re: Latest Updates: Russia-Ukraine Conflict

quote:

---

Next 10 days (through April 7th) will have significant precipitation. In central Luhansk much of this precipitation will fall as snow but quickly melt. Short-term ground trafficability will be significantly limited as a consequence.

---

quote:

---

The Russian MoD claims that, over a period of 24 hours, Russian air defenses intercepted 18 GMLRS rounds and one Ground-Launched Small Diameter Bomb (GLSDB). The mention of GLSDB is notable, but, as always, take Russian MoD kill claims with a grain of salt.

---

quote:

---

MOSCOW—The opening months of Russia’s invasion of Ukraine last year drove an increase in oil and natural-gas prices that brought a windfall for Moscow. Those days are over.

As the war continues into its second year and Western sanctions bite harder, Russia’s government revenue is being squeezed and its economy has shifted to a lower-growth trajectory, likely for the long term.

The country’s biggest exports, gas and oil, have lost major customers. Government finances are strained. The ruble is down over 20% since November against the dollar. The labor force has shrunk as young people are sent to the front or flee the country over fears of being drafted. Uncertainty has curbed business investment.

“Russia’s economy is entering a long-term regression,” predicted Alexandra Prokopenko, a former Russian Central Bank official who left the country shortly after the invasion.

There is no sign the economic difficulties are bad enough to pose a short-term threat to Russia’s ability to wage war. But state revenue shortfalls suggest an intensifying dilemma over how to reconcile ballooning military expenditures with the subsidies and social spending that have helped President Vladimir Putin shield civilians from hardship.

Russian billionaire Oleg Deripaska warned this month that Russia is running out of cash. “There will be no money next year, we need foreign investors,” the raw-materials magnate said at an economic conference.

---

quote:

---

A big part of the dimming outlook stems from a bad bet by Mr. Putin last year that he could use Russian energy supplies to limit Western Europe’s support for Ukraine.

European governments, instead of tempering their support for Kyiv, moved rapidly to find new sources of natural gas and oil. Most Russian gas flows to Europe stopped, and after an initial jump, global gas prices fell sharply. Moscow now says it will cut its oil production by 5% until June from its previous level. It is selling its oil at a discount to global prices.

As a result, the government’s energy revenue fell by nearly half in the first two months of this year compared with last year, while the budget deficit deepened. The fiscal gap hit $34 billion in those first two months, the equivalent of more than 1.5% of the country’s total economic output. That is forcing Moscow to dip deeper into its sovereign-wealth fund, one of its main anti-crisis buffers.

The government can still borrow domestically, and the sovereign-wealth fund still has $147 billion, even after shrinking by $28 billion since before the invasion.

---

quote:

---

A large chunk of its telecommunications equipment and advanced oil drilling software is imported.

“This is a little bit like going back to Soviet times, doing everything ourselves,” said Vasily Astrov, an economist at the Vienna Institute for International Economic Studies. “It will be nearly impossible to properly replace what’s missing.” Analysts at the central bank have called the postwar reality “reverse industrialization,” suggesting a reliance on less-sophisticated technology.

---

quote:

---

Russia managed to avoid the worst last year, aided initially by high global energy prices. Gross domestic product fell 2.1%, according to official data, far less than some early forecasts of a 10% to 15% drop.

---

quote:

---

In January and February of this year, however, oil and gas tax revenue, which accounts for nearly half of total budget revenue, fell by 46% year-over-year, while state spending jumped more than 50%.

---

quote:

---

Consumers are ailing, too. Retail sales fell 6.7% in 2022, the worst showing since 2015, according to official data. New-car sales fell by 62% in February year-on-year, according to the Moscow-based Association of European Businesses.

---

quote:

---

“We’re not talking about a one-year or a two-year crisis,” said Mr. Astrov. “The Russian economy will be on a different trajectory.”

