President Volodymyr Zelensky’s demand for security guarantees from NATO.
“Nobody agrees with Zelensky’s request for NATO’s Article 5 guarantees,” the minister said, referring to the alliance’s famous mutual defense clause. “No country has accepted this proposal. The US, UK and Canada do not accept this either. Of course, Turkey does not accept this. In principle, no one opposes this guarantee, but the terms of it are not clear.”
Russia attacked the neighboring state in late February, following Ukraine’s failure to implement the terms of the Minsk agreements, first signed in 2014, and Moscow’s eventual recognition of the Donbass republics of Donetsk and Lugansk. The German and French brokered protocols were designed to give the breakaway regions special status within the Ukrainian state.
The Kremlin has since demanded that Ukraine officially declare itself a neutral country that will never join the US-led NATO military bloc. Kiev insists the Russian offensive was completely unprovoked and has denied claims it was planning to retake the two republics by force.
Russia’s economic crisis has lost some of its sting, buying more time for President Vladimir Putin at home as his military presses a new offensive in its war against Ukraine.
Even with a recession looming and inflation approaching 20%, the economy has for the moment defied the most dire forecasts. JPMorgan Chase & Co.’s economists have seen enough upbeat signs to halve their forecast for a first-quarter contraction in gross domestic product to 5%.
The bleakest scenario hasn’t materialized in large part because Russia contained the spread of financial contagion with stiff capital controls while plentiful petrodollars helped the ruble recoup losses and put a leash on inflation. Still, the worst may be yet to come: Bloomberg Economics expects an annual decline in GDP of almost 10% this year.
Tighter Belt
Russian consumer spending is falling slower than drop during pandemic
Source: Goldman Sachs Global Investment Research, Sberbank
Weeks after the initial shock of the ruble’s collapse, runaway prices and the departure of hundreds of foreign companies, what awaits the consumer may be a long period of muddling through.
“Our lifestyle hasn’t changed much,” said Olga, an advertising manager and mother of two in the far east city of Khabarovsk.
Fears of scarcity initially prompted the 36-year-old to stock up for a month by buying grains, tinned meat and pasta. Prices for some cleaning products tripled, so she switched to a cheaper alternative.
The family put off plans to buy a second car or go on a vacation this year. But a new normal has set it, and so far it’s manageable, said Olga, asking to be identified only by first name to speak candidly about her situation.
“Not enough time has passed yet,” she said. “I think we will feel the impact later.”
What Bloomberg Economics Says…
“Russian households are already suffering from a loss of purchasing power as prices soar. The economic stress is likely to deepen as sanctions ripple through supply chains to weigh further on the labor market, compounding the effects on real incomes.”
–Scott Johnson. Russia economist
In March, the first full month since the invasion, retail sales fell an estimated 10% from a year earlier, according to Goldman Sachs Group Inc., half the decline Russia experienced at the height of the coronavirus pandemic, when lockdowns closed many stores and kept consumers at home.
As the weeks tick by, evidence points toward the resilience of households. Independent pollster Levada Center said its index of social expectations, a measure of their outlook, rose sharply last month from February.
The government’s intensified censorship and propaganda during the war are doing their part. Still, short-term inflation data and changing shopping preferences show how the sentiment is turning around.
In Demand
Basic food items saw the biggest price increases in Russia
Source: Federal Statistics Service
On a weekly basis, consumer prices are now growing at nearly one-quarter their pace a month earlier. Fears of empty shelves are fading, putting an end to hoarding and panic buying.
Deposits are meanwhile flowing back into the banking system, providing the central bank with enough confidence to start lowering interest rates already after an emergency hike following the invasion.
Cards issued in Russia by Visa Inc. and Mastercard Inc. no longer work outside the country but people have seen few disruptions at home thanks to a domestic alternative pushed in the wake of the first waves of sanctions in 2014. Franchise agreements by fast food chains like McDonald’s mean some of their outlets are keeping doors open.
“All in, it appears that the economic contraction so far has been less drastic than initially anticipated,” JPMorgan economists including Yarkin Cebeci said in a report. “Economic inertia apparently prevented a sharper decline.”
Pressure Subsides
Russian weekly inflation is easing after spike that followed war
Source: Federal Statistics Service, government
For many, however, the hardships are only just beginning. Moscow Mayor Sergei Sobyanin said about 200,000 jobs are at risk in the Russian capital alone because of the exit or halt to operations by foreign businesses.
While Putin bragged Monday that the West’s “economic blitzkrieg” had failed, central bank Governor Elvira Nabiullina warned the same day that as inventories of imported products run out, the economy faces a “structural transformation” over the next six months that will trigger price spikes on some goods as producers seek new sources for components cut off by sanctions.
Stocking Up
Russians switched away from buying food staples as panic eased
Source: Retail audit by NielsenIQ of Russia’s largest grocery chains
Purchases in volume, YoY
JPMorgan said the strength of the economy so far doesn’t mean it will avoid a full-year contraction of 7% this year, comparable to the deepest downturns Russia experienced in the last 30 years.
