Russia/Ukraine War Update - May 10th, 2022

*** MILITARY SITUATION ***

Intense fighting is continuing to rage in Ukraine’s east, the vital Black Sea port of Odesa in the south came under bombardment again, and Russian forces are seeking to finish off the Ukrainian defenders making their last stand at a steel plant in Mariupol.

The past 6 days has seen Ukrainian forces execute a limited counteroffensive north & northeast of Kharkiv that has produced significant results. Russian forces continue to struggle to gain ground from Izium to Popasna

Ukraine’s limited counteroffensive of 02-05 May north & NE of Kharkiv threatens to push Russian forces back across the border into Belgorod. Russian forces in the Kharkiv OD are to spread out and weak to reverse recent Ukrainian gains.

Russia cannot afford another major defeat and will likely have to repurpose reinforcements designated to the Main Effort along the Siverskyi Donets Line between Izium & Popasna or pull units from that direction to stabilize defensives in the Kharkiv OD.

Russian forces continue to struggle to achieve a general breakthrough along the Siverskyi Donets Line between Izium and Popasna. Along the Izium Axis Russian forces are stalled, unable to gain ground against Ukrainian hasty defensive positions.

Russian command posts remain vulnerable to Ukrainian strikes. Russian C2 nodes are not nimble, lack proper concealment, and struggle to mask their electronic signature. Ukraine targets Russian C2 nodes with great effect, crippling their ability to exercise command of forces.

 Russian forces are focusing artillery and air strikes in support of limited assaults on Orikhiv, Huilaipole, and Velyka Novosilka. The Ukrainian General Staff estimates the main Russia objective in the

 Orikhiv sits at the crossroads of several major roads and is a vital point of communication for an advance on Zaporizhzhia. It is likely that units still refiting and reorganizing from the Siege of Mariupol may be committed here in the coming days.

*** ECONOMIC & POLITICAL ***

-The May sell-off continued with the S&P 500 falling beneath 4,000 into the close while the Vix rose above 35. The downside was more a continuation of ongoing concerns, including recession fears, supply chain issues in China with its zero-COVID policy, global central bank tightening, and geopolitical woes rather than fresh newsflow. Losses were broad based with almost all sectors in the red, although Consumer Staples managed to close marginally in the green thanks to strong earnings from Tyson Foods (TSN) on higher food prices, which supported its competitors (K, NWL, CPB, SJM, CAG). Crypto was also slaughtered, seeing Bitcoin fall beneath USD 31k. The Dollar was choppy, but eventually flat, as it initially printed a fresh YTD high before paring into the red as yields declined with the curve bull steepening ahead of US CPI and supply this week. Commentary from Fed's Bostic was in focus: 75bps is not his base case, and he is going to stay open to the possibility inflation will be approaching target at a faster pace than his colleague's project. His baseline is for two-three 50bps hikes. Crude prices tumbled throughout the session as EU Russian oil embargo plans face resistance from Hungary, while the ongoing global demand woes and cuts to Saudi's June OSP's all weighed.

-Democrats will make a separate $10 billion coronavirus funding proposal so the nearly $40 billion in weapons and other aid to Ukraine could get approved more quickly ahead of a “critical” deadline, US President Joe Biden said on Monday. House Speaker Nancy Pelosi (D-California) originally had funding for Covid-19 treatments, tests and vaccines tacked onto the $33 billion proposal for supplemental aid to Ukraine. Republicans, who fully backed funding Ukraine but had a problem with how the Covid funding proposal would affect border policy, threatened to block it in the Senate.

-The European Union is planning to fund the operating expenses of the government in Kiev for at least three months, Politico Europe reported on Monday, citing diplomatic sources. The €15 billion would be raised through a new debt emission, using the template established for Covid-19 relief. Ukrainian President Volodymyr Zelensky has told the International Monetary Fund (IMF) he needed $7 billion per month ($1 = €0.95) to pay salaries, pensions and other government expenditures. The US has pledged to provide a third of that sum for the next three months. The EU intends to make up the difference with special bonds, according to Politico.

-President Joe Biden spoke with top U.S. intelligence and defense officials on Friday to stress the importance of their work but also said that recent news reports about U.S. intelligence sharing with Ukraine have been counterproductive, according to two administration officials. On the phone with CIA Director William Burns, Director of National Intelligence Avril Haines and Defense Secretary Lloyd Austin, Biden’s message was that such disclosures “distract from our objective,” one official said. The other official said Biden conveyed that the leaks should stop. The CIA and the Office of the DNI declined to comment. The Pentagon and the National Security Council did not respond to requests for comment.

-The US president signed the lend-lease Act in the Oval Office at the White House, in Washington, DC, saying the US supports Ukrainians’ “fight to defend their country and their democracy against Putin’s brutal war.” Acknowledging the billions of dollars already spent by the United States, Biden said “caving to aggression is even more costly.” The lend-lease act, streamlining the flow of military equipment, “is based on a WWII-era program to help Europe resist Hitler,” the White House said.

