Russia Likely To Escalate As Losses Pile Up

In another possible defeat, Russia’s some 20,000 forces allegedly have been ordered to withdraw from Kherson this week to the other side of the Dnipro River. Despite large numbers of Russian forces, constant attacks from Ukrainian forces are wreaking havoc on Moscow’s undersupplied military. Kherson is important symbolically as well because it was the first - and only - regional capital Russia managed to occupy and hold in its invasion. The withdrawal was announced by the Russian Defense Ministry, citing the inability to keep the region supplied and secure amid a concerted Ukrainian push to cut off supply lines.

The withdrawal announcement, which came from the Russian Defense Ministry, has not been confirmed by the Ukrainians, who said on Wednesday that they had not yet seen an indication of withdrawal and that fighting continued. The Kremlin confirmed on Thursday that it had begun withdrawal.

We are inclined to err on the side of caution here. Russian forces may withdraw; however, the likelihood is that they are preparing for another, bigger attack on Ukraine’s critical infrastructure, which hasn’t seen any major attacks since October 31st. Ukraine is viewing the alleged withdrawal from Kherson as a distraction from the stockpiling of weapons for an aerial bombardment of infrastructure. There is also concern that due to the significance of Kherson (which Russia has attempted to annex), a withdrawal could indicate a drastic measure along the lines of a scorched-earth strategy. 

We also haven’t yet seen the results of what is a complete restructuring of the Russian government by Putin. The security services botched the invasion of Ukraine, and now the onus is going to rest on regional governments who have been given a great deal more power on a war-time economy footing- depending on where they are located and their geographical significance to the occupation. But most significantly, there is now a “Coordination Council” that is emerging as a body with a great deal of power - and it’s all about coordinating the war effort. 

If we are looking for indications as to what might come next, it’s this council - not the security services or the Defense Ministry - that will be important going forward. It will be about rallying the regions to force manufacturers to produce for the military, from equipment to food and other supplies. Though informally, it sounds like economic mobilization for the war through new civilian leadership. 

Russia’s draft budget for 2023-2025 indicates the war is going to be a long one. And an expensive one, with over $86 billion already spent on the “special operation” in Ukraine this year.  

Anytime Putin experiences a loss, he responds with an escalation, so we do expect another big push to come on top of the bombardment of Ukraine’s energy infrastructure intended to make winter unbearable. Another form of escalation is nuclear, with U.S. Navy intelligence reports indicating Russia is possibly preparing to test a nuclear-powered torpedo but also suggesting testing has been delayed, potentially due to technical difficulties. 

So, how to lead the world into WWIII? Use Iranian drones on the Ukrainian battlefield and leak details of the secret deals to obtain them at a time when Iran is seething from unrest and backed into a corner from which it can only escalate.