The Russo-Ukrainian War II

Into the turning point? (Free)

Update 31/12/2022 (see below): The path to the World War III

It has been relatively quiet in the “eastern front”. After Ukrainian victories in and around Kherson, news on Ukraine have mostly concentrated on Russian bombings. Unfortunately, there seems to a clear reason for this.

I will now continue mapping the worst-case scenario I originally presented in mid-September. This, like my previous post on the topic, will not please many, but I am not here to please, but to forecast and warn where I see the war heading, in the worst case. This is my freetime writing, so please be prepared for (likely) higher-than-usual amount of grammatical errors.

Where are we?

Unfortunately and rather worryingly, my worst-case scenario seems to have been playing out in the ‘background’. Or at least we are heading that way.

I have been steadily (slowly) amassing information on the state of both Ukrainian and Russian casualties, forces, equipment, etc. Exact figures of losses on both sides are, naturally, practically impossible to come by, but a glimpse of what can be considered as reliable figure came, from no other than the President of the European Commission at the end of November.

The Asia Times reports that, in now retracted statement, President Von der Leyen said that Ukraine would have lost 100 000 soldiers fighting Russia. The fact that this was quickly retracted and removed from the video clip of the speech by President Leyen tells me that this was likely the correct figure. Earlier, the high number of Ukrainian casualties was hinted by the venerable Washington Post.

Ukraine in decline; Russia builds up

The statements of Ukrainian soldiers and officers, reported by the Washington Post, paint a picture of heavy losses, but “still in good morale”. Moreover, Russian troops have dugged in, deep, making it very hard and costly to Ukraine to proceed further into the annexed territories. The supplies from NATO are also in a risk of dwindling. “A lot has already been given”, was the statement of an official of a NATO country.

The report by Asia Times paints a trend of decline for the Ukrainian side, and something of an opposite for Russia. Something I’ve read from several sources outside mainstream media.

According to the outlet, Ukraine has lost manpower it cannot easily replace. The estimated fighting size of Ukraine is currently little under 200 000 men.

Estimates of Russian losses wary wildly from around 10 000 to 100 000 men. This is a prominent example of propaganda (on both sides). What comes to material losses, I remain highly skeptical of some western claims that Russia would have lost “thousands” of tanks. For example, none of my Ukrainian sources can confirm Russian losses even remotely of that magnitude.

It’s obvious that with the conscription of 300 000 men (+ the approximately 200 000 men at the start of the campaign) Russia will create an over-whelming force. Moreover, the mercennary group Wagner has been said to been grown from around 8000 to 40000 men. Russia also seems to have amassed a lot of military equipment to Eastern Ukraine during the past two months. What’s the aim?

Russian missile strikes and strategy

Russian missile strikes have targeted critical military and civilian infrastructure. Come late November, around half of Ukrainian energy capacity was destroyed, according to the Financial Times. Moreover, it was becoming ever more burdensome for the the EU keep essential energy supplies flowing into Ukraine. It looks like the “war” on critical energy infrastructure has been won, by Russia.

It’s thus already questionable how Ukraine would cope, even if the war would end today. Damage to her infrastructure is crippling the society and there are heavy human losses.

The massive force Russia is amassing and the all-but-halted progress of Ukrainian forces, tells me that we are most likely approaching a turning point in the war. In the worst case, this implies that Ukraine has already lost. Even in the best case (excluding peace) this means that the war will drag on and become a resource race between NATO and Russia. And, worryingly, there’s more.

A very important strategic issue that seems to have been completely overlooked in western media is that Russia has been engaged in de facto land war with NATO through a proxy (Ukraine). This means that they have been learning NATO tactics and gathering knowledge on their (our, now) military hardware. Implications worry me. Effectively, Russia has gathered military intel on NATO that it will most certainly use in developing new weapons systems and tactics. We have given Russia a military ‘trump card’. This may turn out to be a massive strategic plunder.

