I was not aware of this admission by Poroshenko until recently.

By Leyla Latypova, Moscow Times, 6/23/22

Russian authorities have launched a campaign to recruit essential workers for the “reconstruction” of eastern Ukrainian territories occupied by its forces, according to public online job postings and news reports.

Since shifting the focus of its invasion eastward following a failed effort to capture Kyiv, Russia has said its main objective is to “liberate” areas of eastern and southern Ukraine predominantly populated by Russian speakers.

Now, officials appear to be banking on Russia’s poorest and most patriotic citizens to help these regions recover from the devastation of its four-month offensive, offering above-average salaries and a slew of benefits.

Dozens of job postings on Russian online marketplace Avito call on bricklayers, roof mechanics, painters and welders to join in the reconstruction of Donetsk, the capital of the self-proclaimed Donetsk People’s Republic (DNR).

Most advertisements target users outside major urban centers and promise starting salaries two or three times higher than regional averages.

Workers are also promised an impressive benefits package including coverage of all meals and housing, paid vacation time, “career growth” opportunities and even a $60 cash bonus for the referral of a trusted friend.

Though the listings are posted by private contractors, some mention that the project is sponsored by Russia’s Construction Ministry and are accompanied by motivational slogans like “Let us rebuild Donbas together.”

According to the advertisements, all workers venturing on the patriotic mission will be required to undergo screening by Russia’s Federal Security Service (FSB).

While the construction workers are promised to be “sent off” to occupied territories “within days,” the advertisements make no mention of compensation in case of a worker’s potential injury or death.

Construction recruiters contacted by The Moscow Times declined to comment on workers’ safety or potential compensation.

Russian pro-government volunteer organizations have reportedly been recruiting and dispatching professionals for “humanitarian” missions to the breakaway republics of eastern Ukraine for months.

According to the government-linked Together with Donbas humanitarian group, dozens of Russian psychologists and teachers are currently working as part of a volunteer mission in Mariupol, the southern Ukrainian port that was nearly completely destroyed by Russian forces before they captured it last month.

Unlike construction workers, teachers are reportedly being recruited through private channels, such as closed social media groups at universities that specialize in teacher education.

According to the Siberia-based news website Tayga.info, one such recruitment message seeking teachers of “all subjects” appeared in a student chat at Novosibirsk State Pedagogical University.

“The tasks [are] to ensure the beginning of the school year, organize instructional and educational work and work with children,” the message reportedly said of the “business trip” to the occupied Kherson and Zaporizhzhia regions.

The university said the message was not authentic.

Safety concerns are one of the main factors hindering the recruitment of Russia-educated teachers for the occupied territories, according to Daniil Ken, the head of the independent Teachers’ Alliance union, which is affiliated with jailed Kremlin critic Alexei Navalny.

Despite the promised salaries being up to nine times higher than average in the regions of recruitment, demand for the teaching vacancies in eastern Ukraine remains low, Ken said.

“I hope some people have a moral understanding that going to the occupied territories is wrong, but there is also a rational risk assessment,” Ken told the Polish Belsat TV broadcaster Tuesday.

More successful seems to be the ongoing recruitment of officials, local deputies and Kremlin-loyal activists, Vedomosti newspaper reported earlier this week.

Politicians going to the separatist republics of Donetsk and Lugansk are guaranteed a doubling of their salaries and even promised promotions upon returning to Russia, the Kommersant newspaper reported Monday.

Several well-known regional politicians have already been promoted into prominent positions in the separatist republics.

Rostislav Antonov, a deputy in the Siberian city of Novosibirsk, was appointed as a humanitarian adviser to DNR leader Denis Pushilin earlier this month.

“From the very start of the special operation, I spent a lot of time on the territory of the Donetsk Republic, working on the liberated territories and helping people. This official status will allow me to work with greater dedication,” Antonov wrote on his Telegram channel, using the Russian government’s term for the war in Ukraine.

