I had intended to look at some of the likely boundary conditions in the evolving Russia-Ukraine conflict. But the Western media-gasm over Ukraine successfully (and presumably with US/NATO help) landing a reported 4 out of 6 HIMARS missiles on a Russian deployment center in Makiivka in Donetsk oblast and killing a bunch of Russian soldiers is a vivid reminder of how Ukraine’s ability to keep prosecuting the war more and more depends on preserving an illusion of success, or at least continued viability.
It ought to be pedestrian to believe that telling tall tales isn’t viable in the long run. Ponzis and bubbles, which also run on hype and hope, eventually do collapse. But the dot-com mania had formerly rational investment professionals adopting the view that companies which were clearly never going to be cash flow positive were nevertheless highly valuable because eyeballs. The intensity of conviction in deeply unsound ideas enabled the dot-crazy to become more manic and last longer than any dull conventional person dreamed was remotely possible.
As we’ll discuss in due course, despite the continued media cheerleading, which includes running patently false claims from Ukraine officials, this propaganda process is self-limiting. And there are also signs it may be getting to the end of the line.1
Admittedly, this is a slow news day, but it is nevertheless noteworthy to see the BBC, New York Times and Financial Times running news of this successful strike as a lead story. Let us turn to Anadolu Agency to get the two sides:
A Ukrainian rocket strike killed at least 63 Russian soldiers at a Russian deployment area in eastern Ukraine, Russia’s Defense Ministry said on Monday…
“All necessary assistance and support will be provided to the relatives and friends of the fallen servicemen,” the statement further said.
Late on Sunday, the Ukrainian army’s strategic communications department claimed that nearly 400 Russian soldiers were killed in strikes in Makiivka.
The statement also noted that an additional 300 Russian soldiers were wounded at varying levels of severity.
Let’s say the Ministry of Defense is bad at counting plus some of the now wounded die. 100 dead would still be in line with initial estimates. Ukraine claims 400.
Even using Ukraine’s figures, this is front page news? There have been many days, particularly in recent weeks, when Ukraine’s losses are one to two battalions a day. But we are to believe that the West should be chuffed by Ukraine and the West effectively admitting that a very bad day for Russia rises only the the level of routine losses for Ukraine?
Now admittedly, there is reason for Russians to be upset about this outcome. This loss was not due valiant sacrifice but incompetence. Why were troops, and per some reports, recent recruits not yet done with training, housed within missile range of Ukraine lines? But it’s not due to the magnitude of the losses but the fact that they look to have been completely preventable and may have been made much worse by storing ammo near the barracks.
Nevertheless, those who have been watching Russian reporting closely will note that this Reuters article makes much of the upset among Russian military bloggers…when they are chronically angry at the Russian armed forces with not being aggressive enough and get bent out of shape over comparatively minor Bad Shit Happening, like a recent incident where three helicopters were lost. So I would wait to see the tone of reactions in Russian mainstream media before jumping to conclusions. Nevertheless, from Reuters, Anger in Russia as scores of troops killed in one of war’s deadliest strikes:
Russia acknowledged on Monday that scores of its troops were killed in one of the Ukraine war’s deadliest strikes, drawing demands from nationalist bloggers for commanders to be punished for housing soldiers alongside an ammunition dump….
Igor Girkin, a former commander of pro-Russian troops in east Ukraine who has emerged as one of the highest profile Russian nationalist military bloggers, said the death toll was in the hundreds, later editing his post to include wounded in that figure. Ammunition had been stored at the site and Russian military equipment there was uncamouflaged, he said.
Another nationalist blogger, Rybar, said around 70 soldiers were confirmed dead and more than 100 wounded.
Given that co-locating ammo with barracks is inexcusable, one would also assume that Reuters inclusion of Rybar would mean Rybar was also outraged about the incident.
This is all I could find on Rybar:
🇷🇺🇺🇦🎞 Chronicle of a special military operation: events of December 31, 2022 – January 2, 2023
▪️On December 31, the Russian army launched a massive missile attack on military and industrial facilities on the territory of Ukraine.
At least eight targets were hit in Kiev , including a hotel where foreign advisers were located and CHP-5…
▪️Unfortunately, not without tragedy. On New Year’s Eve, the Armed Forces of Ukraine launched a strike from the HIMARS MLRS on the location of Russian troops in Makeevka .