Alas, my fear is that, if peace is not found soon, worse is yet to come.

The paths forward?

It has been a recurring feature of Russian military campaigns since the Winter War in 1939 (againts Finland) that they start poorly, suffer heavy losses and a loss of morale. Then they learn from their mistakes, regroup and strike with over-whelming force (the only exception to this is the failed Afghanistan campaign).

I think that Russia is currently at 'learning” and “regrouping” stages. This implies two things:

1. The time-window for a truce and negotiated peace is closing.

2. If these are not achieved, Russia will, most likely, strike with renewed fervor and force sometime early next year.

I fear that if we reach #2, Ukrainian army and thus Ukraine could be competely over-run. The force Russia has amassed, with some 400 000 to 490 000 men (depending how large one believes Russian losses to be) and large buildup of military equipment gives it an immense advantage. It may even be enough to march to Kiev and further, if that’s the aim of President Putin.

Thus, I am suspecting that Russia is now preparing, training its troops and waiting for the Ukrainian ‘lowlands’ to freeze (to carry tanks). But I am keen to think that Kremlin is seeking peace, because the next stage of war would be very costly and could easily lead to unforeseen developments and escalation of the war to a totally new level. Yet, as truce could also be used to regroup the forces more easily and effectively for the ‘kill strike’, the motives behind Russia to seek peace are somewhat questionable.

Implications

No need to say I am starting to be rather worried.

Just imagine the shock and fear if Ukraine would be over-run by a Russian ‘blitzkrieg’. Moreover, in the wake of such a drastic development, Europeans could also wake up to the fact that a lion’s share of our military arsenal would have been depleted, in Ukraine. This, though, is something we don’t know for sure, as statements by NATO officials on the depletion may also be part of their strategy. But lot has been lost (“given”) for sure.

In any case, I think that coming weeks will be crucial. If truce has not been achieved with a serious commitment, on both sides, to peace negotiations by then, we may wittness something very dramatic early next year. Russians are obtaining a clear upper-hand and no one knows for sure how President Putin is going to use that.

As a last economic note, I was among the economists that thought that sanctions againts Russia, established in 2014, would crush their economy. The opposite actually happened. Sanctions made Russia independent in, e.g., food production and thus stronger. Now I fear that the current sanctions will do the same, that is, the exact opposite many thought. The ancient strategical wisdom of Tsun Tzu (the Art of War) is “keep your friends close and enemies closer”. I worry much more about independent Russia than an integrated Russia.

I, again, sincerely hope that I am wrong with this speculation. It’s just worrying that my previous worst-case scenario seems to be manifesting. It implies that we need to be prepared for further adverse developments in Ukraine.

Update 15/12/2022: Propaganda and preparation?

The head of UK armed forces, Admiral Sir Tony Radakin, stated in Financial Times interview that “Russia is losing”. This would be a welcome news to us all, but I remain skeptical.

What I’ve read from several different military and intelligence sources outside the mainstream media paints a picture of Russia preparing for something major. FT mentions one piece of information that may imply that the next stage, or the “turning point”, I speculated above, is close.

The FT states that Russian shelling of Ukrainian front-lines has eased in recent days. While one explanation is that Russia is running out of ammunition, there’s also another, a more sinister military-strategic explanation.

What I’ve also read from several sources is that Russia has been turning its economy into a war-footing. This includes running their industry to produce military equipment, like military shells and ammunition, at an increasing pace. What I’ve heard is that, e.g., factories producing shells are running continuosly now, manufacturing artillery rounds in triple-shifts.

Another thing is that, like the FT reports citing Estonian military intelligence sources, Russia has bombarded Ukrainian positions heavily, with an estimated 10 million artillery rounds fired since the start of the campaign. This quite directly implies that Ukrainian losses are likely to be heavy.