Antonov said that he will retain his salaried post in the Novosibirsk Council of Deputies and will be able to “fulfill responsibilities” at home despite his new “honorable and important” role in occupied Donetsk. 

But in contrast to the patriotic fervor of recently promoted regional officials, ordinary Russians might be simply less optimistic about their future prospects in the newly “liberated” lands.

“There is a high chance of [the territories] being subject to counteroffensive by the Ukrainian forces,” Ken said. “Then some … would come back to Russia in a body bag.”

The Bell, 6/26/22

Increased energy export profits

Restrictions on Russian energy exports were agreed with difficulty by Western countries and threaten serious domestic problems. But these painful measures are a long way from achieving their goal: in fact, their ineffectiveness has become the main argument against sanctions.

“Russia’s situation, from the point of view of revenue at the current stage of the war, is better than at the start,” the FT quoted Republican senator Ron Johnson as saying earlier this month. And it’s hard to argue. Russia’s revenues from oil and gas are only increasing and, according to Bloomberg, are on course to hit an all-time record of $285 billion this year. Russia’s official figures show that oil and gas revenues were up 45 percent year-on-year between January and May, from 3,129 trillion rubles to 5,658 trillion rubles. The head of state-owned gas giant Gazprom Alexei Miller told the St. Petersburg International Economic Forum that he’s “not upset about Europe”. The European Union has reduced imports of Russian gas “by several dozen percent,” he said, but prices have risen “several times over.”

There are several unique reasons why the Kremlin has been able to earn these record revenues in recent months. One fundamental reason will fade with time, but it is far from certain that the other reasons will go away any time soon. 

The first reason is the timetable for Europe’s oil embargo that is intended to limit Russia’s foreign earnings. The embargo, which will halt 90 percent of Europe’s imports of Russian oil, will not come into full force until 2023. As a result, the markets have already priced in future supply cuts. Until then, though, Europe continues to buy Russian oil.

Russia’s oil production is recovering after a slump in March and April. Deputy Prime Minister Alexander Novak said earlier this month that it would reach pre-war levels of 10.2 million barrels a day by the end of June – and that numbers would keep rising through July. In the first 100 days of the war, Russia earned €93 billion ($98 billion) from energy exports (61 percent went to the EU). Of that, €59 billion was from oil and oil products, €24 billion from pipeline gas, €5.1 billion from liquefied natural gas (LNG) and €4.8 billion from coal.

By early 2023, the impact of the European oil embargo should be felt. The International Energy Agency (IEA) predicts that, by then, Russian output will have fallen by 3 million barrels a day however, (immediately after the start of the war, the IEA said this would happen in April).

A pivot to the east?

At the height of market uncertainty in the spring, it seemed that Russia’s obvious and only way out – increased energy exports to Asia – might not be possible to achieve. Now, however, it’s clear that Asia’s leading consumers – China and India – are ready to buy much more Russian oil, albeit at discounts of up to 30 percent. 

The data shows that lost sales to Europe have been almost entirely compensated by sales to Asia. Indian refineries even postponed scheduled annual renovations in order to process more cut-price Russian oil. After refining, it is almost impossible to distinguish between Russian oil and oil from other sources if it is returned to the international market.

Based on the averages between March and May, India’s imports of Russian crude are up 658 percent compared with last year. China’s imports are up 205 percent. Across Asia as a whole the figure is 347 percent, according to Rystad Energy. “Asia has saved Russia’s oil revenues,” Kpler analyst Viktor Katona told the New York Times.

Discounts on Russian crude oil will likely remain in order to guarantee Asian clients a significant refining margin and compensate for sanctions-related insurance and freighting costs, according to Wei Chong Ho, vice president for refining at Rystad Energy. But even allowing for this discount, prices are up. Russian figures for January through May show sales at an average of $83.48 per barrel, compared with $61.62 for the same period last year. The average price of Brent crude in the same period was around $104 per barrel.