-Japanese Prime Minister Fumio Kishida has said that phasing out reliance on Russian oil will take time, as Tokyo will do its best to “minimize” the negative impact on businesses and the average person. The comments were made just after the Group of Seven (G7) agreed to target oil imports from Russia as part of sanctions over the military campaign in Ukraine.

-Lockheed Martin CEO Jim Taiclet said on Sunday that his company would nearly double production of their javelin missiles as the U.S. has sent hundreds of the weapons to aid Ukraine’s resistance to Russia’s invasion. “​​Right now, our capacity is 2,100 Javelin missiles per year. We’re endeavoring to take that up to 4,000 per year, and that will take a number of months, maybe even a couple of years to get there because we have to get our supply chain to also crank up,” Taiclet said on CBS’s “Face the Nation.” “We’re starting now to ramp it up because we have an active production line right now that the president saw,” he added, referencing President Biden’s recent trip to a Lockheed Martin facility in Troy, Ala.

Russia can count itself lucky here. Albeit it has provided the US an opportunity to ramp up its arm-production to drown Ukraine in, so far the US isn’t taking advantage. At least not where Javelins are concerned. Only a doubling of production is envisioned and over a very long time. Lockheed naturally doesn’t want to invest too much into capacity expansion that might then go idle if demand disappears. This wouldn’t be a problem if the US government took on that risk but so far it is not. However the real test will be what happens with artillery and drones, the truly important weapons of the war.

-Here is a translation of one of the key parts of Vladimir Putin’s speech, where he explained why he blames the west for forcing Russia to act. Reuters have this translation of the key passage:

Despite disagreements in international relations, Russia has always advocated the creation of a system of equal and indivisible security, a system that is vital for the entire international community. In December last year, we proposed the conclusion of an agreement on security guarantees. Russia called on the west to enter an honest dialogue, in search of reasonable compromise solutions, to take each other’s interests into account. It was all in vain. Nato countries did not want to listen to us, meaning that they in fact had entirely different plans, and we saw this. Openly, preparations were under way for another punitive operation in Donbas, the invasion of our historical lands, including Crimea. In Kyiv, they announced the possible acquisition of nuclear weapons, the Nato bloc began actively taking military control of territories adjacent to ours. As such, an absolutely unacceptable threat to us was systematically created, and moreover directly on our borders. Everything indicated that a clash with the neo-Nazis, the Banderites [Ukrainian Nazi sympathisers], backed by the United States and their junior partners, was inevitable.

-China’s president, Xi Jinping, has warned Germany’s chancellor, Olaf Scholz, that all efforts must be made to ensure the Ukraine conflict does not turn into an “unmanageable situation”, Chinese state media reports.

-Britain would support and provide assistance to Poland or any other central or eastern European country willing to supply Russian-designed jet fighters to Ukraine, the UK’s defence secretary has said. Ben Wallace said the UK would “stand by any country who makes that choice” and would “defend their right to do it” – although it is a step that no country has been willing to take for fear of Russian reprisals.

-After widespread weekend reports confirming that all Ukrainian civilians who had been trapped inside Azovstal steel plant in Mariupol have been evacuated, leaving an estimated few hundred Ukrainian fighters who have vowed to 'fight to the end', it appears the final bloody showdown for the large besieged complex has begun. Ukraine's defense ministry says Russia has commenced "storming operations" against the plant aimed at wresting its last Ukrainian defenders from its cavernous underground confines.

-U.S. gas prices have surged to the highest level in real terms since the financial crisis in 2008 as strong demand for LNG from buyers in Europe and Asia puts pressure on inventories. Front-month futures for gas delivered to Henry Hub in Louisiana are trading at almost $9 per million British thermal units, up from just over $3 at the same point last year and less than $3 in 2019.

-A combination of delayed plantings in Northern U.S. Plains and Canada due to soggy weather, a dry spell in Western Europe, chaos in Ukraine, and severe weather in India, have disrupted global wheat markets, sending prices in Minneapolis to the highest levels since 2008. Spring wheat is used to make bagels, pizza crust, rolls, and croissants, among other specialty items, which touched a 14-year high on Monday morning at $12.31 a bushel due to delayed planting fears across the northern U.S. Plains and Canada because of abnormally wet conditions.

-Russia’s RIA news agency is carrying some quotes from Kirill Stremousov, who they describe as deputy chairman of the military-civilian administration in Kherson. They report he said: We are not planning to hold a referendum and create a republic. Today, based on the opportunities we have, we will integrate as much as possible into the Russian Federation. Kherson region is to the north of Crimea, which Russia annexed after its 2014 invasion.