“Domestic demand is expected to be depressed as job and income losses, increased poverty, inflation, and supply disruptions reduce consumption while investment continues to fall,” the World Bank said in an April 10 report that predicted Russia’s economy will shrink 11.2% this year.
Confidence Issue
A growing number of Russians say it isn’t the time for big purchases
Source: pollster VTsIOM
Consumers, whose spending accounts for more than half of economic activity, aren’t rejoicing yet either. Fully 85% of Russians say they’ve stockpiled food supplies, a bigger share than even in 1992, the year after the Soviet collapse, according to survey published this month by state pollster VTsIOM.
Demand for gardening tools is surging as some people look to growing vegetables and home canning to survive hard times.
“Most of the population is getting accustomed to the situation,” said Andrei Milekhin, president of Romir, an independent research center in Moscow.
Thank you very much for inviting me to be here. And I recall our travels in Germany fondly, especially when Steve and I debated the Ukraine issue back then. I agree with what you said by the way, Katrina, when you said that this is the most dangerous crisis since the Second World War. I think it’s actually more dangerous than the Cuban Missile Crisis, which is not to minimize the danger of that crisis. But I think basically what we have here is a war between the United States and Russia and there’s no end in sight. I cannot think of how this can end in the near future. And I think there’s a very dangerous chance of escalation. First of all, escalation to where the United States is actually doing the fighting against Russia, the two sides are clashing militarily, which hasn’t happened so far.
And I think there’s a serious danger of nuclear escalation here. I’m not saying that it’s likely, but I can tell stories on how it actually happens. So the question is, how did we get in into this mess? What caused it? And the reason it’s very important to deal with that issue is it has all sorts of implications for understanding Russian thinking. If you want to understand how the Russians think about this crisis, you have to understand the causes. Now the mainstream view, which I of course reject, is that Vladimir Putin is either a congenital aggressor or he is just determined to recreate the Soviet Union or some version of the Soviet Union. He’s an expansionist, he’s an imperialist. I think that argument is wrong and my view is that this is really all about the West’s efforts to turn Ukraine into a Western bulwark on Russia’s borders.
And the key element in that strategy of course, is NATO expansion. And in my story, it all goes back to the April 2008 decision at the NATO summit in Bucharest where it was said that both Georgia and Ukraine would become part of NATO. The Russians made it manifestly clear at the time that this was unacceptable, that neither Georgia nor Ukraine were going to become part of NATO. And in fact, the Russians made it clear that they viewed this as an existential threat. Very important to understand those words. From the Russian point of view from the get go, this was perceived as an existential threat. Lots of people in the West do not believe it is an existential threat to the Russians, but what they believe is irrelevant because the only thing that matters is what Putin and his fellow Russians think, and they think it is an existential threat.
Now I think, to be honest, that the evidence is overwhelming that this is not a case of Putin acting as an imperialist and it is a case of NATO expansion. If you look at his February 24th speech justifying why Russia invaded Ukraine, it is all about NATO expansion and the fact that is perceived to be by him, an existential threat to Russia. If you look at the deployment of forces in Ukraine, it’s hard to make the argument that the Russians are bent on conquering and occupying and integrating Ukraine into a greater Russia. If you listen to Zelenskyy talk about a possible solution, the first thing he goes to is talking about creating a neutral Ukraine. That tells you that this is really all about NATO expansion and Ukrainian neutrality. Furthermore, there is no evidence of Putin saying that what he wants to do is actually make Ukraine part of Russia.
There’s no evidence of him saying that this is feasible and that he intends to do it. There’s no question, in his heart he would like to see Ukraine be part of Russia. In his heart he would probably like to see the Soviet Union come back. But as he has made manifestly clear, that is not possible and anybody who thinks that way is not thinking straight. He has in effect said that. So I would like someone to point out to me the evidence where he makes it clear that what he is actually doing in terms of formulating policy is trying to create a greater Russia or reconstitute the Soviet Union. All of this is to say, if you believe like I do that he is facing an existential threat, you’re in effect saying he views this as a threat to Russia’s survival. And if he’s in a situation like that, he cannot lose. When you face an existential threat, you don’t lose. You have no choice. You have to win.
Now, this brings us to the America side. What are the Americans doing? What we’re doing, which is what we did after the crisis broke out on February 22nd 2014, is we’re doubling down. We have decided that what we’re going to do is we are going to defeat Russia inside of Ukraine. We’re going to deliver a decisive defeat against the Russians inside of Ukraine. And at the same time, we’re going to strangle their economy. We’re going to put wicked sanctions on them and we’re going to bring them to their knees. We, in other words are going to win and they’re going to lose. Furthermore, the Biden Administration and the president himself has gone to enormous lengths to ramp up the rhetoric and portray the Russians as the font of all evil and to portray us as the good guys and to create the impression in people’s minds that this is a situation that doesn’t lend itself to compromise because you can’t compromise with the devil. In fact, what has to be done here is we have to win.
