Pearls and Irritations

But with every day I am seeing signs of Ukraine not just doing better than expected, but actually positioning itself for the post-war future.

I would like to share some impressions from talking to people in Ukraine since the start of the war, following Ukrainian media and listening to various Russian independent channels still operating on YouTube. Some of the most interesting insights come from numerous former Russian military officers, who have for a number of years been documenting the corruption and the degradation of the Russian army—obviously in the hope of overcoming it.

It is obvious that Ukraine has some very difficult days ahead. However, every sign I see indicates Ukraine is already winning both politically and militarily. To explain my optimism, let me start with the obvious statement: the idea that Ukraine needed denazification or that its Russian speaking people needed rescuing is not just insane, it is evil. However, it is worth repeating because the way the Russian government framed the invasion both to the world and to its own people is itself an illustration of the reasons why Ukraine is likely to succeed. Russia does not have a realistic vision or purpose to take it to victory, while Ukraine is increasingly cohering around a common purpose.

Overall, the dominant view in the Ukrainian media and among independent-minded Russian observers is that the dynamic phase of the conflict will continue for about another week to 10 days, after which the situation will settle to a static line of conflict with some kind of long-term truce, although possible localised attacks. There are a number of risks over the next few days, in particular around Kyiv and Odesa. However, there is growing conviction that Russia’s ability to make significant advances is becoming exhausted. The static line of conflict is likely to involve Russians holding a narrow land corridor from Crimea to the Donetsk and Luhansk “republics” along the coast, some border areas and possibly Kharkiv, although the defence of Kharkiv is going amazingly well given that it is only 30km from the Russian border.

Of course, Russia has a lot of resources and there will no doubt be tactical setbacks for Ukraine, but overall, I am not hearing any knowledgeable voices who think that Russia will be able to achieve any of its strategic objectives through conventional military means. The insights from the Ukrainian and Russian observers—which ring very true given my own experience with both countries—suggest that Russian failure can be explained by the following:

Intelligence

At the start of the war, there was a lot of concern that Ukraine was permeated by the Russian intelligence operatives and that there were many pro-Russian elements within Ukraine who could undermine defence. In fact, it appears to be almost the other way around. There appears to be evidence that elements within the Russian intelligence apparatus support Ukraine. The evidence generally cited includes: (i) that on the first morning of the war, when Russians sought to achieve a shock and awe effect of destroying key Ukrainian military installations and command and control centres, all sensitive equipment and troops were removed from the areas under attack; there were very few initial Ukrainian casualties and the command and control remained intact; (ii) Ukraine appears to have had remarkably good intelligence about the locations and plans of the elite Russian forces (including Chechens), to the point where a very high proportion of Russian casualties continued to be among the elite troops; (iii) Ukrainian home guards have been very effective at detaining Russian sabotage and assassination teams (although, as an aside here, it may have something to do with the nature of the Ukrainian society, which Russians clearly do not understand. When I lived in Kyiv, I was amazed at how village-like the atmosphere is even in the very big cities, with everyone knowing their neighbours and instantly identifying “outsiders”. As a result, even during the complete mess of the early 1990s, Kyiv remained largely free of street crime. I can easily see how local patrols would instantly spot unusual behaviour and presence)

Kleptocracy

We all knew that theft of public property is a Russian national past-time. However, for some reason, many Western military analysts assumed that kleptocracy would have only a limited effect on the Russian military. Even Russian observers who have spent years complaining about corruption are now saying they did not realise how bad things really were. It now appears that much of the modernisation of the Russian army was a sham: Potemkin show to report to the leader while siphoning off vast amounts from public procurement. The signs are everyone, both big and small: the Ukrainian army is reporting that military vehicles and tanks they are now capturing often appear to have been stripped of anything that could be sold on the civilian market (such as radios). The rations are expired. There has been a lot of speculation about why the Russian Airforce, which is infinitely superior to the Ukrainian one on paper, has been largely ineffective. There are various explanations relating to institutional weaknesses, but Russian observers are also pointing an even more obvious explanation: many planes are not operable due to theft of fuel, electronics and other valuables, while pilots are generally very poorly trained in part, again due to theft: fictitious flying hours allow fuel to be sold through the back door.

