SITUATION IN UKRAINE: 14 – 21 June 2023

At the front, the Armed Forces of Ukraine are advancing in the southern (Zaporizhzhia-Kherson) direction. For two weeks of offensive operations in the Berdyansk and Melitopol directions (in the Zaporizhzhia region), 8 settlements were liberated: Novodarivka, Levadne, Storozheve, Makarivka, Blagodatne, Lobkove, Neskuchne, Pyatikhatki. Pyatikhatki is a village from which you can attack the city of Vasylivka and the city of Energodar. Ukrainian troops in the Zaporizhzhia direction advanced to a depth of 7 km, the area liberated in the south is about 120 square kilometers. On the Vremievsky ledge near Velyka Novosilka, the RF Ministry of Defense announces Ukrainian attacks in the areas of the settlement of Rovnopol and the settlement of Urozhayne. Also, the Ukrainian military announced the advance near the town of Ugledar in the area of the settlement of Pavlivka.

The RF Armed Forces are conducting offensive operations in the Limansky and Kupyansky directions, trying to seize the initiative. The high activity of attacks is fixed.

Russia considers a major Ukrainian attack across the Dnipro after the explosion of the Kakhovska hydroelectric power station unlikely and is transferring military personnel from the Kherson direction to Zaporizhzhia and Bakhmutske. The undermining of the Kakhovska hydroelectric power station can be considered an element of defense (providing a flank) on the part of the RF Armed Forces, aimed at disrupting or hindering the Ukrainian counteroffensive. At the same time, after the flooded soil and shallowed riverbed have dried up (2-4 weeks), the Armed Forces of Ukraine will again have the possibility of a landing operation, which will be simplified by the narrowed riverbed.

The Ukrainian counteroffensive is still in its initial phase. The key reserves accumulated by Ukraine for the counteroffensive have not yet been used. And now Ukraine is simultaneously trying to stretch the front line and expose weaknesses in Russian defense. During the counter-offensive, Ukraine faced a layered Russian defense. The first line of defense of the Russian Federation is significantly strengthened by the installation of mines, artillery, and front-line aviation.

The absence of the introduction of the main reserves (especially tank brigades) into battle, as well as the slow pace of the offensive, most likely indicate that the Armed Forces of Ukraine have not yet managed to break through the first line of defense of the Russian army. Identification of the Armed Forces of Ukraine of weak points in the defense of the Russian Federation, most likely, will be completed within 2-3 weeks. After that, we should expect the possible introduction of the main masses of reserves into battle in promising areas, which can be considered: the direction of attacks along the Dnipro to the Zaporizhzhia and Kherson regions. From the line Ugledar - Gulyaipole - Orikhiv - Vasylivka in the direction of Melitopol - Genichesk (or in the direction of Melitopol - Berdyansk), with a side impact branch to Nova Kakhovka (to encircle Energodar and restore control over the Zaporizhzhia nuclear power plant).

In general, in Ukraine, they insist that to conduct a successful counter-offensive, it is necessary to speed up and increase the supply of weapons. Now at the front of the Russian Federation, it has an advantage in artillery and aviation, which cause the main damage to the forces of the Armed Forces of Ukraine. On June 15, a regular meeting of the allied countries was held in the Ramstein format (the meeting has already become 13 in this format), the main topic of discussion was the "aircraft coalition", training of Ukrainian pilots, and strengthening air defense. Allied countries said that the training of Ukrainian pilots on F-16 aircraft has already begun, after which it will be possible to deliver aircraft to Ukraine, but the delivery dates were not announced.

One of the most important is the issue of the supply of shells and weapons, which already exist in Ukraine. As a result of the increase in Russian missile attacks (it uses both attack drones and cruise and ballistic missiles), Ukraine needs additional supplies of air defense systems like Patriot, NASAMS, and SAMP/T. The supply of new Leopard tanks was also discussed, it is known that Ukraine will receive 14 more Leopard 2 tanks.

With a high degree of probability, the terms of Ukraine's membership in the Alliance will not be announced at the upcoming July summit in Vilnius. And Ukraine will be offered a "compensatory political package" in the form of assurances about the possibility of acquiring NATO membership after the war, additional military-technical assistance.

