The situation in Ukraine: key trends May 19 - 25, 2022

In general, the situation for the Ukrainian troops on the Donetsk front has deteriorated significantly over the week, and the formation of an operational crisis is possible.

The Armed Forces of the Russian Federation, using the terrain, intensified the offensive from the area of the city of Popasna. As a result, the network of fortified sites of the Armed Forces of the so-called " Svetlodarsk Bulge" (the area of the town of Debaltsevo) and all the settlements of this region (the city of Svetlodarsk, the village of Mironovske, Lugansk, etc.) came under the control of the RF Armed Forces. The front line is shifting to the city of Bakhmut. There is a danger of Vooglegorska TPP being captured. This may entail significant economic and image losses for Ukraine.

In the Lugansk region, where Ukraine controls no more than 10% of the territory, the Russian Federation attempts to seize the city of Severodonetsk and the Lysychansk-Bakhmut highway. The capture of the road will block the region from the rest of the territory of Ukraine. It will allow the Russian Federation to declare a symbolic "victory" - "liberation of the LNR.”

In the Izyum direction, the Russian Federation is probably preparing an offensive against Sloviansk and the city of Kramatorsk, and in the Mykolaiv direction of the Armed Forces of Ukraine - against Kherson.

Putin's decree on a simplified procedure for obtaining citizenship of the Russian Federation for residents of the Zaporizhzhia and Kherson regions of Ukraine confirms the assumption that they plan to include the captured southern Ukrainian areas into the Russian Federation. The preparation for the issuance of Russian passports was immediately announced by the so-called—representatives of the authorities of the occupied territories. The region, most likely, will be gradual "Russified,” preparing the social ground for holding a referendum on joining the Russian Federation.

The negotiation process has been stopped. Parties are still more focused on the outcome of hostilities and declare that their positions remain unchanged. At the same time, publications are beginning to appear in the Western media, emphasizing the need to return to peace negotiations. The problem of blocked Ukrainian ports and food exports is acute. Therefore, the parties may conclude a temporary truce, or sanctions may be partially relaxed to prevent a global food crisis.

As a result of an online meeting of the heads of military departments of more than 40 states, about 20 countries announced new military assistance packages for Ukraine. In particular, Denmark will transfer Harpoon anti-ship missiles to Ukraine to unblock Ukrainian ports, hitting Russian ships at distant approaches. At the same time, Ukraine criticizes the pace of arms supply, which is insufficient to repel the Russian offensive in the Donbas effectively.

A crisis is brewing in Transnistria and Moldova. In response to the detention of the ex-president of Moldova I. Dodon, Pridnestrovie accused Moldova of organizing terrorist attacks on its territory.

Turkey opposes the entry of Finland and Sweden into NATO. For its part, the United States is trying to resolve the problem of the Turkish veto.

Instability has increased in Tajikistan and Syria.

military situation

Slobozhanskyi direction: The primary efforts of the Armed Forces of the Russian Federation were focused on holding occupied lines from the counteroffensive of the Armed Forces of Ukraine. Fighting continues in the areas of the settlements of Ternova and Borshcheva (in the northeast of Kharkiv). In the Izyum direction, the Russian Federation is probably preparing for an active offensive against the cities of Sloviansk and Kramatorsk. There are ongoing attempts of the Russian offensive in the village of Dolgenkoe and the village of Bogorodychne.

Donbas: The Russian Armed Forces have advanced mainly westward from the city of Popasna towards the town of Severodonetsk and captured the so-called " Svetlodar Bulge" - a network of fortified areas of the Armed Forces of Ukraine. The city of Svetlodarsk and the settlements of Mironovsky were captured (southeast of Bakhmut, Mironovka, Lugansk. The Armed Forces of Ukraine remain in the area of the Uglegorsk TPP. RF Armed Forces seek to take control of the Lysychansk-Bakhmut highway. This creates a risk of encirclement of the Armed Forces of Ukraine in Severodonetsk and Lysychansk. Also, RF aims to encircle the Armed Forces of Ukraine in the size of the city of Zolote and around the town of Avdiivka and the village of Peski.

Southern direction: the primary efforts of the Russian Federation have been concentrated on the maintenance of occupied lines, and active operations are not carried out; units of the Armed Forces of Ukraine are being shelled.

Black Sea-Azov direction: without significant changes. The Russian Federation is shelling the coast of the Odesa and Mykolaiv regions.

Since the beginning of the invasion, the area of territories occupied by Russia has increased by 2.9 times. If, until February 24, the Russian Federation controlled 7% of the Ukrainian territory, the area of uncontrolled regions in Ukraine has grown to 20.9% of the total territory - about 120 thousand km 2 (comparable to the square of Greece).