The Russian authorities classified foreign trade statistics in April. However, Dmitry Polevoy, investment director at Loko Invest, estimates that Russia’s export earnings are up 40 percent year on year (he’s basing this on data from the country’s key trading partners). Deliveries to Turkey, China, India and Brazil are increasing the most rapidly, Polevoy said.

Even with a redirection of supplies to Asia, limits on energy exports to Europe will lead to a fall in production volumes in Russia, according to Dmitry Kulikov, chief economist at Russian credit rating firm ACRA. And the demand for Russian oil – and oil prices – will depend, above all, the state of the world economy: if there is a recession then oil prices will likely drop rapidly. This could lead to problems for Russian energy exports.

G7 countries are currently discussing a cap on the price of Russian oil on international markets. That could end the vicious circle in which falls in Russian export volumes push up global prices – in other words, Russia’s energy revenues are preserved at the cost of consumers in the West. However, reaching agreement on this will be no less challenging than signing off on the EU’s Russian oil embargo.

Tech under threat

There is far less of a debate about the effectiveness of sanctions on selling to Russia. The block on the sale of Western technologies, raw materials and components – coupled with the voluntary exodus of Western companies from the Russian market – has caused a collapse in Russian imports. At their lowest point, imports were down almost 50 percent year-on-year before stabilizing at about 44 percent in May, according to Polevoy’s estimates. Imports from Germany were down 58.7 percent year-on-year in March; from France they were down 60.4 percent and from the U.S. they dropped 78.8 percent. 

Countries formally branded as “unfriendly” by the Russian authorities accounted for about 45 percent of trade last year, ratings agency ACRA pointed out in its latest report on sanctions. And this has disproportionately affected some sectors: in May, for example, auto sales in Russia plummeted 83.5 percent. According to ACRA, imports could drop up to 30 percent in value terms by the end of the year. Russia urgently needs to find new suppliers of components, services and licensed software, rebuild its supply chains and figure out a way to make payments without the risk of secondary sanctions for partners, ACRA said.

Thus far, there is no evidence of imports recovering. That’s illustrated most clearly by the ruble exchange rate, which is about 50 to the U.S. dollar. Despite the absence of any economic reasons to strengthen, the Russian currency remains highly valued. On the one hand, this calms price rises in the country (as of June 10, annual inflation eased slightly to 16.7 percent – from 17.1 percent in May); on the other hand, it has already led to three weeks of deflation. The future exchange rate will continue to depend on external barriers to trade, according to ACRA’s Kulikov.

Restrictions on tech imports will hamper productivity in Russia: some activities will simply become impossible (such as producing microprocessors), and a significant amount of investment will go on finding equivalent technologies not subject to sanctions, rather than increasing efficiency. Technological isolation means that there will be a reliance on old technology, in effect causing what Central Bank analysts characterize as “reverse industrialization.” What that means in practice is that lower quality products will go to market at higher prices than their imported competitors. 

The impact of import restrictions could be long-term and pronounced, according to Kulikov, particularly when you look at the history of sanctions against regimes in Iran, Venezuela and South Africa. Tech isolation in general, and reverse industrialization in particular, will lead to reduced quality of life for Russians: equipment, vehicles, construction materials, and even milk in Tetra Paks could become too expensive for ordinary Russians.

How the U.S. views the effectiveness of sanctions

The issue of whether sanctions work as a foreign policy tool have been under discussion in the U.S. for decades. The general opinion is that they are not as effective as they might seem. Research by economists at Drexel University suggests sanctions only force the hoped-for policy changes in the target country in 35 percent of cases. Dartmouth professor Robert Pape argued in 1997 that this only happens in 5 percent of cases. 