Air defense destroyed only part of the missiles. As a result of the hit, about 70 Russian servicemen were killed, more than 100 people were injured.
To underscore: This strike was an impressive stunt. Either by virtue of Western surveillance or loose-lipped cleaning women tipping off Ukraine authorities, Ukraine killed a not-consequential number of men and disproportionately embarrassed the Ministry of Defense. It has no strategic impact and will not change the direction of the conflict.
In fact, it is consistent with what your humble blogger predicted weeks ago: as Ukraine is increasingly incapable of scoring meaningful victories on the battlefield, will increasingly resort to terrorism as a way of looking like it can still cause meaningful pain to Russia. Technically this attack was not terrorism but spending 6 of Ukraine’s scarce HIMARS to achieve a mere PR blip looks an awful lot like desperation to score any type of “win” appearance, as opposed to strategy.
In fact, Alex Vershinin, known to many readers as the author of the seminal Royal United Services paper, The Return of Industrial Warfare, recently provided an updated take on the strategies of the two sides. Vershinin sets forth Ukraine’s two key elements, and the second one in such a matter of fact manner that it is easy to miss its importance:
The Ukrainians’ terrain-focused war of maneuver is constrained by two factors: limited artillery ammunition and equipment production, and coalition considerations. Ukraine started the war with 1,800 artillery pieces of Soviet caliber. These allowed firing rates of 6,000 to 7,000 rounds a day against 40,000 to 50,000 Russian daily rounds. By now this artillery is mostly out of ammunition, and in its place Ukraine is using 350 Western caliber artillery pieces, many of which are destroyed or breaking down from overuse. Meanwhile, Western nations are themselves running out of ammunition; the U.S. is estimated to produce only 15,000 155mm shells a month. This constraint has forced Ukraine to adopt mass infantry formations focused on regaining territory at any cost. Ukraine simply cannot go toe to toe with Russia in artillery battles…
Ukraine’s second constraint is the coalition nature of its warfare. Since running out of its own stocks, Ukraine is increasingly reliant on Western weaponry. Maintaining the Western coalition is crucial to the Ukrainian war effort. Without a constant string of victories, domestic economic concern may cause coalition members to defect. If Western support dries up due to depletion of stock or of political will, Ukraine’s war effort collapses for lack of supplies. In some ways, Ukraine has no choice but to launch attacks no matter the human and material cost…
The Achilles heel of this strategy is manpower. Ukraine started the war with 43 million citizens and 5 million military-aged males, but according to the U.N., 14.3 million Ukrainians have fled the war, and a further 9 million are in Crimea or other Russian-occupied territories. This means Ukraine is down to about 20 to 27 million people. At this ratio, it has less than 3 million draftable men. A million have been drafted already, and many of the rest are either not physically fit to serve or occupy a vital position in the nation’s economy. In short, Ukraine might be running out of men, in my view.
Look again at this sentence: “Without a constant string of victories, domestic economic concern may cause coalition members to defect.”
Vershinin may be correct that in the end manpower will be the limiting factor for Ukraine. But its last “victories,” the attacks on the Engels airbase (which satellite photos have shown did no damage, although some staff on the base did die, supposedly due to fallout rather than a direct hit) and now in Makiivka, were not due to Ukraine beating Russia in house-to-house fighting or successful human wave tactics, but targeted missile strikes against sexy targets. Russia has elevated the importance of preventing those attacks and has in the last week been targeting HIMARS and howitzer platforms, reportedly with a high success rate due to shortening the time between detecting the source of a shot and firing back. Russia also claims to have destroyed a (the?) center that was modifying older rockets into jet drones to hit targets like the Engels airbase.
In other words, the West’s limited ability to keep Ukraine supplied with materiel will constrain its ability to keep ginning up its recent sort of “victories”. Brian Berletic has been dutifully recording, for months, how US and NATO weapons deliveries to Ukraine keep shrinking.
And on top of that, Vershinin ignores the considerable and growing cost of keeping Ukraine afloat. Ukraine is dependent on the West to fund its government, giving new meaning to the expression “client state”. Ukraine’s GDP contraction is estimated to be on the order of 35-40% for 2022. Ukraine in November projected its 2023 budget deficit to be $38 billion. Mind you, that is for essential services and is likely to underestimate the cost and knock-on effects of dealing with Russia’s attacks on its electrical grid. Again, before the grid strikes, the IMF had estimated Ukraine’s budget needs at $3 to $4 billion a month. It’s an easy bet that that $38 billion funding gap will easily come in at more than $50 billion.