Thus, NATO Secretary General J. Stoltenberg once again stressed that Ukraine will not receive an invitation to join the Alliance at the upcoming summit in Vilnius since the NATO countries do not discuss this when preparing for the event. J. Stoltenberg announced the adoption at the summit of a multi-year plan for military supplies to Ukraine and the creation of the Ukraine-NATO Council for joint consultations on security issues.

Also, the thesis that "Ukraine will join the EU and NATO" after the war can be used as an instrument of covert pressure on the Ukrainian leadership to push for negotiations.

Until the end of the Ukrainian counter-offensive, any constructive peace talks between Ukraine and the Russian Federation are impossible. But behind the scenes, the world community is already actively considering various options for ending hostilities. In particular, the leadership of African countries, along with China, Turkey, and the Pope aspires to the role of mediators and peacekeepers. So the delegation of African countries presented their peace plan in Ukraine and the Russian Federation. African countries have suffered greatly as a result of the war in Ukraine, in particular, due to anti-Russian sanctions, restrictions on the export of Russian and Ukrainian food and fertilizers, and so on.

The visit of the African delegation coincided with the beginning of the Ukrainian counteroffensive.

It is worth noting that since the beginning of the full-scale war in Ukraine, most African countries have taken either a neutral or pro-Russian position; but they are interested in preserving Ukraine in African food markets, which is a factor of political stability in the region.

As for other reasons for the visit of the African delegation to Ukraine. It can be noted that the most interested party in the visit to Ukraine is South African President Cyril Ramaphosa, whom the United States accuses of supplying weapons to the Russian Federation. A bipartisan group of U.S. congressmen has demanded a review of South Africa's trade incentives, which would greatly harm the South African economy.

According to various sources, the African peace plan implies the withdrawal of Russian troops in exchange for easing sanctions, and according to others - a truce without the withdrawal of Russian troops. The parties to the conflict (Ukraine and the Russian Federation) expectedly confirmed their adherence to their previous positions.

President of Ukraine V. Zelensky once again confirmed that he would not go to the "freeze" of the conflict, and peace negotiations are possible only after the withdrawal of Russian troops from all Ukrainian territories.

The President of the Russian Federation V. Putin, for his part, once again transferred the responsibility for stopping the peace talks to the Ukrainian side. And he repeated that the Russian Federation was supposedly ready for negotiations, but Ukraine back in March 2022 refused to sign the previously agreed Istanbul Treaty. In addition, the Russian Federation, make it clear that they do not intend to negotiate the fate of the already occupied territories (Donetsk, Luhansk, Kherson, and Zaporizhzhia regions). The Russian Central Election Commission has officially announced "elections" there, which will be held on September 10, 2023.

In general, the situation with peace negotiations and the degree of possible compromises will largely depend on the situation at the front and the progress of the counteroffensive of the Ukrainian troops.

At a conference in London (21-22 June) the Government of Ukraine will present the most promising areas for investment in the restoration of Ukraine. The London conference should play a decisive role in attracting and accumulating investor funds (mainly from the G7 countries). According to World Bank estimates, Ukraine will need at least $411 billion to restore. As a result of the conference in London, the government expects the conclusion of several important agreements, memorandums, and declarations aimed at the restoration and development of the country.

But it is expected that the reconstruction projects presented by Ukraine will face the distrust of potential donors due to the ongoing war, as well as accusations of corruption within the power team. So in July last year in Lugano, Switzerland, during an investment conference, a plan for the restoration of Ukraine was presented - $750 billion for 10 years. But funding for it was not allocated.

It can also be assumed that a kind of "bride-in" of a candidate for the post of head of the new Government of Ukraine will take place behind the scenes in London. In particular, from the delegation, the main contenders for this post are - Vice Prime Minister for Innovation, Development of Education, Science, and Technology - Minister of Digital Transformation of Ukraine - Mykhailo Fedorov, Deputy Prime Minister, Minister of Infrastructure and Regional Development A. Kubrakov, Deputy Head Office of the President for Economic Policy R. Shurma, Minister of Economy Yu. Svyrydenko may also be a possible candidate for the post of future prime minister.