Now, you’ll know that it would be a devastating defeat for Joe Biden if the Russians were to win this war. And of course, as I just said to you, from the Russian point of view, they have to win this war because this is an existential threat that they are facing. So the question you then want to ask yourself is, where does at leave us? Both sides have to win. It’s impossible for both sides to win, not when you think about the situation that we’re facing here. So how do we get a negotiated settlement? I just don’t see it happening. I don’t see the Russians giving any meaningful ground and I certainly don’t see the Americans giving any meaningful ground. So what is likely to happen? There’s now talk on our side, and even on the Russian side, that this war is going to go on for years. In other words, we’re going to have a war between the United States and Russia that goes on for years.
Now, I understand that we are not involved in the fighting at this point, but we are about as close as you can get to being involved. And then you start saying to yourself, is it not possible that we will get dragged into this one? There’s a huge amount of political pressure on the Biden Administration for us to implement the no-fly zone to actually go in for humanitarian purposes to Ukraine and so forth and so on. So far Biden has been able to resist that pressure, but will he be able to resist it forever? And what if we have a military incident that drags us into the fighting? So we could very well end up in a situation where the United States and Russia are fighting against each other in Ukraine. Then we come to the issue of nuclear escalation.
I think first of all, if the United States gets dragged into a fight against Russia and it’s a conventional war in Ukraine or over Ukraine in the air, the United States will clobber the Russians. If the Ukrainians are doing so well against the Russians militarily, you can imagine how much better the Americans will do in air to air engagements and even on the ground, right? In that situation, don’t you think it’s possible that Russia would turn to nuclear weapons? I think it’s possible. I’ve studied a lot of military history. I’ve studied the Japanese decision to attack the United States at Pearl Harbor in 1941. I’ve studied the German decision to launch World War I during the July crisis in 1914. I’ve looked at the Egyptian decision to attack Israel in 1973.
These are all cases where decision makers felt they were in a desperate situation and they all understood that in a very important way they were rolling the dice, they were pursuing an incredibly risky strategy, but they just felt they had no choice. They felt that their survival was at stake. So what we’re talking about here is taking a country like Russia, right, that thinks it’s facing an existential threat, that thinks its survival is at stake and we’re pushing it to the limit. We’re talking about breaking it. We’re talking about not only defeating it in Ukraine, but breaking it economically. This is a remarkably dangerous situation, and I find it quite remarkable that we’re approaching this whole issue in such a cavalier way. And by the way, I think a lot of this has to do with the fact that so many people who were involved in thinking about this problem today were raised during the unipolar moment and not during the Cold War. During the Cold War, as someone like Jack can tell you even better than me, we thought long and hard about nuclear war.
We thought long and hard about US-Soviet relations and how that might lead to a nuclear war. People who grew up in the unipolar moment are much more cavalier about these issues. And I think this presents a very dangerous situation. Now I would note that even if the Russians and the Americans don’t end up fighting each other, but the Ukrainians are able to stagger the Russians in Ukraine and deliver significant defeats on them, the Russians may still turn to nuclear weapons. It’s possible. Is it likely? No, but it’s possible. And that scares me greatly and it should scare most Americans and certainly most Europeans. So all of this is to say, when I look at the US-Russia relationship today, I think we’re effectively at war with each other. Although again, the Americans are not fighting against the Russians on the battlefield, but this is a very dangerous situation.
Now what about Ukraine? Don’t the Ukrainians have any agency? I mean after all, it’s their country that’s being destroyed. One could make the argument that the West, especially the United States, is willing to fight this war to the last Ukrainian. And the end result is Ukraine is in effect being wrecked as a country. Given that they have agency, is it not possible that the Ukrainians themselves will say enough is enough and put an end to this? Sadly, I don’t think that’s the case. And I think the fact is that the United States will not allow the Ukrainians to cut a deal that the United States finds unacceptable. The Washington Post had a piece on Monday that made it very clear that the administration and our NATO allies are very worried that the Ukrainians are going to cut a deal with the Russians that makes it look like the Russians won or that in fact, concedes that the Russians have won at least to some extent.
We do not want that to happen. As I said before, the Biden Administration is out to inflict a decisive defeat on Russia. If the Ukrainians decide to cut a deal and allow Russia to win in some meaningful sense, the Americans are going to say that’s unacceptable. And the Americans will work with the right wing nationalists in Ukraine to undermine Zelenskyy or his successor. So I see no way Ukraine can step in and put a stop to this crisis. I just see it going on and on. I may conclude by saying that George Kennen said in the late 1990s, that NATO expansion was a tragic mistake and that it would lead to the beginning of a new Cold War. At first, it looked like he was wrong. We had the first tranche of expansion in 1999 and we got away with it. We had the second tranche of expansion in 2004 and we got away with that. But then when the decision was made in April 2008 for a third tranche, which would include Georgia and Ukraine, it’s quite clear that we had moved a bridge too far. And the end result, I’m sad to say, is that I think that Kennen’s prediction has proved true. Thank you.
It’s been five days. According to Alex Christoforou, during a Duran video from yesterday (a program on which Lira appeared regularly), the Chilean embassy in Poland, which is the embassy covering most of Eastern Europe, has received numerous inquiries about Lira and is pursuing an investigation. The discussion about Lira starts around the 2 hours, 21 minute mark.