Not many know, but the success of Finland to suppress a superior enemy, Russia or Soviet Union, during the Second World War relied on artillery. During 1939-1944 Finland developed a highly effective, pioneering way to use artillery to actively defend against attacking enemy forces. These practices were developed during the Winter War (1939-1940) and honed to perfection during the defense battles in Summer 1944, where the fate of Finland was decided.

What I’ve read from several unofficial sources is that Russia has been using same kind of tactic against the superior Ukrainian forces inflicting heavy casulties. The Asia Times piece, I cited above, basically confirmed this.

So, if Russia is producing artillery rounds in mass quantities, why are their bombardments slackening?

The military-strategic explanation is that they have started to prepare for a major offensive. They are gathering ammunition (saving artillery rounds), and conducting reconnaissance operations in the front-lines to gather intel on the strength and fighting ability of the Ukrainian side. Obviously, heavy shelling would be a direct threat to reconnaissance operatives.

Alas, the worst case scenario, why Russia has eased shelling, is that they are preparing for the winter-offensive, I have speculated for a while.

I want to re-emphasize that I am dearly hoping that my worst case scenario is wrong, because if it’s not, it means escalation of the war, and we (Finland) are part of the front-line. I consider it to be obvious that Russia does not have the manpower to take any action towards Finland at current time, but if Russia is not losing in Ukraine, that day may very well come.

To add, Russia has made available a footage showing loading of Yars intercontinental ballistic missile to a silo near Moscow. From the worst-case scenario perspective, this can be seen as nuclear threat to stave off any larger retaliatory measures concerning the possible winter-offensive in Ukraine. We just have to hope (pray) that cool heads prevail.

Update 24/12/2022: Who started the war?

All major events that include a high degree uncertainty can only be forecasted reliably through scenario analysis and forecasts. Our first best-case scenario, published in March, on the Russo-Ukrainian war assumed that there would be a quick ceasefire after the winter months (when the ground would turn muddy). This clearly, and unfortunately, did not manifest.

Our worst-case scenario, at that time, was that the war would turn into a ‘guerilla warfare’. This is the situation in which we essentially have been since early fall. Battle lines have been hardened. Now, the new information I have received alters our worst-case scenario quite a bit.

During this week, I received several contacts displaying information “hidden” in the reports of the OSCE (Organization for Security and Co-operation in Europe) special mission in Ukraine. The data points to the conclusion that the conflict may not have been initiated by Russia on 24 February, 2022, but by Ukraine about a week before.

I have to admit that this information was perplexing as, if accurate, it would throw the whole western narrative on the motives of the war upside down.

I went through the OSCE reports and they do confirm a sudden and lasting spike in explosions within the Donetsk and Luhanks regions (see, e.g., this and this) starting on 17 February. They also confirm projectiles “assessed as rockets” and reports on damage to civilian infrastructure and a factory in a non-governmental controlled Mykolaivka near Luhansk. They also confirm fresh craters in government-controlled areas. What the reports do not clearly state, however, is who did most of the shelling or who commenced it.

An article by Reuters, citing sources from both Kremlin and Washington, states quite clearly that Donbas was under heavy shelling, at least, on 17-18 February. Here another one per Reuters. This is one French site, citing the report of the OSCE, clearly lays the blame on escalation on the Ukrainian-side.

As I stated before, I had contacts to OSCE mission in East-Ukraine and I was aware of the shelling of many areas by Ukrainian and Russian forces. In many occasions, however, bombardments deliberately missed their targets (neighbours rarely want to kill each other). Yet, it was obvious that also the Ukrainian side shelled, sometimes heavily, the civilian areas of Donbas. This I know for a fact. There were reports, published in the western media on, e.g., shelling of Donetsk.

I have also seen claims of a pre-war troop build up, by Ukraine, in the border of Donbas. These I cannot confirm from a reliable source, though.

