Various people have asked me for my latest views on the war in Ukraine, so here goes.

Essentially my views have not changed. Russia has no path to victory, and the longer the war goes on the worse it gets for Russia, and Putin. It's only a matter of time really before either Russian forces in Ukraine collapse, or we see Moscow trying to sue for some kind of peace (I think they have tried numerous times over the past year actually, e.g. thru the Turkish route)

On the former, Ukraine has the advantage still in terms of troops on the ground, even with the latest bout of Russian mobilisation. And Ukraine has the advantage still in terms of training and motivation. NATO continues to arm and train the Ukrainians at a pace that simply cannot be matched by Russia. The UK is training now something like 30k Ukrainian troops and the US has begun a similar programme in Poland.


Russian conventional kit losses are just so huge now that they cannot be easily or quickly replaced - they are running short of key munitions and armaments.

Bit by bit, the Ukrainians are getting the kit - first old T72s, MIG29, but then 155mm artillery, HIMARS, Patriots, Ceasars, now Bradley, and Challenger tanks, and likely we will see Leopard tanks, and eventually even likely F16s, Apache helicopters, etc.. Putin has continuously set red lines when it has come to military supplies from the West, and NATO has continuously rolled through these, calling Putin’s bluff.

Ukraine Regains Position Near Chasiv Yar as Russia Intensifies Offensive
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Ukraine Regains Position Near Chasiv Yar as Russia Intensifies Offensive

The capture of Chasiv Yar could be both a strategic and symbolic victory for Moscow ahead of the May 9 Victory Day, but Ukraine stands defiant in its defense before Western supplies arrive.

What we have learned from red lines being set and rolled through is that Putin does not have escalation domination. He has limits. He is ultimately scared of NATO as what he has seen from Ukrainian use of second and third generation NATO kit in Ukraine, is that Russian fourth and fifth generation kit simply cannot compete with even lower tech NATO stuff. If NATO deploys its own 4th and 5th generation kit against Russia it would be over in hours. Putin knows this. He faces total defeat if he escalates - and WMD are just not options - rarely do I agree with something Boris Johnson, and he was right here when he made similar comments at Davos.


So, the longer this goes on the worse it gets for Russia. More mobilised troops just do not help. It just means more Russian troops and kit presenting themselves to be taken out by the Ukrainians.

Speaking to military types with firsthand experience now in Ukraine I asked them why the Russians have not really bombed NATO convoys supplying arms to the Ukrainians. They told me that the Russians don't have full battlefield satellite coverage, which is key in modern warfare. And thru NATO, the Ukrainians do. So, the Ukrainians can always see in advance what the Russians are doing, before the Russians. It's just such a massive advantage. Again it means the more Russian troops and kit are presented, the more get wiped out. 

Now you might ask how come the Russians don't have this satellite coverage - well it's either that NATO are jamming them or else the Russians have been investing in the wrong things in space - lots of focus on commercial space activity, like rocket deployment tech to sell to the West, but actually they have not invested enough in actual satellites, or not enough relative to NATO.


So over time it just gets worse - much worse for Russia. More men and equipment lost, and at a time when with oil prices lower and the Urals oil price discount now running at 48%, the Russian budget is finally beginning to suffer. I estimate that energy receipts might be lower by $150bn this year, which would mean the budget deficit tripling to over 6% of GDP and likely the $225bn current account surplus fast evaporating. The latter will accelerate capital flight and reserve depletion. Putin will have to make guns versus butter choices, and that means risks of social and political unrest at home.

With all that in mind, I think Moscow would love a ceasefire or peace deal as is, which would cement its current gains on the ground, in effect keeping what it has which is about 17% of Ukrainian territory, including the land corridor to Crimea. Moscow had around 11% prior to the invasion on Feb 21, so Putin could sell all this as a win at home, in terms of taking an additional 6% or so, and he would argue ensuring the resupply of Crimea through that land corridor.

And in the end, while Russia might have lost 100k plus dead and injured and plenty of treasure for not very much, Putin dominates the information narrative at home, and can sell whatever narrative he wants. If people don't agree they can leave,  or protest and end up with Navalny in the Gulag.


The Ukrainians though will never accept a ceasefire until at the least we get back to Feb 21 settings. Despite the shift from Russia to attacks on critical infrastructure I see zero change in the motivation of the Ukrainian government to fight on - opinion polls still show 90% support for continuing the war, and they think they are going to win (so do I). For the Ukrainians it's a matter of survival. Putin has not helped his cause by shaping the war as a rejection of Ukrainian identity, and that means that the Ukrainians really have no choice. The shear brutality of the Russian attack has also cemented opinion in Ukraine - Russia seems set on wiping Ukraine and Ukrainians off the face of the earth.  So where can they go? They have no choice but to fight.

Now I know that same brutality has made some Ukrainians push the narrative that the war cannot end until all of Ukraine is recaptured, including Crimea and Donbas. But actually in private many Ukrainian are more realistic, and many would question why they would want Crimea and DPR and LPR back given their populations are now warped in their pro-Russian views.