Continued reliance on Soviet command structures but without the Soviet means of terror

Outside a very small contingent of the elite troops, the Russian army does not allow or rely on initiative, with soldiers provided with very specific orders and not being informed about the tactical or strategic objectives. As a result, as the situation on the ground changes, the inability to adjust to the tactical situation leads to strategic blunders. The Russian column heading to Kyiv from the north is a prime example. One Russian observer describes it as the world’s first and biggest self-managed POW camp. In essence, the column set out following a plan that relied on assumptions which quickly proved to be wrong. But the officers and soldiers on the ground were not empowered to respond to the change in circumstances, leading to the column running out of food and fuel and congesting itself to a stand-still. In Soviet times, such institutional weaknesses were overcome in two ways: willingness to throw more and more bodies into the meatgrinder and the use of terror on anyone retreating or surrendering. However, while Putin has recreated much of the Soviet security state, he is clearly still operating under greater societal constraints than the Soviet leaders. There was wide speculation in Russia that the government would announce martial law and general mobilisation. However, Putin has been making repeated assurances to the public that this would not occur—even as it is becoming clear that the current level of commitment of troops and personnel is not sufficient to win.

Lack of understanding of Ukraine

One of my great personal joys has been to observe a complete cultural transformation of Ukraine over the last 30 years into a genuinely open and free society. When we lived in Kyiv in the early 90s, even though I could speak the languages, I felt completely alien. Now, the way the Ukrainian society works makes perfect sense. They have lots of problems, but these are the kinds of problems free societies deal with and they deal with them in the same way as any Western society would—through endless debate, criticism, annoying parliamentary manoeuvring and so on. This matters not just in terms of the Ukrainian motivation to fight (which has been well covered by the media) but also in terms of what it takes to capture and secure the country. Russians have clearly planned their take-over of Ukraine in the same way one would take over Russia—the focus was on capturing the main administrative buildings. Russians clearly continue to believe that Ukraine functions in the same centralised way as Russia, and do not understand just how decentralised and bottom-up the Ukrainian society has become. As a result, even in areas where Russians have substantially penetrated the Ukrainian territory, they only have minimal control. Kherson is a very good example. Russians proclaimed that they have captured Kherson because they have control of the city administration buildings. However, effectively, Russian troops are confined to those buildings with limited control over the city. This is amply illustrated by the footage of a major demonstration in Kherson on Saturday where crowds marched with Ukrainian flags around the streets, while Russians soldiers in the city administration building fired in the air. Russian attempts to assassinate Zelensky fall into the same basket: if Putin were killed, Russia would be transformed; if Zelensky is killed, Ukraine’s systems will continue functioning. Zelensky’s success has come from giving a public focus to the self-organisation of the Ukrainian society, not from issuing great orders.

Money

While Russia’s per capita GDP is higher than Ukraine’s, the extreme concentration of wealth in Russia and the theft of budget resources means that the average Russian (especially outside the glitter of Moscow) is a bit poorer than the average Ukrainian. With Russia’s economy shrinking under sanctions while Ukraine is receiving a lot of aid, Ukraine simply has more financial resources to mobilise its population. Ukrainians involved in the conflict are better paid, which also leads to better motivation and better ability to look after their families. A Russian professional soldier earns 62,000 roubles per month. This was USD900 before the war and is now around USD500 (and falling). The Ukrainian army is now paying USD3,000 per month to all active-duty personnel. Ukraine is also providing increased social assistance to the population. Despite being under attack, Ukraine’s economy is less stressed than in Russia’s. In addition, Russia’s isolation means that it has to rely on its own limited resources to re-supply the army. Ukraine is seeing a huge influx of both government and private resources.