Political analyst Daniel Dresner formulated a paradox back in 1999: moderate sanctions against friendly countries are far more effective than harsh sanctions against ideological opponents. U.S. pressure on France and Great Britain during the Suez Crisis of the 1950s is generally regarded as an example of the former, while the measures against Iran, North Korea and Venezuela, despite huge economic damage, have had little or no effect on the political leadership of these countries over the course of several decades.

The debate about whether sanctions can influence Moscow’s decision-making raged long before the start of the war, and the architects of the current measures have a sober view of their capabilities when speaking on the record.

“If we are dealing with an autocrat like Putin, who has a high pain threshold and confidently controls the information sphere in his country, we need to be clear that sanctions will never solve the problem by themselves,” Biden’s deputy national security advisor Deepak Singh said in April. “We understand that even a blow as powerful as the one we have already dealt will take time to change Putin’s strategic calculations. But we are betting that, in time, he will come to understand that [continuing the war] will be a strategic reverse.”

But halting the war in Ukraine is not the only goal of these sanctions: the long-term impact on the Russian economy should prevent Moscow from pursuing an expansionist agenda in other countries and, at the same time, be a deterrent to other nations.

Julia Starostina, Peter Mironenko

Translated by Andy Potts

The Bell is a weekly newsletter in English, twice-daily in Russian. We give you the essential insider view on Russian politics and business in a 5 minute read.
 
We appreciate any feedback: please contact us at info@thebell.io.

By Caitlin Johnstone, Substack, 6/25/22

The New York Times reports that Ukraine is crawling with special forces and spies from the US and its allies, which would seem to contradict earlier reports that the US intelligence cartel is having trouble getting intel about what’s happening on the ground in Ukraine.

This would also, obviously, put the final nail in the coffin of the claim that this is not a US proxy war.

In an article titled “Commando Network Coordinates Flow of Weapons in Ukraine, Officials Say,” anonymous western officials inform us of the following through their stenographers at The New York Times:

As Russian troops press ahead with a grinding campaign to seize eastern Ukraine, the nation’s ability to resist the onslaught depends more than ever on help from the United States and its allies — including a stealthy network of commandos and spies rushing to provide weapons, intelligence and training, according to U.S. and European officials.

Much of this work happens outside Ukraine, at bases in Germany, France and Britain, for example. But even as the Biden administration has declared it will not deploy American troops to Ukraine, some C.I.A. personnel have continued to operate in the country secretly, mostly in the capital, Kyiv, directing much of the massive amounts of intelligence the United States is sharing with Ukrainian forces, according to current and former officials.

At the same time, a few dozen commandos from other NATO countries, including Britain, France, Canada and Lithuania, also have been working inside Ukraine.

Some CIA personnel have continued to operate in Ukraine secretly, mostly in Kyiv, directing much of the intelligence the U.S. is sharing with Ukrainian forces, according to current and former officials. https://t.co/4VWdybmome

— The New York Times (@nytimes) June 25, 2022

The revelation that the CIA and US special forces are conducting military operations in Ukraine does indeed make a lie of the Biden administration’s insistence at the start of the war that there would be no American boots on the ground in Ukraine, and the admission that NATO powers are so involved in operations against a nuclear superpower means we are closer to seeing a nuclear exchange than anyone should be comfortable with.

The revelation that the CIA and US special forces are conducting military operations in Ukraine does indeed make a lie of the Biden administration’s insistence at the start of the war that there would be no American boots on the ground in Ukraine, and the admission that NATO powers are so involved in operations against a nuclear superpower means we are closer to seeing a nuclear exchange than anyone should be comfortable with.

This news should surprise no one who knows anything about the usual behavior of the US intelligence cartel, but interestingly it contradicts something we were told by the same New York Times not three weeks ago.

“American intelligence agencies have less information than they would like about Ukraine’s operations and possess a far better picture of Russia’s military, its planned operations and its successes and failures,” NYT told us earlier this month. “U.S. officials said the Ukrainian government gave them few classified briefings or details about their operational plans, and Ukrainian officials acknowledged that they did not tell the Americans everything.”

