Russia/Ukraine War Update - July 16th, 2022

 *** MILITARY SITUATION ***

-The Russian Federation has launched a large-scale drive to form volunteer battalions in the 85 “federal subjects” (or regions) that comprise the federation. Recruiting for some volunteer battalions began in June but has intensified in July, with new volunteer units being reported daily. The battalions apparently will consist of roughly 400 men each aged between 18 and 60. They will belong to various branches of service including motorized rifle, tank, and naval infantry, but also signals and logistics. Recruits are not required to have prior military service and will undergo only 30 days of training before deployment to Ukraine.

-Russian forces are likely emerging from their operational pause as of July 15. Russian forces carried out a series of limited ground assaults northwest of Slovyansk, southeast of Siversk, along the T1302 Bakhmut-Lysychansk highway, southeast of Bakhmut, and southwest of Donetsk City. These assaults may indicate that Russian forces are attempting to resume their offensive operations in Donbas. The assaults are still small-scale and were largely unsuccessful. If the operational pause is truly over, the Russians will likely continue and expand such assaults in the coming 72 hours. The Russians might instead alternate briefer pauses with strengthening attacks over a number of days before moving into a full-scale offensive operation. A 10-day-long operational pause is insufficient to fully regenerate Russian forces for large-scale offensive operations. The Russian military seems to feel continuous pressure to resume and continue offensive operations before it can reasonably have rebuilt sufficient combat power to achieve decisive effects at a reasonable cost to itself, however. The resuming Russian offensive may therefore fluctuate or even stall for some time.

-Ukrainian HIMARS strikes have likely killed or wounded four Russian 106th Airborne Division deputy commanders. Russian news outlets reported the deaths of 106th Division’s deputy commanders Colonel Sergey Kuzminov, Colonel Andrey Vasiliev, and Colonel Maxim Kudrin, seemingly confirming Ukrainian claims that HIMARS strikes on Shaktarsk on July 9 killed or wounded a significant portion of the 106th's leadership. Ukraine’s Center for Strategic Communications claimed on July 12 that one unspecified 106th Airborne Division deputy commander remains in critical condition.

-M270 long-range multiple rocket launch systems have arrived in Ukraine, the Ukrainian defense minister announced on Friday. “They will be good company for HIMARS [high mobility artillery rocket systems] on the battlefield. Thank you to our partners. No mercy for the enemy,” Oleksii Reznikov tweeted.

According to the news outlet Ukrinform, the Norwegian government approved of the transfer of three M270 multiple rocket launchers to Ukraine, with Great Britain’s assistance. “The Norwegian systems need to be modernized, so Great Britain will receive and upgrade the Norwegian launchers before forwarding the already modernized systems to Ukraine,” Ukrinform reported.

-Rocket strikes launched by Ukrainian forces have destroyed more than 30 Russian military logistics centres in recent weeks and significantly reduced Russia’s attacking potential, Ukraine’s defence ministry spokesperson said on Friday. The official, Oleksandr Motuzianyk, emphasized the role played by American HIMARS rocket systems, one of several types of long-range weapon supplied by the West to assist Ukraine in its fight against Russian forces.

*** ECONOMIC & POLITICAL ***

-Ukrainian officials have confirmed that the US House of Representatives approved of $100 million in funding to train Ukrainian pilots to operate American aircraft as part of the National Defense Authorization Act. The pilots will be trained on F-15 and F-16 jets, according to Andriy Yermak, Ukrainian president Volodymyr Zelenskiy’s chief of staff.

-Citing a “highly volatile” security situation, the US embassy in Kiev has urged Americans not to visit Ukraine, and those already there to leave immediately. In a security alert published on Thursday on the embassy’s website, US citizens who are still in Ukraine have been strongly advised against attending large public gatherings. It emphasized that the “security situation throughout Ukraine continues to be violent and unpredictable,” claiming that “large gatherings and organized events” may “serve as Russian military targets” anywhere in the country. The alert warned that US citizens in Ukraine should not “rely on US government assistance” but instead act according to their own “contingency plan,” which has to be developed in advance.