Combat map



The situation in the occupied territories

It is becoming more and more evident that the Russian leadership plans to include the captured Ukrainian territories in the south of the country into the Russian Federation.

President of the Russian Federation V. Putin signed a decree on the simplified admission to Russian citizenship of residents of the Zaporizhzhia and Kherson regions. After this statement, the Russian-appointed "administrations" of the Zaporizhzhia, Kherson, and Donetsk regions declared that preparations were already underway for issuing Russian passports to residents.

Probably, the Russian authorities are not going to create pseudo-republics like “LDNR” in the occupied territories but prepare these regions for direct “entry” (through a referendum or without it) into the Russian Federation by passportization and a change in public sentiment.

Dual-currency zones have already been introduced in the occupied Zaporizhzhia and Kherson regions: you can pay in hryvnia and rubles there.

According to reports, even though the nuclear power plant (ZNPP) is still operating and connected to the energy network of Ukraine, Deputy Prime Minister of the Russian Federation Marat Khusnullin, who visited the occupied territory, suggested that Ukraine continue to buy electricity from the Zaporizhzhia nuclear power plant.

In general, the situation in the temporarily occupied territories remains complicated. The Russian Federation faces significant difficulties in holding the occupied territories. In particular, protests occur here from time to time, and Ukrainian guerrilla continues to offer active resistance. In particular, as a result of an explosion in the city of Energodar, Andrei Shevchik, the self-proclaimed head of the "people's administration" of Energodar, was injured. Earlier, the media reported that a remote detonation of a Russian armored train was carried out in the occupied Melitopol.

And in the temporarily occupied territory of the Luhansk region, spontaneous protests were held by family members of people who were forcibly mobilized into the ranks of the Russian occupation forces. Protests were recorded in Luhansk and Rovenky. With the further course of the war of attrition, protest activity, desertion, and a drop in the morale in the ranks of the warring parties will increase.

Negotiations between Ukraine and Russia.

During the week, the constructive negotiation process did not resume. The parties do not demonstrate readiness to compromise and are focused more on the outcome of hostilities. There is fierce rhetoric and public rejection of the truce. While the Russian Federation has toughened its position regarding Ukraine's accession to the EU, Ukraine constantly emphasizes that they intend to return its entire territory under control.

The peace plan proposed by Italy, based on the neutral status of Ukraine, was rejected by both the Russian Federation and Ukraine.

The Italian peace plan contained four main points.

1. Ceasefire and liquidation of the line of clashes under the supervision of the UN.

2. Accession of Ukraine in a short time to the European Union and its neutral status without joining NATO.

3. Agreement between Ukraine and Russia on the "disputed territories" of Donbas and Crimea to resolve conflicts on internationally recognized borders.

4. A new multilateral treaty for peace and security in Europe should ensure arms control and conflict prevention.

In particular, the Russian Federation criticized the provisions regarding the Donbas and Crimea and stated that these territories would not return to Ukraine. Moscow believes that Kyiv should signal the resumption of negotiations (readiness to accept Russian proposals).

For his part, President Zelensky has not unequivocally stated that Ukraine would sit down at the negotiating table with the Russian Federation after it returns all the territories lost since February 24. In the Russian Federation, such a position is called not constructive.

In Davos, on the Securing panel Europe Head of the President's Office Oleksandr Yermak presented the International Working Group on Security Assurances for Ukraine, set up on behalf of Volodymyr Zelenskyy, which he chaired jointly with former NATO Secretary-General Anders Fogh Rasmussen. Its goal is to develop specific recommendations for reliable and effective security guarantees for Ukraine.

It is worth saying that not only Italy is talking about the option of a neutral status for Ukraine. Publications are beginning to appear in the Western media, emphasizing the need to end the conflict or return to peace negotiations. During the World Economic Forum and former US Secretary of State Henry Kissinger said that achieving a neutral status for Ukraine and its formation as a bridge between Russia and Europe is the main goal in the current situation around the country.

Public opinion.

Ukrainian society may agree to the country’s neutral status in exchange for full-fledged security guarantees.

The citizens of Ukraine are ready to abandon NATO but will not make any territorial concessions to achieve peace.

According to a study by the Kyiv International Institute of Sociology (KIIS). At the same time, citizens will not agree to any territorial concessions to achieve peace.

82% - believe that no territorial concessions are allowed.

10% - believe that some territories can be abandoned to achieve peace and preserve independence.