---

quote:

---

Wagner Group forces have likely taken the AZOM industrial complex in northern Bakhmut and continue to make gains within the city. Russian milbloggers widely claimed on March 28 that Wagner fighters have captured the AZOM complex and are working to clear the area of remaining Ukrainian forces.[1] These claims are relatively consistent with available visual evidence of Russian presence in the AZOM complex. Geolocated footage posted on March 26 shows a military correspondent from Russian outlet RIA Novosti moving around the territory of the complex with apparent ease, indicating that Wagner likely controls enough of the plant to host media personalities in relative safety.[2] RIA Novosti correspondent Sergei Shilov additionally visited AZOM on March 28 and indicated that fighting has now moved to the industrial zone south of AZOM.[3] Several Russian milbloggers also claimed on March 28 that Wagner fighters have advanced closer to Bakhmut’s city center, taken control of the city market, and reached the Palace of Culture.[4] These claims are plausible considering geolocated visual evidence of Wagner’s advances towards the city center posted on March 28, as well as combat footage of Ukrainian infantry engaging in small arms exchanges with Russian forces near the Palace of Culture and central market area in Bakhmut city’s center.[5] Wagner is likely working to consolidate gains in northern and central Bakhmut to push towards the city center and expand its zone of control into western Bakhmut. ISW assesses that Russian forces have advanced into an additional five percent of Bakhmut in the last seven days and that they currently occupy roughly 65 percent of the city.

---

quote:

---

Russian and Ukrainian sources speculated that Lieutenant General Sergei Kuzmenko will replace Colonel General Rustam Muradov as Eastern Military District (EMD) commander.[6] Kuzmenko previously served as the commander of the 6th Combined Arms Army from 2015 to 2019 and more recently as a department head at the Russian Armed Forces General Staff Academy

---

quote:

---

Wagner Group financier Yevgeny Prigozhin may be using his influence in Russia’s mainstream media landscape to present himself as a contender in Russia’s 2024 presidential elections. Prigozhin’s own Federal News Agency published an interview that Prigozhin conducted with Russian journalists from Russia Today, RIA Novosti and Federal News Agency on March 14.[9] This interview was noteworthy for its unique format--during the interview Prigozhin seemed to mimic the way that Russian President Vladimir Putin films his choreographed public meetings, either to mock Putin quietly or to suggest subtly that Prigozhin could become Russian president like Putin. The choreography and staging of Prigozhin’s interview places Prigozhin in the camera’s frame at Prigozhin’s desk across from his audience in the same way that Putin’s filmed meetings and photo ops usually do

Prigozhin may seek to parody Putin’s cinematography style as part of a larger trolling campaign to attack the Kremlin or draw tacit parallels between Prigozhin and the office of the Russian presidency. Prigozhin has previously insinuated that he could replace Putin. Prigozhin made a sarcastic announcement on March 11 that he will run for the Ukrainian presidency in 2024 — a statement that a prominent Kremlin-linked Russian scholar argued implicitly promoted a narrative that Prigozhin would run in Russia’s presidential elections which are also scheduled for 2024.[13] Prigozhin directly attacked Putin’s presidential administration on January 18 and insinuated that some officials working there are traitors who want Russia to lose the war in Ukraine — one of Prigozhin’s boldest attacks against the Kremlin to date.[14] Prigozhin also denied the Kremlin’s claims that Russia is fighting NATO in Ukraine and questioned whether there are actually Nazis in Ukraine as the Kremlin — and specifically Putin — constantly claims.[15] Prigozhin’s recent behavior — regardless of its intent — is advancing a narrative among Russian society that Prigozhin has larger political aspirations in Russia.