-A U.S. Army veteran who independently and voluntarily fought in Ukraine warned on Thursday that the hardest days of fighting the war are still to come, as the Russian military tightens its control over territory in the eastern part of the country. Retired U.S. Army Staff Sgt. James Vasquez, who has returned from combat in the country but plans to go back, told the congressional Helsinki Commission during a briefing that while the Ukrainian military is better off now with increased foreign support, the most difficult fighting lay ahead for soldiers. “We have much more support now, and we have the weapons and gear that we need to be able to fight properly,” Vasquez said to the panel. “The fight’s harder than it was when I left. And that was hard fighting when I left.” Vasquez shared moving and oftentimes difficult details of his time in Ukraine at the hearing, alongside retired U.S. Marine Corps Lt. Col. Rip Rawlings, who is providing logistical support to the Ukrainian military through he and Vasquez’ foundation, Ripley’s Heroes. Vasquez, who has gained a social media following through the videos he shares from the battle’s front lines, said he has “pretty much sold everything I owned” so he can return to the fight in Ukraine.

-Hungary has military plans on how to protect ethnic Hungarians living in western Ukraine, Foreign Minister Peter Szijjarto has revealed. Budapest is ready to act in defense of 150,000 people it considers its own, he revealed in an interview on Friday. “Our country has prepared emergency war scenarios,” the minister told Index news website. He said the Hungarian government wanted to avoid using them, which is why it sought a peaceful resolution of the Russia-Ukraine armed conflict.

-Europe has “shot itself in the lungs” with sanctions aimed at Russia over its war in Ukraine, Hungarian Prime Minister Viktor Orban said on Friday. Orban, a nationalist who has ruled Hungary since 2010 and frequently clashes with Brussels, has been a fierce critic of European Union sanctions on Russian oil.In an address on national radio, Orban urged EU leaders to change the sanctions policy.

-A senior EU foreign affairs spokesman appeared to brush aside concerns by member states that weapons supplied to Ukraine were finding their way to the black market. In an interview published on Thursday by a Ukrainian news website, Peter Stano said the EU had “no reason not to trust” Kiev on the matter. The news outlet, Ukrinform, asked Stano for comments after “speculative assumptions have appeared” in the Western media “over the risk of smuggling the weapons supplied to Ukraine by Western partners.” Ukrinform didn’t specify which articles it was referring to. But the Financial Times reported on Tuesday that EU member states were concerned over the whereabouts of the arms. The British newspaper said Western nations want Ukraine to have a more robust system for tracking weapons it receives to fight Russia.

-Funds promised to Ukraine by the EU have been delayed due to concerns over the bloc’s own economic troubles and infighting in Brussels, Bloomberg reported on Friday, citing people familiar with the discussions. Back in March, the European Commission proposed a €9 billion ($9 billion) loan to Ukraine, set to be backed by guarantees from the governments of EU members. However, so far the bloc has managed to agree only on a first tranche worth €1 billion, which was unveiled on Tuesday. According to Bloomberg, the hold up is because Germany tried to convince the EU to provide non-refundable grants through the International Monetary Fund rather than loans to Kiev.

-Russia plans to create its own national oil benchmark in 2023 as a means to protect its oil export revenue while the West is stepping up sanctions against Russian oil, a document seen by Bloomberg News showed on Friday. Russia’s oil producers, its central bank, and relevant ministries are working to launch a national trading platform for Russian oil in October this year. The goal would be to attract enough foreign partners to buy Russia’s crude and generate enough volumes so as to set up a national oil benchmark at some point between March and July next year, according to the document Bloomberg News has seen. Russia’s efforts to create a national oil benchmark come as the Western allies are looking at ways to impose a price cap on Russian oil traded globally. The price cap is expected to hurt the huge oil revenues Vladimir Putin is currently getting from energy exports.Russia, for its part, is looking to protect its oil revenues, and one of the ways it has come up with is a national oil benchmark.