The European Union promises to cover 45% of all Ukraine's financing needs until 2027 and is ready to offer a financial assistance package worth about 50 billion euros. The European Commission offers assistance in the form of grants, soft loans, and guarantees. But the funds will be provided on the condition that Ukraine implements reforms aimed at improving the rule of law and fighting corruption.

Despite martial law and the moratorium, utilities in the country continue to grow. The Cabinet of Ministers approved an increase in the electricity tariff for the population from June 1 to UAH 2.64/kWh. Energy Minister German Galushchenko noted that such a decision entailed the destruction and damage of energy infrastructure as a result of Russian airstrikes.

Previously the tariff was UAH 1.44/kWh for consumption up to 250 kilowatts, and UAH 1.68/kWh for more than 250 kilowatts. At the same time, it is possible that this increase in tariffs for the population will not be the last. According to the National Commission for State Regulation in the Spheres of Energy and Utilities (NERC), this is still below the cost, according to the regulator's calculations, the cost of electricity is 5.5-6 hryvnia per kilowatt.

NERC has already raised the distribution tariff for oblenergos, which will not directly affect the price tags for electricity for the population. But it will directly affect tariffs for businesses, which will increase by an average of 5%. The upgrade will take place in several stages. The first is from June 1st to June 30th. For 22 oblenergos, the tariff will increase by 7.5-28.1% for the first class of voltage and by 6.9-25.5% for the second. The second stage is from July 1 to December 31. During this time, the tariff will increase for 27 oblenergos, including those located in the front-line territories. The increase in the cost of electricity for businesses will increase the cost of production and, as expected, will lead to a new round of inflation - an increase in the cost of goods and services.

The Russian Federation intends to stop the operation of the grain corridor, which will greatly complicate the export of Ukrainian agricultural products, 75% of which is exported through ports. So Deputy Foreign Minister of the Russian Federation Sergey Vershinin announced that the grain deal will cease to exist on July 18. Earlier, the head of the press service of the Russian president, Dmitry Peskov, said that the part of the grain deal concerning Russia was never completed, so de facto there are no prospects and grounds for its extension. The export of agricultural products brings 53% of export profits to the budget of Ukraine. At the same time, ports remain the main way to export grain and, accordingly, a source of foreign exchange earnings for Ukraine. From the beginning of the functioning of the grain deal on August 1, 2022. until the end of May 2023, Ukraine exported 60 million tons of agricultural products, of which about 45 million tons (75%) were exported through ports and only about 15 million tons were exported by other means of transport. The operation of the "grain corridor" for 10 months was supposed to bring Ukraine - about $ 13.5 billion.

Military situation

Combat actions.

The situation in the Kharkiv region: In the Kupyansk direction, attacks were repulsed near the settlement Berestove of Kharkiv region.

In Donbas: The Armed Forces of the Russian Federation stopped actively advancing in the Limansky, Bakhmutsky, Maryinsky, Avdiivsky, Shakhtarsky (Ugledarsky) directions. The main local clashes are taking place in the areas of the cities of Bakhmut, Maryinka, and Avdiivka. The attacks of the RF Armed Forces were repulsed in the area of the settlements of Bilogorivka, Novoselovsky, and Spirne in the Luhansk region. In the Donetsk region attacks were repelled - in the areas of the settlements of Yampolivka, Stepne, Torske, Grygorivka, Orikhovo-Vasylivka, Novomykhailivka, Krasnogorivka, and Peremoha.

The situation in the South: in two weeks of offensive operations in the Berdyansk and Melitopol directions (in the Zaporizhzhia region), the Armed Forces of Ukraine liberated 8 settlements: Novodarivka, Levadne, Storozheve, Makarivka, Blagodatne, Lobkove, Neskuchne, Pyatikhatki.

Black Sea-Azov direction: without significant changes.

Combat map.

Domestic policy.

The economic situation in the country.