And paying for teachers’ salaries, pensions, road repair, hospitals, are not the sort of thing that enriches the military-industrial complex. This is a huge amount for the West. Euronews, in discussing the then estimated $38 billion hole, strongly hinted Ukraine would come up short:
The country is now scrambling to find sources of revenues to sustain its 2023 budget, which includes a record-breaking deficit of $38 billion (€36.9 billion).
The funding is supposed to ensure the most basic services, such as healthcare and education, remain available to citizens as the war rages on….
But in the midst of a global recession, what country is willing to foot such hefty bill?…
Together, the EU and the US could fill a significant portion of Ukraine’s enormous budgetary hole, but it will not be enough to close it entirely.
Other Western countries, together with financial institutions like the International Monetary Fund (IMF) and the World Bank, are expected to contribute to the effort.
But the IMF broke its policies in extending its initial loans to Ukraine (lending to countries at war is a no no) and has not extended new credit since the SMO started. Amusingly, new US support would go to pay IMF loan surcharges, and Congress wants to go beat up the IMF over that. Even if that narrowly succeeds, dream if the agency will provide more than at best token support going forward. From CNBC:
A provision in the recently signed defense spending bill mandates that the United States work to ease Ukraine’s debt burden at the International Monetary Fund, which could create tensions at the world’s lender-of-last-resort over one of its biggest borrowers.
The National Defense Authorization Act requires American representatives to each global development bank, including the IMF, where the U.S. is the largest stakeholder, to use ” the voice, vote, and influence ” of the U.S. in seeking to assemble a voting bloc of countries that would change each institution’s debt service relief policy regarding Ukraine.
Among other things, the U.S. is tasked with forcing the IMF to reexamine and potentially end its surcharge policy on Ukrainian loans…
Inevitably, some U.S. grant money is spent servicing IMF loans…
The effort to wrangle the IMF’s 24 directors, who are elected by member countries or by groups of countries, to end the surcharges may not be so easy.
Just before Christmas, the directors decided to maintain the surcharge policy. They said in a Dec. 20 statement that most directors “were open to exploring possible options for providing temporary surcharge relief,” but others “noted that the average cost of borrowing from the Fund remains significantly below market rates.”
Note the US vote share at the IMF is 17.8%.
Last and not at all least, the success of Ukraine propaganda seems to be falling despite the media and politicians doing their best to create the impression otherwise. Lambert and I were both very much surprised to read that a recent poll of likely US voters (as in presumably politically engaged) found fewer than 1/3 thought Ukraine was winning the war.
Similarly, the half life of pro-Ukraine propaganda pushes seems to be collapsing. In the second half of December, the New York Times published an extravaganza intended to revive the Bucha narrative. It died almost immediately. There was another bizarre press boomlet, in which a Putin TV interview, coming after a run of important public meetings, was uniformly depicted by the Western press as seeking to negotiate as proof of Russian desperation. In fact, Putin had given a series of very forceful speeches in which he expressed his regret for falling for Merkel and Hollande’s duplicity over the Minsk accords, stressing his frustration at the lack of anyone trustworthy on the other side of the table. Putin’s TV recap amounted to “Well we are always willing to talk [if there is actually anyone we can talk to]”.
That breathless angle also died in a new cycle.
So let’s watch how long the frisson over this terrible Russian mistake lasts. If again not long, it’s a sign that Ukraine is losing its hold over public attention.
1 It turned out that securitizing subprime debt, at least with all the greedy intermediaries getting enough fees to make it worth their time, wound up with one tranche, or slice of the risk layer-cake, being not attractively priced and therefore hard to sell. That was the BBB or BBB- tranches. That tranche was mainly or even entirely rolled up with the same tranches from other deals, with supposedly some better debt thrown in to make a risk sausage called a CDO.
But the BBB- tranche of a CDO was similarly unloved. Sometimes it was put into other CDOs (!!!) or used to make a yet more speculative risk sausage called a CDO squared.
There were even CDO to the thirds and a very few CDOs to the fourth. In a mathematical joke over my pay grade, there was a tiny CDO to the fourth series called Octonions. Octonions are the end of the line for normed division algebras over the real numbers.