Putin vows to fight on, time for a new strategy to help Ukraine
Despite Trump's "big announcement" weapons and sanctions deal, nothing has changed. It's time to change tactics. Accelerate Ukraine's membership of the EU as that could push Putin out of office.
Russian President Vladimir Putin will ignore the US threat of secondary sanctions and fight on, regardless of the new Nato-purchased weapons on their way to Ukraine, Reuters reported citing several Kremlin sources.
These reports are usually very telling, as they are based on the sources of Guy Falconbridge, the Reuters Moscow bureau chief and a colleague of mine from Moscow in the 1990s who is still there. I also suspect that the Kremlin use Guy to talk to the West unofficially in the same way as the CIA use the Washington Post to talk about stuff without going official.
But there are no surprises here. Ukraine is nearly out of Patriot ammo and, as we have been reporting, there is little chance of getting significant new supplies before the end of the year. Indeed, there is little chance of ever getting enough to adequately protect itself.
This whole story has become very frustrating. US President Donald Trump was talking to journalists yesterday and said, “I'm on no one’s side,” which I think is exactly the way to understand it.
He went on to say that he is on the side of “humanity” and “wants to stop the killing.” But if that were true then he could deliver the 17 Patriot batteries to Ukraine tomorrow – a game changing number – from the 60+ batteries the US has in reserve. That’s not going to happen.
Everyone is skirting around the delivery timetable problem, unwilling to admit that Ukraine has been thrown under the bus for at least as long as the summer lasts. 50-days from now is September 2, when the autumn comes and the fields in Donbas turn to mud again. There will probably be another attempt at ceasefire talks then after Ukraine has pummelled during the dry weather.
The groveler-in-chief Nato General Secretary Mark Rutte has been pushing hard for an increase in defence spending – presumably on US arms – to 5% of GDP. No surprise there either as despite its multinational veneer, Nato remains a US-controlled organisation. EU foreign policy chief and former Estonian Prime Minister Kaja Kallas let the cat out of the bag by calling on the US to “share the burden” yesterday. That is not going to happen either.
In the meantime, there are lots of noisy meetings going on to paper over Ukraine’s deteriorating situation. German Chancellor Friedrich Merz is due in London tomorrow to talk immigration and defence. The latest buzzwords are “peace through strength,” but the coalition of the willing is looking very weak at the moment.
Embarrassingly, Slovak Prime Minister Robert Fico has dug his heels in and continues to block the passage of the eighteenth sanctions package until he gets an exemption from the plan to end all Russian gas imports completely by 2028. As we have argued, this is a nonsensical policy and Europe’s security is guaranteed and many of its economic problems are solved, if it just holds Russian gas imports to say 15% of the mix – a bit less than the current level.
The EU is cracking at the seams, as whatever unity there was at the start of the war is bleeding away. Hungary, Slovakia and Malta are in open rebellion. Poland has illegally banned Ukraine agricultural goods transits. And European Commission President Ursula von der Leyen is under attack by her allies in the EC. As we have been arguing since the first couple of rounds, all these sanctions packages have done more damage to Europe than to Russia thanks to the boomerang effect. And the scale of the proposed defence spending, which no one in Europe can actually afford, is only going to make this worse.
But sanctions have done some damage to the Russian economy. A report today says the Russian consumer boom that has been driving the strong growth is coming to an end, which will make budget problems, as VAT is the Kremlin’s main source of income these days. However, the Central Bank of Russia (CBR) just released its latest Talking Trends newsletter, which shows CBR governor Elvia Nabiullina’s plan is working and inflation is falling faster than expected, down from 10% in December to 9.4% now. That means she can give the economy a badly needed boost by starting to cut rates again – possibly as soon as this month.
In other words, it looks very likely that the Kremlin can keep this war up for years.
It’s time to stop it. Without the US participation, Ukraine cannot win. It can’t even not lose, which is actually the strategy of its partners. And despite the hurrah of Trump’s “big announcement” on July 14 the “some, but not enough” strategy has not changed: Germany still won’t send its Taurus missiles and from the few details Trump has given, he has also ruled long-range powerful missile sales for Ukraine.