Even in the country’s east, where intense fighting is underway, 68% are against territorial concessions. Ready for concessions - only 19%

42% - believe that it may be acceptable to receive security guarantees from such states as the USA, Great Britain, Germany, and France in the current conditions instead of NATO.

39% - continue to insist that only joining NATO will be able to ensure the security of Ukraine, and therefore this should not be abandoned.

19% of respondents either did not decide on their opinion or did not agree with these statements.

Socio-economic situation.

The National Bank of Ukraine has returned to a free exchange rate, which could accelerate hryvnia devaluation and inflation.

After the outbreak of the war, the National Bank suspended the work of the foreign exchange market and fixed the official exchange rate at the level of UAH 29.25 /$. Euro, respectively, costs 31 UAH. To prevent the black currency market from flourishing, since mid-April, the regulator has allowed the sale of cash currency to individuals.

But the $4 billion that the National Bank spent in two months to support the exchange rate did not hold back further devaluation. According to the NBU, cash dollars cost 31.13 hryvnia /$, euro - 33.56 hryvnia /€. On May 20, the average dollar buying rate was UAH 35.4. The average selling rate was UAH 36.3. The exchange rate jump is explained mainly by the growing demand for the currency and limited supply. Banks do not sell dollars because of the restrictions imposed by the National Bank.

The first deputy head of the tax committee of the Verkhovna Rada, Yaroslav Zheleznyak, believes that shortly, 40 hryvnias will be paid per dollar.

Ukraine will return to the state regulation of gasoline and diesel fuel prices. On May 17, the government suspended price regulation on the fuel market. According to the Cabinet of Ministers, after this decision, the expected marginal prices for diesel fuel will not exceed UAH 58 per liter, and gasoline - no more than UAH 52 per liter. After the abolition of state regulation as of May 19, fuel prices increased by 10-15 hryvnia per liter.

According to Deputy Minister of Economics Denis Kudin, state regulation of gasoline and diesel fuel prices will be introduced again when the shortage of fuel in the Ukrainian market disappears. " Supply lag, the time from contracting to export to Ukraine can be up to 30 days. There were examples when large operators imported fuel to Constanta (a port in Romania - ed.) a month ago, and still, not all of this volume has entered Ukraine," he said. For this reason, as Kudin explains, as soon as the situation returns to normal, price regulation will return to the market.

"Coal case" of Medvedchuk and Poroshenko.

Detained SBU politician Viktor Medvedchuk testified against former Ukrainian President Petro Poroshenko. As stated in the department, the information concerns criminal cases on the Samara-Western Direction oil pipeline's withdrawal from state ownership and coal supply from the Luhansk and Donetsk People's Republics. According to the statement, the fifth president was "responsible for the purchase of coal from the temporarily occupied territories in 2014-2015," and later, it was Poroshenko who allegedly became the owner of the Ukrainian section of the oil pipeline, known as the " Medvedchuk pipe." The European Solidarity party talks about political persecution. They see criticism from Poroshenko's party on the mistakes of the country's leadership in the war. And this is, among other things, an attempt by Bankova to divert attention from her mistakes made during the war.

Since the President's rating is now very high, and the popularity of Poroshenko and the opposition has plummeted, Bankova can act more harshly against her opponents. While it is difficult to say whether the activation of the "coal business" threatens an actual conclusion for P. Poroshenko, it is possible that Western partners will not welcome such a development of events. But in any case, as a result of a new round of investigations against Poroshenko, the trend toward his marginalization as a politician, and the destruction of his political structures and economic assets, will intensify. Even though the rating of the ex-president after the start of the war already fell sharply, a significant part of his electorate went to Zelensky.

The situation around Ukraine.

The situation with the deblockade of Ukrainian ports.

Russia has blocked Ukrainian ports since the start of the war. To avoid a food crisis globally, the US and the EU are considering various ways of deblocking Ukrainian ports, including the partial lifting of sanctions against the Russian Federation and Belarus. According to the UN, only ten weeks of wheat reserves ten Earth remained due to the war in Ukraine. In the future, food prices in the world will increase.

An informal international political and economic coalition has been created to solve the problem of unblocking Ukrainian ports, and options for particular operations are being prepared. Two ways of deblocking Ukrainian ports are being considered - diplomatic and military in the West. UN Secretary-General António Guterres proposed easing sanctions, in particular, returning potash fertilizers from Russia and Belarus to world markets, easing Western sanctions against both countries - in exchange for Russia allowing vessels with grain from Ukraine to pass. Consultations are underway with all parties involved - from Russia to Turkey and other countries engaged in grain logistics.