-World War Three is "more realistic" and "more probable" than Vladimir Putin gracefully accepting defeat to Ukraine, according to the editor of a top Russian state TV channel. Vladimir Putin is more likely to launch a nuclear World War 3 than accept defeat to Ukraine, a top Russian state TV editor has terrifyingly claimed. Margarita Simonyan, editor of state broadcaster RT, made the explosive remarks on TV on Wednesday night, stating that the Russian leader unleashing a nuclear strike is "more probable" than failure. The comments are one of many from Russia warning the West of "consequences" for interfering its ongoing invasion. Ms Simonyan said: "Either we lose in Ukraine or the Third World War starts. "I think World War Three is more realistic, knowing us, knowing our leader.

-Public displays of Russian and Ukrainian flags will be banned at 15 memorial sites in Berlin, including the iconic Soviet WWII memorial in the Treptower Park, during Victory Day celebrations on May 8 and 9, the city’s interior ministry has said on Friday. The move has sparked controversy after some German media and politicians, as well as the Ukrainian ambassador to Berlin, have deemed the decision “scandalous.” The idea behind the ban was that “commemoration of Germany’s liberation from the Nazis on May 8 and 9 1945 must be clearly separated from the situation in May 2022,” Berlin’s interior ministry said on Saturday, referring to the ongoing Russian military action in Ukraine.

-The Canadian prime minister, Justin Trudeau, made an unannounced visit today to the Ukrainian town of Irpin. Irpin was retaken from Russian troops in late March following fierce fighting.

-Ukraine’s foreign minister, Dmytro Kuleba, has said that he has discussed the unblocking of Ukraine’s food exports with the US secretary of state, Antony Blinken, in a bid to ensure global food security. Before the war Ukraine, one of the world’s major sources of grain and oilseeds, used to export most of its cereals through its Black Sea ports. But they have been blocked since Russia’s invasion on 24 February.

-CIA Director William Burns said the war is in a dangerous phase because President Putin “thinks he cannot afford to lose” . Burns said the huge amount of western military support for Ukraine was not a deterrent to the Russian President

-Former US intelligence officers are advising their successors currently in office to shut up and stop boasting about their role in Ukraine’s military successes. Two stories surfaced in as many days in the American press this week, citing unnamed officials as saying that US intelligence was instrumental in the targeting of Russian generals on the battlefield and in the sinking of the Moskva flagship cruiser on the Black Sea. The initial report in the New York Times on Wednesday about the generals was partially denied by the White House, which said that while the US shares intelligence with Ukrainian forces, it was not specifically shared with the intent to kill Russian general officers.

-Britain has pledged to provide another £1.3bn ($1.60bn) in military support and aid to Ukraine. The new funds will almost double Britain’s previous spending commitments to Ukraine.

-With supplies running low, amputations conducted in a ramshackle clinic, and corpses piling up, the fighters trapped at the besieged steel plant in Ukraine’s Mariupol are battling to hold on as Russian forces tighten their grip on the city’s last redoubt. A smattering of Ukrainian units making their last stand are sheltering in the labyrinth of Soviet-era bunkers and tunnels snaking beneath the sprawling steelworks along with an untold number of wounded and dead combatants. Details about the chaotic final defence and desperate efforts to tend to the wounded have been painstakingly pieced together by military medic Yevgenia Tytarenko, whose husband and colleagues remain trapped inside the factory.

Commanders have issued their final goodbyes to loved ones as supplies dwindle and the Russians close in, while the possibility of extracting the fighters looks increasingly unlikely, said Tytarenko. “Commanders have already said their farewells to their wives. One of them messaged his wife: ‘Don’t cry. We’ll be back home in any case - alive or dead’,” said Tytarenko. Tytarenko described a chaotic and complex operation inside Azovstal with fighters battling the Russians while also shepherding civilians along with the bodies of those killed to different parts of the plant. Without refrigeration, the bodies of the dead have been packed in plastic bags and are rotting, but the fighters remain committed to preventing them from falling into the hands of the Russian forces.

-On Saturday, six Russian cruise missiles fired from aircraft hit Odesa, where a curfew is in place until Tuesday morning. Videos posted on social media showed thick black smoke rising over the Black Sea port city as sirens wailed. The Odesa city council said four of the missiles hit a furniture company, with the shock waves and debris badly damaging high-rise apartment buildings. The other two missiles hit the Odesa airport, where the runway had already been taken out in a previous Russian attack.

-Ramzan Kadyrov, the head of Russia’s republic of Chechnya, said on Sunday his soldiers have taken control of most of the eastern Ukrainian city of Popasna, while Ukrainian officials said a battle for the town in the east of the country is ongoing.

-The Ukrainian government has said that it has destroyed another Russian ship. The ministry of defence claimed that Ukrainian Bayraktar TB2 had hit the landing craft of the Serna project