Despite martial law and the moratorium, utilities in the country continue to grow. The Cabinet of Ministers approved an increase in the electricity tariff for the population from June 1 to UAH 2.64/kWh. It is reported that Energy Minister German Galushchenko urgently submitted this resolution to the Government for consideration. He noted that such a decision entailed the destruction and damage of the energy infrastructure as a result of Russian airstrikes.

Previously the tariff was UAH 1.44/kWh for consumption up to 250 kilowatts, and UAH 1.68/kWh for more than 250 kilowatts.

At the same time, it is possible that this increase in tariffs for the population will not be the last. According to the National Commission for State Regulation in the Spheres of Energy and Utilities (NERC), this is still below the cost, according to the regulator's calculations, the cost of electricity is 5.5-6 hryvnia per kilowatt.

Three tariffs are currently in force in Ukraine: two "social" tariffs for the population and one market tariff for business. The price for legal entities, which includes the cost of electricity, VAT, and the tariff for distribution, transmission, dispatching, and supply, exceeds UAH 6 per kWh.

NERC has already raised the distribution tariff for oblenergos. The upgrade will take place in several stages. The first is from June 1st to June 30th. For 22 oblenergos, the tariff will increase by 7.5-28.1% for the first class of voltage and by 6.9-25.5% for the second. The second stage is from July 1 to December 31. During this time, the tariff will increase for 27 oblenergos, including those located in the front-line territories. The increase in tariffs for oblenergos does not affect the price tags for electricity for the population. But they directly affect tariffs for businesses, which will increase by an average of 5%. The increase in the cost of electricity for businesses will increase the cost of production and, as expected, will lead to a new round of inflation - an increase in the cost of goods and services.

Raising prices for the population for hot water, gas, and heating is not yet planned. But by autumn, a rise in the price of cold water is expected, at least by -10% (the moratorium on increasing utility tariffs does not apply to cold water). In addition, tariffs for cleaning the adjacent territory, garbage collection, etc. are increasing.

Grain deal.

In Russia, they intend to stop the operation of the grain corridor. So Deputy Foreign Minister of the Russian Federation Sergey Vershinin announced that the grain deal will cease to exist on July 18. “We are working to ensure that July 18 is the time for the completion of those agreements that are not being implemented,” said S. Vershinin. Earlier, the head of the press service of the Russian president, Dmitry Peskov, said that the part of the grain deal concerning Russia was never completed, so de facto there are no prospects and grounds for its extension.

In Ukraine, it has been repeatedly stated that the Russian Federation is sabotaging the work of the grain corridor and blocking the registration of ships for the export of grain since mid-April. As a result, some ships may have to wait more than 3 months for inspection.

The extension of the grain deal is extremely important for Ukraine, especially against the background of the decision of the European Commission, which imposes a ban on the most exported products from Ukraine - they account for 35% of all export profits of Ukraine.

The export of agricultural products brings 53% of export profits to the country's budget. At the same time, ports remain the main way to export grain and, accordingly, a source of foreign exchange earnings for Ukraine. According to the data of the Ministry of Agrarian Policy and Food, from the beginning of the functioning of the grain deal on August 1, 2022. until the end of May 2023, Ukraine exported 60 million tons of agricultural products, of which about 45 million tons (75%) were exported through ports and only about 15 million were exported by other means of transport. In particular, railway - 9.6 million tons; automobile - 4.8 million tons; ferries - 0.55 million tons. On average, every month Ukraine can export up to 3.5-4 million tons of grain, which is about $1.2 billion. Or, on average, it is about $300,000 per 1 million tons of products. Thus, the operation of the "grain corridor" for 10 months should have brought Ukraine - about $ 13.5 billion.

 

Donor Conference for the Reconstruction of Ukraine in London.

A conference on the restoration of Ukraine will be held in London on June 21-22. It is known that at the conference the government will present the most promising areas for investment, and an important step will be taken in the issue of insurance of military and political risks for investors.

Prime Minister Denys Shmyhal said that during the conference, the authorities will focus on three main aspects: rapid recovery, the attraction of private investment, development of regions. According to World Bank estimates, Ukraine will need at least $411 billion to restore.

As a result of the conference in London, the government expects the conclusion of several important agreements, memorandums, and declarations aimed at the restoration and development of the country.