-Poland will purchase 116 used M1 Abrams main battle tanks from the US in order to backfill the armored vehicles it had delivered to Ukraine. Warsaw has reached an agreement on the matter with the White House, Polish Defense Minister Mariusz Blaszczak told news agency IAR on Friday. The agency reported that the first US-made tanks would be delivered early next year and replace more than 240 Soviet-era T-72 tanks, which Poland transferred to Ukraine in April. Poland initially hoped to replenish its stocks with German Leopard 2 tanks. But the planned deal failed to materialize, after which Polish President Andrzej Duda in May accused Berlin of breaking its word.

-The US House of Representatives has authorized $840 billion in defense spending in 2023, boosting President Joe Biden’s proposed record military budget by $37 billion. The annual National Defense Authorization Act (NDAA), which sets military expenditure, was passed on Thursday by a vote of 329-101. The bill offers $1 billion in aid to Ukraine, including a program to train Ukrainian pilots to fly F-15, F-16 and other US aircraft. The Ukrainians should familiarize themselves with US-made planes “while the administration continues to consider sending such equipment,” said a statement on Congressman Adam Kinzinger’s website last month. The bill also bans the supply of the F-16s to Turkey unless the US president guarantees to Congress that Ankara has not “violated the sovereignty of Greece, including through territorial overflights” for 120 days prior to the transfer.

-Brazilian President Jair Bolsonaro says he has figured out how to end the Russia-Ukraine conflict, but he won’t share his plan with anyone until he pitches it to Ukrainian leader Volodymyr Zelensky next week. “I'll tell him my opinion, what I think,” he told reporters on Thursday. “The solution to this, I know how it could be resolved, but I won't tell anyone.” The Brazilian leader is scheduled to speak with Zelensky by phone on Monday.

-House Democrats on July 13 voted to add an amendment to the National Defense Authorization Act (NDAA), the annual military spending bill, to identify “neo-Nazis” in the military and law enforcement. The NDAA amendment was sponsored by Rep. Brad Schneider (D-Ill.) and instructs the FBI, Department of Homeland Security (DHS), and Department of Defense (DOD) to publish a report analyzing “white supremacist and neo-Nazi activity” within military and law enforcement. The amendment passed in a 218–208 vote where it faced unilateral opposition from Republicans. “Such behavior, such extremism is a threat to us in all segments of society. There is no reason to believe that our military is any different,” Schneider said on the House floor late on the evening on July 13 in defense of the amendment. “These are exceptions,” Schneider insisted. “They are rare, but we must do everything we can to identify them and to thwart them before risks become a reality.” If the amendment is passed by the Senate, the FBI, DHS, and DOD would be required within 180 days to send Congress a report on the number of people discharged from either military service or law enforcement for “white supremacist” or “neo-Nazi” ideology.

-Russia is developing a new anti-satellite weapon that could soon disrupt Western spy satellites flying over its territory. The Space Review published a new report indicating "strong evidence that a space surveillance complex in Russia's northern Caucasus is being outfitted with a new laser system called Kalina that will target optical systems of foreign imaging satellites flying over Russian territory." Construction of the Kalina project began in 2011. In a 2014 financial document, Kalina's stated purpose was to "create a system for the functional suppression of electro-optical systems of satellites" using high-powered laser pulses. Another document from 2017 described Kalina as a "laser system for electro-optical warfare" and said it was a special quantum-optical system" being developed by the Rosatom state corporation. Kalina can permanently blind optical sensors on satellites, and this is different than other laser weapons known as "dazzlers," which can temporarily blind optic systems). Russia's desire to target satellites via a so-called 'soft kill' approach is a much different strategy than launching an anti-satellite missile, as it recklessly did in November 2021, knocking a defunct satellite out of orbit and, in return, generating 1,500 pieces of space junk. The report said, "the project has suffered numerous delays, but recent Google Earth imagery shows that construction is now well underway."