In any case, this information brought me back thinking my original scenarios on the onset and motivations behind the war. I prestented two opposite scenarios. One argued that the conflict was a ‘proxy war’ launched by Russia against the West. The other suggested that it was a similar maneuver by the U.S. against Russia. On this latter, I wrote:

A commentary, which I read in the spring (which I cannot find anymore, it seems) argued that it would have been in the interest some powerful U.S. institutions [like CIA] to try to disintegrate the Eurasian power structure that was forming between China, Russia and Europe, because it would threaten the hegemony of the U.S. The best way to accomplish would be to push President Putin “over the edge” in Ukraine.

Based on the current data, we simply cannot be sure who iniatiated the conflict, but it does point to the possibility that Ukraine, not Russia, was behind the escalation. I am sure that the OSCE holds this information, but at least I have not been able to find it.

So, the new worst-case scenario, i.e., that the Biden administration is waging the war, is the worst imaginable. This is because it would imply that:

1. War is likely to spread and the likelihood of the conflict going nuclear is definitely higher than with the “Russian did it” -scenario.

2. Europe is likely to be sacrificable, which may even be the aim of the Biden administration (the worst-worst-case scenario).

3. Finland and Sweden are, most likely, being dragged into the NATO to act as a buffer zone against Russia in the north. This directly implies that the main battleground in the north, if a war between NATO and Russia commences, will be Finland.

This would also, for example, explain why there has been no real push for a peace in Ukraine, as it would not be what the Biden administration would be seeking for.

I truly would have wanted to start my Christmas break with a different kind of analysis and news. However, as an unyielding empiricist, I go where the data leads (no exceptions).

Alas, this new information leads to a worst-case scenario, which includes a heightened likelihood of World War III. Worryingly, there’s also a historical analogy to the onset of WWI, which I will present later.

I have to say that I have never ever hoped more that my worst-case scenario would be wrong. The OSCE has the information to either confirm or debunk this. Let’s hope they will be open about, because we need to know (I doubt it though).

Despite of all of this, Merry Christmas!

Update 31/12/2022: The path to WWIII

Yesterday we published our most dark scenario forecasts ever. Our scenarios ranged from laying a road onto the World War III, to peace and prosperity through “cleansing” (crash essentially) of the current financial-economic system. Basically, range could not be wider.

In this New Year’s addition to my worst-case scenario, I present the road that could lead to WWIII. This is naturally just a rudimentary analysis, but the fact remains that the current situation in Europe parallels the historical narrative that led to ‘the Great War’.

The road to WWI is long and cumbersome. Its main foundation was laid in 1879, when the Austro-Hungarian Empire and the German Empire (the “Second Reich”) formed a military alliance. Italy joined in 1882, and the pact was named as the Triple Alliance. In 1894 a similar pact was agreed between France and Russia.

Tensions between European states had run high for several year before the onset of the war on the 28th July 1914, when the Austro-Hungarian empire declared war to Serbia. Escalation of tensions into an outright European war had been halted, with diplomatic efforts, in 1905, 1908, 1911, 1912 and in 1913.¹ However, the fateful assassination of Franz Ferdinand, the eldest son of Archduke Karl Ludwig of Austria and an heir to the crown of the Habsburg double-monarchy, and his wife Sofie Ferdinand on 28 June, 1914, set in motion a process that led to the onset of the war in just a month later.

What makes the onset of WWI interesting now, is the military-strategical angle behind it.

Industrialization had changed Europe quite radically in the 1800s and early 1900s. Germany had taken full military advantage of this, which were shown in the quick and successful campaigns against Denmark, Austria and France in the latter part of 1800s. Germany relied on her technological advantage and pre-planning, but other nations had studied the successes of Germany thoroughly. The military advantage was smaller than what German high command thought.²

Germany had drafted a 'Schlieffen Plan' named after the Joint Chief of General Staff, count Alfred von Schlieffen. It essentialy stated that whatever kind of war erupts in Europe, and if Germany is part of it, she should attack France first (regardless whether France is part of it or not).³ The plan was to flank the French army with a pincer movement through Belgium and proceed to Paris with an 'arch maneuver' through north-eastern France. Everything depended on delaying Russian mobilization as long as possible.