Their projects during the conference should be presented by:

• Vice Prime Minister for Innovation, Development of Education, Science, and Technology - Minister of Digital Transformation of Ukraine - Mykhailo Fedorov.

• Deputy Prime Minister, Minister of Infrastructure and Regional Development - Alexander Kubrakov, and his deputy - Alexandra Azarkhin.

• Deputy Chairman of the Office of the President Rostislav Shurma.

• Minister of Economy - Yulia Svyrydenko and her deputy - Alexander Griban.

• Minister of Social Policy - Oksana Zholnovich.

• Energy Minister German-Galushchenko.

• Minister of Finance - Sergei Marchenko.

The process of preparation for the conference was coordinated by Deputy Head of the Presidential Office for Economic Policy Rostislav Shurma, the Office of Reforms of the Cabinet of Ministers, and individual ministries were also involved. It is known that he will present a transformation program in 2050 worth $400 billion.

The London conference should play a decisive role in attracting and accumulating funds from potential donors (mainly the G7 countries). In addition, it can be assumed that behind the scenes in London, there will be a kind of "bride-in-law" of a candidate for the post of head of the new government of Ukraine. In particular, from the delegation, the main contenders for this post are - Vice Prime Minister for Innovation, Development of Education, Science, and Technology - Minister of Digital Transformation of Ukraine - Mykhailo Fedorov, Deputy Prime Minister, Minister of Infrastructure and Regional Development A. Kubrakov, Deputy Head Office of the President for Economic Policy R. Shurma, Minister of Economy Y. Svyrydenko may also be a possible candidate for the post of future prime minister. But Ukraine is expected to face mistrust with the ongoing war and accusations of corruption within the power chain.

At the same time, it is already known that the United States will provide Ukraine with $1.3 billion to repair the energy system and help enterprises. The UK will provide an approximately $306 million bailout package and another $3 billion over three years. Germany will provide Ukraine with €381 million in humanitarian aid.

France is allocating €40 million for the restoration.

Latvia is transferring its entire fleet of helicopters to Ukraine.

Latvia - all available Stinger anti-aircraft missile systems and is preparing to complete the transfer of all its helicopters.

The European Union promises to cover 45% of all Ukraine's funding needs until 2027. The EU is ready to offer a financial assistance package worth about 50 billion euros to support Ukraine for the next four years, as stated by European Commission President Ursula von der Leyen. According to her, “ the deficit in the Ukrainian tax system will be about €60 billion. The need for a quick recovery will be about €50 billion. This means that the deficit as a whole will be €110 billion until 2027. " A €50 billion aid package will help finance the Ukrainian government's operating expenses and pay for urgent reconstruction priorities. Unlike previous financial packages for Ukraine, the plan will be funded by Member State contributions rather than market loans. The European Commission offers assistance in the form of grants, soft loans, and guarantees. Funding will be provided on the condition that Ukraine implements reforms aimed at improving the rule of law and fighting corruption.

The situation around Ukraine.

Peace negotiations.

Last week, a delegation of African countries arrived in Ukraine to meet with President Zelensky and presented their peace plan. According to various sources, it implies the withdrawal of Russian troops in exchange for easing sanctions, and according to others - a truce without the withdrawal of Russian troops. As we wrote earlier, there are now two main groups of negotiators in the world. The first, led by China (which includes Turkey, the Vatican, and third-world countries), insists on a cessation of hostilities and the resumption of negotiations. Which may mean the loss of part of its territories by Ukraine, which is more beneficial for the Russian Federation. The second group (Ukraine, the United States, and European countries) adheres to the position of de-occupying all the occupied territories of the Russian Federation, and only after that, it is possible to start negotiations with the Russian Federation.

It is worth noting that since the beginning of the full-scale war in Ukraine, most African countries have taken either a neutral or pro-Russian position. Now their visit has coincided with the start of the Ukrainian counter-offensive. Members of the delegation include representatives from all parts of Africa and different political courses - the President of South Africa and the representative of Uganda (pro-Russian views), Zambia, Comoros (pro-Western), Egypt, Congo, and Senegal (neutral).