On the other hand, Western countries also need to deblockade Ukrainian ports because it simplifies the supply of weapons to Ukraine. But the diplomatic way of solving the problem opens the course only for grain.

Therefore, the US and the UK are also considering a forceful scenario for unblocking ports, but this, in turn, could lead to a direct clash between NATO and Russia, which the Alliance is trying to avoid with all its might. In addition, this will lead to a violation of the Montreux Convention and a clash with Turkey, which is obliged to prevent warships from entering the Black Sea in a situation of war. Therefore, a significant stake is being placed on Ukraine itself, driving the Russian fleet away from its shores. This explains the activity near Serpent's Island, which controls the sea route to the Black Sea ports of Ukraine.

Chinese Foreign Minister Wang Yi also called for creating a green corridor to export Russian and Ukrainian grain. He called for an end to the conflict between Ukraine and Russia as soon as possible to open such a corridor. He stressed that China is ready to maintain cooperation with all parties and "will not stand aside."

Military assistance to Ukraine.

More than 40 countries participated in the second meeting of the Contact Group on Ukraine, which took place virtually. The meeting was also joined by four new nations that were not present at the Ramstein base last month: Austria, Bosnia and Herzegovina, Colombia, Ireland, and Kosovo. The Minister of Defense of Ukraine, Oleksiy Reznikov, Deputy Commander-in-Chief of the Armed Forces of Ukraine, and a representative of the military intelligence of Ukraine, joined the virtual meeting.

As a result of the online meeting of the heads of military departments, about 20 countries announced new military assistance packages for Ukraine. In particular, according to the head of the Pentagon, the Czech Republic transferred fire support helicopters, tanks, and missile systems to Ukraine. Denmark will transfer Harpoon anti-ship missiles and launchers to Ukraine, said Pentagon chief Austin. Harpoon missiles hit a distance of 300 kilometers. In Ukraine, they hope to unblock Ukrainian ports with their help, hitting Russian ships at distant approaches.

Earlier, the US Congress allocated $40 billion for military assistance to Ukraine, which is distributed as follows:

- $6 billion for military training, equipment, and weapons;

- $ 8.7 billion to replenish stocks of American weapons;

- $3.9 billion to help the US European Command;

- $5 billion to address the global food crisis caused by the war in Ukraine;

- almost $9 billion of economic assistance to Kyiv

- about $900 million to support Ukrainian refugees.

Of these, only 6 billion will go directly to the supply of weapons to Ukraine.

Transnistrian-Moldovan crisis.

A purge of pro-Russian forces has begun in Moldova. Former Moldovan President Igor Dodon has been detained on corruption and high treason charges. I. Dodon in Moldova is considered a pro-Russian politician. The anti-corruption authorities of Moldova, together with the special services, conducted searches at I. Dodon 's house in the case of passive corruption, financing of a political party by a criminal organization, treason, and illegal enrichment.

In response to the actions of Moldova, Pridnestrovie accused Moldova of organizing terrorist attacks on its territory. The so-called "ministry" of the unrecognized republic published a story entitled "Sabotage and the terrorist attack in Tiraspol" about a joint "investigation" of various power structures of Transnistria. It claims that the military registration and enlistment office in Tiraspol was set on fire on the instructions of a person associated with the "power structure of Moldova." This may be the reaction of the Pridnestrovian authorities to the detention by Moldova, oriented towards Moscow ex-president Igor Dodon.

Moldova likely coordinated its actions with Western partners. Because two days ago, Maia Sandu held a meeting with a delegation of the US Congress in Chisinau. They discussed the security situation in the country and the region, the consequences of the war in Ukraine for Moldova, and bilateral Moldovan - American relations. And the British government announced the need to provide Moldova with modern Western weapons. The arrival of military specialists in the region and the accumulation of armaments are noted.

The situation in the region is also essential in terms of unblocking Ukrainian ports. The UK is currently negotiating with allies to send warships to the Black Sea to protect cargo ships carrying Ukrainian grain. True, this can only take place with the approval of Turkey, which controls the Bosphorus. And also on the condition that NATO is ready to fight the Russian fleet, which is still unlikely. Therefore, to a greater extent, a bet is made that Ukraine itself will be able to press the Russian fleet.

Earlier, at the end of April, Russia named access to Transnistria, the occupied part of Moldova, as one of the “second stage” goals of the war in Ukraine. Chisinau was alarmed by this statement. A series of provocations followed this in Transnistria: explosions, shelling, and arson. On May 18, Moldovan President Maia Sandu announced that Russia should withdraw its troops from Transnistria.

The Council of the European Union approved the decision on temporary liberalization of trade with Ukraine and canceled all duties on Ukrainian exports.