It seems a bit unlikely that US intelligence agencies would have a hard time getting information about what’s happening in a country where they themselves are physically located. Moon of Alabama theorized at the time that this ridiculous “We don’t know what’s happening in our own proxy war” line was being pushed to give the US plausible deniability about Ukraine’s failures on the battlefield, which have only gotten worse since then.

So why are they telling us all this now? Well, it could be that we’re being paced into accepting an increasingly direct role of the US and its allies in Ukraine.

Hawks in April: Don't call it a proxy war!
Hawks in May: Of course it's a proxy war!
Hawks in June: It's not their war, it's our war!

— Daniel Larison (@DanielLarison) June 20, 2022

The other day Antiwar’s Daniel Larison tweeted, “Hawks in April: Don’t call it a proxy war! Hawks in May: Of course it’s a proxy war! Hawks in June: It’s not their war, it’s our war!”

This is indeed exactly how it happened. Back in April President Biden told the press the idea that this is a proxy war between the US and Russia was “not true” and Defense Secretary Lloyd Austin said “It’s not, this is clearly Ukraine’s fight” when asked if this is a proxy war. The mainstream media were still framing this claim as merely an “accusation” by the Russian government, and empire spinmeisters were regularly admonishing anyone who used that term on the grounds that it deprives Ukrainians of their “agency”.

Then May rolled around and all of a sudden we had The New Yorker unequivocally telling us that the US is in “a full proxy war with Russia” and hawks like US congressman Seth Moulton saying things like, “We’re not just at war to support the Ukrainians. We’re fundamentally at war, although somewhat through a proxy, with Russia, and it’s important that we win.”

And now here in June we’ve got war hawks like Max Boot coming right out and saying that this is actually America’s war, and it is therefore important for the US to drastically escalate the war in order to hand the Russians “devastating losses”. 

Max Boot ???????? @MaxBootWe need to understand that this isn’t their war in Ukraine—it’s our war—and we need to do more to defeat Russia’s attack on the West. Speaking on @Morning_Joe about the subject of my new @PostOpinions column: wapo.st/39zdxww

June 20th 20221,666 Retweets5,287 Likes

So the previously unthinkable idea that the US is at war with Russia has been gradually normalized, with the heat turned up so slowly that the frog doesn’t notice it’s being boiled alive. If that idea can be sufficiently normalized, public consent for greater escalations will likely be forthcoming, even if those escalations are extremely psychotic. 

Back in March when I said the only “agency” Ukraine has in this conflict is the Central Intelligence kind, empire loyalists jumped down my throat. They couldn’t believe I was saying something so evil and wrong. Now they’ve been told that the Central Intelligence Agency is indeed conducting operations and directing intelligence on the ground in Ukraine, but I somehow doubt that this will stir any self-reflection on their part.

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from TASS Russian News Agency, 6/26/22

VILNIUS, June 26. /TASS/. Lithuania will not make concessions on the issue of transit of sanctioned goods to Russia’s enclave Kaliningrad region, President Gitanas Nauseda blogged on his Facebook page (banned in Russia; owned by Meta Corporation, which is designated as extremist in Russia).

“It is perfectly clear that Lithuania must and will apply the EU sanctions. Lithuania must and will maintain control over the goods transported via its territory, and any ‘corridors’ are out of the question, just as concessions to Russia are out of the question,” the president said.

“The government should immediately begin consultations with the European Commission so that the imposed sanctions don’t harm either the interests of Lithuania or international agreements,” he noted.

Earlier, Kaliningrad Region Governor Anton Alikhanov said that on June 18, Lithuania’s national railroad operator notified Kaliningrad of restrictions on the transit of goods between the region and mainland Russia. On June 21, news came that the restrictions affected road traffic as well.

The Kremlin branded the move as an economic blockade, while Lithuania and the EU insist the restrictions are only aimed at implementing the sanctions regime in place against Russia.