President of Ukraine V. Zelensky once again confirmed that he would not go to the "freeze" of the conflict, and peace negotiations are possible only after the withdrawal of Russian troops from all Ukrainian territories.

Interestingly, during During the visit of African guests, Kyiv was subjected to a major missile attack, and an air raid alert was declared in the city. But the reaction of the African delegation showed that they did not intend to peddle the topic of air raids.

The next day, the African delegation went to the Russian Federation to meet with V. Putin. The Russian president once again pointedly shifted the responsibility for stopping the peace talks to the Ukrainian side. And he repeated that the Russian Federation was supposedly ready for negotiations, but Ukraine back in March 2022 refused to sign the previously agreed Istanbul Treaty. According to him, then Ukraine was ready to discuss with Russia the size of its armed forces, permanent neutrality, and security guarantees. In Ukraine, the authenticity of these statements has not been confirmed. In addition, the Russian Federation, make it clear that they do not intend to negotiate the fate of the already occupied territories (Donetsk, Luhansk, Kherson, and Zaporozhzhia regions). The Russian Central Election Commission has officially announced " elections " there, which will be held on September 10, 2023.

As for the main reasons for the visit of the African delegation to Ukraine. It can be said that the most interested party in the visit to Ukraine is South African President Cyril Ramaphosa, whom the United States accuses of supplying weapons to the Russian Federation. A bipartisan group of U.S. congressmen has demanded a review of South Africa's trade incentives, which would greatly harm the South African economy. African countries also suffered greatly as a result of the war in Ukraine, in particular, due to anti-Russian sanctions, and restrictions on the export of Russian and Ukrainian food and fertilizers.

But in general, the leadership of African countries is striving for the role of mediators and peacekeepers along with China, Turkey, and the Pope, so the visit to Ukraine is rather demonstrative.

At the same time, before the end of the Ukrainian counter-offensive, any constructive negotiations between Ukraine and the Russian Federation are impossible. The situation with peace negotiations and the degree of possible compromises will largely depend on the situation at the front and the advancement of Ukrainian troops.

Weapon deliveries.

On June 15, a regular meeting of the Allied countries was held in the Ramstein format (the meeting has already become 13 in this format), the main topic of discussion was the "aircraft coalition", training of Ukrainian pilots, and strengthening air defense. In general, Ukraine insists that to conduct a successful counter-offensive, it is necessary to speed up and increase the supply of weapons.

Now at the front of the Russian Federation, it has an advantage in artillery and aviation, which cause the main damage to the forces of the Armed Forces of Ukraine.

NATO said that the training of Ukrainian pilots on F-16 aircraft has already begun, after which it will be possible to supply aircraft to Ukraine, but the delivery dates were not announced.

One of the most important is the issue of the supply of shells and weapons, which already exist in Ukraine. As a result, of the increase in RF missile attacks (using both strike drones and cruise and ballistic missiles), Ukraine needs a larger air defense system like Patriot, NASAMS, and SAMP/T. The supply of new Leopard tanks was also discussed, it is known that Ukraine will receive 14 more Leopard 2 tanks.

So far, there is no consensus on future security guarantees for Ukraine. Most likely, Ukraine is unlikely to receive guarantees at the level of Article 5 of the NATO Charter even after the end of the war.

With a high degree of probability, the terms of Ukraine's membership in the Alliance will not be announced at the upcoming July summit in Vilnius. And Ukraine will be offered a "compensatory political package" in the form of assurances about the possibility of acquiring NATO membership after the war, additional military-technical assistance.

Thus, NATO Secretary General J. Stoltenberg once again stressed that Ukraine will not receive an invitation to join the Alliance at the upcoming summit in Vilnius since the NATO countries do not discuss this when preparing for the event. J. Stoltenberg announced the adoption at the summit of a multi-year plan for military supplies to Ukraine and the creation of the Ukraine-NATO Council for joint consultations on security issues.

Also, the thesis that "Ukraine will join the EU and NATO" after the war can be used as an instrument of covert pressure on the Ukrainian leadership to push for negotiations.

 

Ruslan Bortnik, Oksana Krasovskaya, Andrey Timchenko

for the Ukrainian Institute of Politics