The basic problem is Russia is now making 1,200 missiles a year whereas the US only makes about 600 Patriot rockets a year – a third of what Ukraine needs. And that is if Trump sends all those rockets to Ukraine, which of course he won’t do. Ukraine is churning out millions of drones a year in the drone war, which has kept it in the game. But now this is a missile war, Ukraine makes nothing that can bring down missiles so without the US it is defenceless.
Conceding 20% of its territory will be painful of course, but as we argued, it’s the Finlandisation of the conflict and that worked out well for Finland, that had to give up 10% of its territory.
The answer is for Ukraine to join the EU, and actually that is the way to defeat Putin as well, without firing a gun once. If you have spent any time in Russia, then you will realise what a shock it would be to Russians (who we should admit are pretty arrogant when it comes to patriotism, currently at an all-time high) if Ukraine’s standard of living overtook that of Russia’s.
I'm not sure Putin would survive it, and it is one of the very few options he have for destabilising his regime. He couldn’t hide it either, as every household in Russia has deep and intimate ties with Ukraine: friends, wives, cousins, grandfathers, etc who are from, or live in, Ukraine. Of all the countries that Ukrainians have fled to since the war started, the most are in Russia. At the very least, the Kremlin would be forced to soften its stance as the Russian people would get involved in the so-called “near abroad.” Millions would probably leave Russia and move to Ukraine in search of a better life…
Can you imagine the effect if Putin, the “saviour” of Russian and “bringer of stability” after the Yeltsin-chaos, failed to do as well as Ukrainian President Volodymyr Zelenskiy (or whoever replaces him). One of the reasons Putin is so popular – his ratings are currently over 80% -- is because for Russians, Ukraine is an object lesson in the misery and destruction that chasing European values can bring, reinforced by the poverty of Moldova, Georgia, and Kyrgyzstan, which have all been through coloured revolutions. But if those revolutions were actually made to work?
And it would work. The only successful reform strategy since the end of the Soviet Union in 1991 has been: “join the EU.” Look at Poland. Poland is booming and fast starting to replace Germany as the engine of European growth. Instead of wasting tens of billions of euros on rearming the EU, spending money on weapons that will never be used as the “danger” that Russia will invade Nato is a myth, we should be ploughing it into Ukrainian infrastructural transformation funds and the like. I saw Ireland blossom as it went through this process. Poland is going through it now and has already seen its economy double in size to the extent that all the Polish cleaning ladies that used to live in Berlin have gone home as life is better now than in Germany. And it's just starting to take hold in the Balkans which is also just starting to boom.
Ukraine’s EU accession process has begun, and I did a deep dive to get my head around what is on the agenda. It’s actually going well. The first stage screening of all its laws will be over in the next months and the legal basis for the workaday Internal Markets cluster is already well advanced and EU-compliant. Ukraine has also done a lot on the Green Energy cluster, thanks to putting green energy at the centre of its efforts to wean itself off Russian gas.
Less good is the Fundamental cluster that covers things like property rights, the judiciary and corruption, but that one was always going to be a problem for Ukraine. Also the Agricultural cluster is going to be very hard indeed, as the EU can’t take Ukraine in under the current rules; its agricultural sector is simply too big and would eat up €186bn of subsidies every year – more money than it has received from the US and EU combined in three years of war.
Still, the European Commissioner for Enlargement Marta Kos says there is a good chance that Ukraine could join as soon as 2030, which would be very fast indeed. Given the distortions Putin has introduced into his economy, and the fact that Russia will have to continue to spend heavily on defence after the war to rebuild its military stockpile, there is a good chance that the Russian economy will face stagflation that will allow Ukraine’s to go shooting past it very soon.
For me this strategy is a no-brainer, as, apart from anything else, it is easier to do and will definitely work. The strategy of arming Ukraine to allow it to fight a forever war goes nowhere.