While the current phase of the conflict is horrifying, this war is not new. It has been going on since 2014. Ukraine and Russia’s proxies have been locked in static battle around the line of control in Donetsk and Luhansk. So, once this current phase of the war re-enters the static stage, there is strong possibility that the situation will revert to the same creeping war we have seen since 2014. Ukraine will have suffered a lot of civilian casualties and material damage, and the conflict will be frozen over a much wider line of control, but overall Ukraine will emerge in a much stronger position. One should not under-estimate the boost to national confidence Ukraine has already enjoyed. This will be translated into greater reforms and even faster progress. Meanwhile, Russia will remain under truly crippling sanctions (rather than the token once since 2014). Russia will struggle economically, socially and culturally. Western money will flow into Ukraine, with both continued strengthening of the Ukrainian economy and its military. Cynical as it sounds, apart from the people trapped in the Russian controlled areas, there is every chance the outcome will be a win both for Ukraine and for the West. Russia will rave and rage and increasingly become China’s vassal state, but it has raved and raged, and has been falling under Chinese dominance for some time. If Putin secures a land bridge from Crimea to DNR and LNR, he may even declare a victory.  Eventually, Putin will die of old age and the change in leadership may serve as an opportunity for Russia to re-set its relationship with the world.

Of course, there are two possible alternative scenarios. One is that Putin escalates, including into nuclear confrontation. In fact, if Putin escalates, it almost has to be into a nuclear confrontation as Russia is quickly exhausting its conventional resources. This is mind boggling. We can only hope that there are limits to the orders that the Russian soldiers will follow.

The other, more realistic, fast-change scenario is a domestic revolt in Russia. A lot has been written about how Putin is well protected, there is no natural successor etc. It is all true. But here are some interesting considerations which have not received sufficient attention:

• Putin’s main power base are Federal Security Service (FSB )and Foreign Intelligence Service (SVR). Yet, the flow of Russian intelligence to Ukraine and the public humiliation of the head of SVR on national television during the National Security Council’s televised “discussion” of the invasion indicate that his hold on this power base may not be all that secure

• The decision to postpone the general mobilisation indicates that Putin still feels he needs support from the Russian middle class. Russia has general conscription, but the system is sufficiently corrupt so that the children of the elite and the middle class never serve. For now, those who run the government apparatus, the media, the education and science system know that their children are safe. If that changed, it is not clear if the Russian administrative and political system could survive

• The economic sanctions imposed by the West are much more severe than anyone thought possible, but what is even more amazing is the wide outpouring of voluntary sanctions from various companies. As the current round of sanctions really bites, the middle class may become significantly less supine

• Finally, casualties. Russians are going all out to hide the extent of their casualties from their population. But so did the Soviets in the 1980s, with much more total control over information sources. The Soviet Union lost 15,000 soldiers in Afghanistan in 10 years. The Soviet population was obviously much higher than the Russian population alone. There is debate about the number of Russian losses, but the term “decimated” is being used even by very cautious observers.

We will wait with sadness and horror. Once this is over, and I go back to what I have no doubt will remain free Kyiv, I have no idea how I will look my friends and business contacts in the eye given the suffering they went through and the pathetically little we could do. Moral indignation alone just does not cut it. But with every day I am seeing signs of Ukraine not just doing better than expected, but actually positioning itself for the post-war future.

I have long personal association with post-independence Ukraine, going back to 1992. My first visit to Kyiv was as member of staff of the International Monetary Fund in a team negotiating the initial stabilization agreement with Ukraine. From 1994 to 1997, I served as an IMF Resident Representative in Kyiv. Since leaving IMF, I have been working as an advisor on numerous infrastructure projects and transactions in Ukraine. In recent years (up until the start of the pandemic), I visited Ukraine three to four times a year, working closely with both the Poroshenko and Zelensky administrations. Most recently, I led a team of advisors helping with the sale of concessions for the ports in Kherson and Mykolaiv. I am fluent in Russian and have enough Ukrainian to read and follow conversations.

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