Germany treated France as her main rival and enemy (which had happened several times in history), regardless whether this was an actual threat. The French had similar fears with Germany and their plan, named as the Plan XVII, was drafted to counter the German offensive.

So, after the murder of Franz Ferdinand and the first declaration of war, Russia came to the aid of its ally, Serbia. Russia mobilized its troops and France vowed to support Russia according to their pact. This created a direct threat to the Schlieffen Plan and on 1 August, 1914, Germany declared war to Russia. On 3 August, Germany declared a war to France. Then Belgium and Great Britain declared war to Russia, Austro-Hungarian empire to Russia and Great Britain to Austro-Hungary. At the end of August, 1914, Japan attacked the Asian colonies of Germany making the war a global event, a world war.⁴

Coming back to current day, Russia sees NATO as a threat. It does not matter, whether this is real or not. All that matters is how the opponent (Russia) sees it. This can be derived from speeches of leading Russian politicians. Russia’s actions during the past few years implies that Russia has a “Schlieffen Plan”. We just do not know, what triggers it.

Naturally, NATO -countries see Russia as the main threat, currently. The question is, what is the aim of the United States? Does the ‘deep state’ (or whatever) consider Russia (and China) as imminent threats to the U.S.? If so, the U.S. will surely have a “Plan XVII”, or it will be sketched as we speak. Alas, we would be in a similar kind of a setup than what preceded the WWI.

This rather straight-forwardly implies that Ukraine is Serbia (in 1914). We have the China-Russia pact (currently forming) and the “Triple Alliance” of NATO (US, Britain, the EU). If push would come to shove, Collective defence Article 5 of the NATO would become the determining factor (for “Plan XVII”), because it would trigger a NATO-wide defence agreements.

Recent undertakings and maneuvers of both Russia and NATO give clear hints, how such a war would be expected to proceed, that is, what kind of moves and counter-moves seem to have been planned. I’ve already listed some of them in my first instalment of the worst-case scenario, and will continue to analyze them on my third instalment next year.

It’s my estimate that the road we will follow will be laid during the next three months. If Russia is able and willing to lauch a major offensive in Ukraine during the winter months (January-March), we enter a road that will lead to the onset of WWIII, in the worst-case. If not, then we remain hopeful for a peace.

I would hope to have ended the 2022 with a more cheerful message, but the fact remains that the worst-case scenario of the Russo-Ukrainian war has gotten darker and darker with each move Russia and the West have made, since 2014. Thus, the current situation also resembles, somewhat, the slow nine-year escalation of regional conflicts into WWI in 1914. In this retrospect, 2023 is likely to be a decisive year setting the path of things to come.

Regardless, Happy New Year!

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Disclaimer:

The information contained herein is current as at the date of this entry.  The information presented here is considered reliable, but its accuracy is not guaranteed.  Changes may occur in the circumstances after the date of this entry and the information contained in this post may not hold true in the future.

No information contained in this entry should be construed as investment advice.  Readers should always consult their own personal financial or investment advisor before making any investment decision, and readers using this post do so solely at their own risk. 

Readers must make an independent assessment of the risks involved and of the legal, tax, business, financial or other consequences of their actions. GnS Economics nor Tuomas Malinen cannot be held i) responsible for any decision taken, act or omission; or ii) liable for damages caused by such measures.

1. See (in Finnish), Otavan Suuri Maailmanhistoria: Ensimmäinen Maailmansota (1986), p. 106-107

2. See (in Finnish), Otavan Suuri Maailmanhistoria: Ensimmäinen Maailmansota (1986), p. 92-98

3. See (in Finnish), Otavan Suuri Maailmanhistoria: Ensimmäinen Maailmansota (1986), p. 92-95.

4. See (in Finnish), Otavan Suuri Maailmanhistoria: Ensimmäinen Maailmansota (1986), p. 104-108.