-Just last week the New York Times reported of a Russian strike 'on civilians' in Chasiv Yar even as its own reporter at the location acknowledged in a detailed separate report that the apartment complex that was hit was mostly housing military forces. The New York Times is again lamenting about a damage to civilian buildings even as the main target was obviously a military one.

-Dear Biden administration: for an example of a real emergency that justifies draining a commodity reserve - and not just midterm elections which Democrats will lose in a historic rout - read on. German energy giant and distressed nat gas utility Uniper, which is among the companies most exposed to Russian natural gas, has started using gas it was storing for the winter after Russia cut deliveries to Europe, increasing pressure on Berlin as the German energy giant needs to be rescued “in a few days.” The country’s top buyer of Russian gas started withdrawing fuel from storage sites to supply its customers, the company said in a statement to Bloomberg on Friday. The drawdowns, which began on Monday, will also help the company to save some cash as it has been forced to pay up for gas in the spot market. Meanwhile, flows through the Nord Stream 1 pipeline remain shut for maintenance.

-Chinese refineries’ throughput fell for the first time in more than a decade during the first half of the year, by 6 percent to 13.4 million bpd. In June alone, processing rates were higher than in May, but some 10 percent lower than the all-time high reached last year in June, Reuters said in a report citing official data. Oil imports also fell in June, according to data from energy analytics firm OilX—by 1.6 million bpd to 9.2 million bpd. On an annual basis, OilX analysts noted, the June average was about 1 million bpd lower than what China imported in crude oil in June 2021. They noted, however, that despite the recent series of lockdowns because of Covid flare-ups, China’s oil imports were remarkably stable over the past few months. Chinese oil production rose during the first half of the year, by 4 percent from a year ago, with the daily average at 4.15 million bpd. In June, domestic output hit an all-time high of 4.18 million bpd. Refinery runs have suffered from Covid restrictions since the start of the year as Beijing maintained its zero-Covid policy and by fuel export restrictions the government has imposed on refiners.

-Saudi Arabia has a thirst for heavily discounted Russian diesel and other fuel products banned by many countries in the West. The world's largest oil exporter more than doubled the amount of Russian fuel oil in the second quarter to supply power generation stations to meet surging cooling demand this summer and allow the kingdom's crude exports to increase. Western sanctions forced Russia to discount fuel oils on spot markets, which has increased demand in the East, not just from the Saudis but also from China and India.

-North Korea has slammed Ukraine’s decision to sever diplomatic ties between the two nations.

-The rate on a 30-year fixed mortgage rose to 5.51% from 5.30% and while it's lower than it was in late June, the average rate is still more than 2 points higher than at the start of 2022.

-Copper has suffered its worst weekly plunge in price since the early months of the coronavirus pandemic, in a stark indicator of the worsening state of the global economy.

-Ukraine could push Russian forces back to its pre-war borders by 2023 — wiping out its territorial gains — because President Vladimir Putin's troops are "exhausted," a retired US general said on Thursday. Lt. Gen. Ben Hodges, the former commanding general of the US Army in Europe, told Insider that Ukraine's ability to push Russian troops back to the existing borders depends on continued Western support through sanctions and weapons deliveries. "The Russians are exhausted," Hodges said. "They don't have much else they can do right now."

-Russia has banned investigative news outlet Bellingcat and its partner The Insider. Russia’s prosecutor general said their activities “posed a threat to... the security of the Russian federation”. A statement said both organisations will be added to Russia’s “undesirable” list, which bans them from operating in Russia and makes cooperating with them illegal for Russian organisations and individuals. Bellingcat founder Eliot Higgins questioned how it can be applied, given that it has no official presence in Russia

-India has reported its first monkeypox case as the World Health Organization (WHO) plans to convene an emergency meeting over the global outbreak next week. The patient is a 35-year-old man who had returned from the UAE to the southern Indian state of Kerala on July 12, Veena George, the state health minister, said on Thursday.