Can Crimea be taken militarily?

Gen. BH's sense of things is right on target; a strike (with serious new equipment) on Zap-land to break the 'land bridge combined with another mishap on the Kerch bridge leaves Crimea (and hence RU) extremely vulnerable.

So, I think any peace can be cut around Feb 21 settings, and with the issues of the future of Crimea and DPR and LPR thrown into the long grass via some longer term commission over their future.


NATO might not also countenance a Ukraine high risk assault on Crimea, which has long before Feb 21 been a huge Russian military base.

We have seen something of a statis in military positions in recent weeks, with focus on Bakhmut, but I think later this winter or in the spring we see new Ukrainian offensives and the risk still is Russian collapse in Ukraine, which means eventually Putin has to accept the reality and negotiate to Feb 21 settings. He either gets there through military collapse with dire political repercussions at home or else he can negotiate something which involves a lower military, economic and political cost which allows him to sell some kind of victory at home.

A couple of other points:

Belarus - talk of a Russian/Belarusian counteroffensive from the north?

Well Russia tried that before, in February, and it failed. What has changed since? Not much, aside from Ukrainian capability and defences improved. And I cannot see Belarusians fighting for Russia in Ukraine - if Russians don't want to fight in Ukraine, why would the Belarusians, who have no love for Lukashenko? Lukashenko could perhaps present 5,000 loyal troops to fight in Ukraine, but I think he would be nervous about seeing these then destroyed in Ukraine, and then the domestic political backlash which could see his own regime toppled. Rather I think this is all a feint by Russia, to draw Ukrainian forces to the north and away from Donbas. Lukashenko has no choice but to play along and to present to be loyal to Putin.


Energy - has Putin spent the energy card?

Well, we are not yet through the winter, but it has been mild so far, European gas storage is at seasonably high levels, and I think we are through the worst of it. Lots of focus on the risks to next winter, but actually I think we saw the impacts of demand destruction because of price, and I think diversification into renewables and LNG continues in overdrive.

Actually, I think we are in for a period of lower for longer energy prices, and that hurts Russia. Putin has killed the golden goose. There is no return for Gazprom gas sales to Europe.

I know I have been predicting an early end to the war since September, but actually the market has traded it that way, as it has grown accustomed to a benign war outcome - Putin having no option to escalate, global demand deflates in response to the shock of higher energy prices, and markets working to clear imbalances. That's still my scenario from here. Putin and Russia become less relevant. He cannot win the war with a $1.8 trillion Russian economy up against the West with a combined GDP of what, $40 trillion and a huge technological advantage.

Western support for Ukraine

Talk I know of the West being soft on Ukraine and not willing to stay for the long haul. Add in there the GOP control of the House in Congress and concerns about the ability of Biden to fund the Ukrainian defence.

Actually I think the West is remarkably unified, and they get that the future of European security depends on Putin being beaten. The Yanks, the Brits, the East Europeans, the Scandies, even the Dutch are absolutely on the same page. Germany is a joke, and will be pulled kicking and screaming along with the dominant Western view. Orban is largely seen as a traitor in the West now who will be dealt with after the war ends. Macron is just not relevant on Ukraine - the French are providing sufficient finance nor military kit as to be relevant in any way. The French, and Germans, have been totally and utterly wrong on Russia for the past decade and are not seen as having any useful perspective.

And on the GOP and House?

A large majority in Congress are still anti Putin, and pro Ukrainian. And in any event, Congress already signed off in the $38bn financing package for Ukraine in 2023 which will be front loaded.

So, I see no change in prospects for US and indeed NATO/Western support for Ukraine. In fact, I think the realisation is dawning that the best way to avoid NATO having to fight Putin’s Russia at some point in the future, is actually to ensure the Ukrainians beat Russia now. Every Russian tank destroyed by Ukraine now is one less for NATO to have to inevitably face in the future.

Russia - the future?

Actually, the more debatable question is not how this war will end, as it will absolutely end in a Ukrainian victory. I have no doubt. But what happens to Russia following GS inevitable defeat? Can Putin survive, and can the Federation survive? Therein I see a decent chance that we see the end of Putin and, while not my base case, I think it's possible we see a collapse of the Federation into many new states - as with the USSR in 1991. Think here Tatarstan, Chechnya, Dagestan, Rump Russia, et al. The Federation is I think 89 regions and autonomous republics. We could see 20 new states.

And the irony herein that Putin started this war to create a Greater Russia, but the likely net effect will be a Lesser Russia. 


Timothy Ash is a Senior Emerging Markets Sovereign Strategist at RBC BlueBay Asset Management. He is an Associate Fellow at Chatham House on their Russia and Eurasian program.

Reprinted from @tashecon blog  [email protected].

The views expressed are the author’s and not necessarily those of Kyiv Post.

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