---

quote:

---

High-ranking Russian officials continue a campaign begun in December 2022 to set domestic conditions for a protracted war both in private and in public. The Guardian, citing anonymous internal sources, reported on March 28 that Kremlin Spokesperson Dmitry Peskov told a group of Russian political and cultural elite that “things will get much harder” and that the current situation (in reference to the war) “will take a very, very, long time” during a private dinner in December 2022.[17] Peskov’s reported warning supports ISW’s assessment that Russian authorities have been preparing multiple aspects of Russian society for a protracted war through careful setting of information conditions and engagement of the Russian defense industrial base (DIB) since the end of 2022.[18] Russian Minister of Defense Sergei Shoigu relatedly visited artillery shell production facilities in Chelyabinsk and Kirov oblasts on March 28 and claimed that Russian ammunition production has increased significantly over the past year, promising that production will increase a further seven to eight times for certain unspecified artillery products by the end of the year

---

quote:

---

The Russian budget continues to reflect the overall costs of Russia’s war in Ukraine. Bloomberg reported on March 28 that Russia has classified an unprecedented one-third of its entire budget expenditures and noted that classified spending as of March 24 is twice as high as it was during the same period in 2022.[21] Bloomberg also found that Russian defense and security spending is the second largest budget category after spending on social programs.[22] Bloomberg concluded that the classified share of the Russian budget will account for nearly a quarter of all expenditures for the whole of 2023 and will be due to an increase in expenses classed as “other expenses in the field of national defense.”[23] Russian outlet RBC relatedly reported on March 28 that the Russian Ministry of Finance plans to submit a proposal to reduce the number of federal state institutions subordinate to federal authorities in order to increase the efficiency of budget expenditure management.[24] Such expenditure manipulations suggest that Russia is trying to cut spending in a variety of spheres to support increased defense spending, further responding to costs associated with the war and setting conditions for a long war.

---

quote:

---

ISW assesses that Russian forces have advanced into an additional five percent of Bakhmut in the last seven days and that they currently occupy roughly 65 percent of the city.

---

quote:

---

Russian channel Dva Mayora (Two Majors) is suggesting that Ukrainians are accumulating heavily and preparing to cross the Dnieper. They draw this conclusion based on the info about the movement of boats, and other equipment, as well as training of crews and improvement of logistics. They only don't know if this will be the main or a distracting strike.

---

quote:

---

Incomprehensible attempts to reform the state-run defense conglomerate date back to the earliest periods of Russia’s war in Ukraine in 2014.

UkrOboronProm was established in 2010 as a quasi-ministry exercising strict control of over 100 of Ukraine’s critical state-owned defense enterprises, including key manufacturers like the Antonov Company or the tank manufacturers and repairers in Kharkiv, Kyiv, or Zhytomyr, still largely the Soviet era legacy.

The corporation is widely criticized for endemic corruption, obsolete management, and poor performance in domestic and export markets. The company has been losing its role in the rapidly growing global arms sector.

In the annual rating of the world’s top 100 defense companies by Defense News, UkrOboronProm dropped from 68th in 2016 ($920 in total annual revenue) to 97th in 2021 (with $1.3 billion in total).

After years of bureaucratic ping-pong, the Ukrainian parliament, in July 2021, finally passed a long-overdue bill on the conglomerate’s shift to a stock company. The UkrOboronProm’s enterprises were to adopt corporate governance under the Organization for Economic Co-operation and Development (OECD) standards.

According to the plan, UkrOboronProm was to be restructured as two major holdings.

The first one, preliminarily named the Defense Systems of Ukraine, was to manage 65 enterprises divided into several industrial clusters specialized in aircraft repairs, armored vehicles, high-precision weapons, munitions, and radar and maritime systems.

The other holding was to specialize in aircraft and space components.

Besides, the new companies were also supposed to retain their affiliates managing foreign arms sales and bidding contracts.

Under the plan, the new UkrOboronProm’s reformed enterprises would be finally entitled to act independently and seek investments in production and research. Also, companies were supposed to be entitled to dispose of their surplus assets (such as non-used premises or land plots) and use the gained funds for their development only.

The decree, passed by the government in March, begins the implementation of this plan.

---

quote:

---

On March 21, the Ukrainian parliament endorsed the appointment of Oleksandr Kamyshyn, the former management board chairman of state railways monopoly Ukrzaliznytsia, as the new minister for strategic industries.

---