Now the European Union is the largest trading partner of our country, with the share of trade in goods almost 40% of the total foreign commerce of Ukraine. In 2021, the volume of exports of goods to the EU amounted to nearly 23 billion dollars.

According to the geographical structure of Ukrainian exports to the EU, the largest trading partners of Ukraine are Poland, Italy, Germany, the Netherlands, and Hungary.

Since the beginning of the war, Ukrainian exports have fallen significantly. This creates a severe risk to public finances since exports are vital in receiving tax payments and currency. For comparison, if in March 2021, the volume of our exports amounted to 4.8 billion US dollars, then in March 2022, it was only 2.3 billion.

Trade liberalization concerns:

- all duties by the deep and comprehensive free trade area between Ukraine and the EU that have not yet been liberalized, in particular: industrial goods, duties on which should gradually disappear by the end of 2022, vegetables and fruits, as well as agricultural products;

- a collection of anti-dumping duties on goods of Ukrainian origin;

- application of general import rules for goods of Ukrainian origin.

Not all goods from Ukraine are included in the free trade agreement with the EU, and part of Ukrainian products is subject to strict quotas. Therefore, one should not expect that this decision will significantly improve the situation of the Ukrainian economy.

Launch of the Indo-Pacific Economic Framework, also known as IPEF.

US President Joe Biden initiates a new Indo-Pacific trade pact. The White House says the framework will help the United States and Asian economies collaborate more closely on:

• supply chains,

• digital trade,

• clean energy,

• protection of workers

• and efforts to combat corruption.

The details are to be agreed upon between the member countries.

The agreement does not offer incentives to potential partners by lowering tariffs or giving signatories greater access to US markets. These restrictions may not make the US structure an attractive alternative to the Trans-Pacific Partnership. The US is likely unwilling to risk US jobs through increased market access. When previous President Donald Trump withdrew from the multinational Trans-Pacific Trade Agreement, making room for Chinese expansion, the US lost the economic pillar of its engagement with the Indo-Pacific. China, the largest trading partner of many countries in the region, is now seeking to join the TPP.

Countries can participate in both trade deals.

This is the latest move by the Biden administration to maintain and expand U.S. influence in a region under growing Chinese influence. The new pact comes when the administration believes it has an advantage in competing with Beijing. US GDP growth is projected to be around 2.8% in 2022 compared to 2% in China. The slowdown undermined speculation that China would automatically displace the US as the world's leading economy.

It is already known that in addition to IPEF will participate Japan and South Korea.

Taiwan, which has sought membership in the IPEF structure, is not among the governments that will be included. The participation of the self-governing island of Taiwan, which China calls its own, would irritate Beijing.

The White House immediately clarified that President Biden, speaking of readiness for military participation in defense of Taiwan, had in mind the supply of weapons for the island’s self-defense.

Turkey continues to oppose the entry of Finland and Sweden into NATO.

Finland and Sweden applied for NATO membership on 18 May. But Turkey has blocked the start of negotiations in NATO on the entry of Finland and Sweden into the alliance. In exchange for approval of Sweden's and Finland's accession to NATO, Turkey demands that Sweden and Finland declare the PKK and its derivatives as terrorist organizations. In connection with the disagreements regarding the two countries’ entry into NATO, Secretary of State E. Blinken will hold talks with Turkish Foreign Minister Cavusoglu. It is unclear whether this issue is about pressure on Ankara or whether Erdogan's demands will be met.

The process of Ukraine's accession to the EU may be delayed.

Ukraine can receive the status of a candidate member of the EU at the next meeting of EU leaders, which is to be held in June 2022. After the European Commission delivers its findings in June, the European Council will consider the issue. On May 9, Ukraine submitted to the European Union the completed second part of the questionnaire required to obtain the status of a candidate for EU membership.

At the same time, the French Foreign Ministry for European Affairs, Clement Bon, believes that the process of Ukraine's accession to the European Union may take 15 or 20 years. Previously European Council President Charles Michel said he was not ready to name a specific date to consider Ukraine's application for EU membership on the agenda. The Austrian Minister for EU Affairs, Caroline Edtstadler, said that "in the next five to ten years," Kyiv will not be accepted into the European community. For his part, Polish President Andrzej Duda assured that his country would do everything possible for Ukraine to join the European Union. He spoke Sunday at the Ukrainian parliament as part of his visit to Kyiv.

According to polls in Austria, 36 % do not support Ukraine's accession to the EU, and in France - 27%. In Poland, Ukraine's accession to the EU is supported by 81% (only 11% do not support it).