As part of the trend towards strengthening the presidential vertical of power, personnel changes in state structures continue. Andriy Kostin has been appointed the new Prosecutor General of Ukraine. The parliament also appointed Olga Sovgirya to the position of judge of the Constitutional Court. The resignation of R. Demchenko from the post of First Deputy Secretary of the National Security and Defense Council could be related to the plans of the President's Office to strengthen its presence in the National Security and Defense Council and the need to get rid of people who are suspected of having ties with the Russian Federation by the passionate patriotic part of society and Western partners. Further reshuffles within the government and the resignation of Prime Minister D. Shmygal himself are also likely during the summer and autumn of this year. The possibility of changing the head of the OP remains.
A deal was concluded regarding the export of food from Ukrainian ports (Odesa, Chornomorsk, and Yuzhny). In fact, there was an exchange - the Russian Federation went to the de-blockade of Ukrainian ports (which will approximately add 5% of GDP to Ukraine and bring up to $ 1 billion in additional export earnings per month) in exchange for lifting sanctions on Russian food exports. In addition, the Russian Federation has unblocked the supply of goods to the Kaliningrad region, and the Russian state-owned companies Rosneft and Gazprom will be able to supply oil to third countries. In addition, both parties (Ukraine and the Russian Federation) do not want to be blamed for mass starvation in third-world countries, as well as to suffer financial losses from claims from global grain traders for not fulfilling the contract.
In general, the deal regarding the export of food from Ukrainian ports showed that in the event of an international consensus, the parties (Western countries, Ukraine, Russia) are able to negotiate. In addition, a precedent has been demonstrated for the lifting of sanctions and a willingness to compromise when it comes to critical issues of the global economy and political stabilization of the situation. Turkey has made great efforts and strengthened its role as the main mediator in the Ukrainian-Russian settlement.
At the front, in the region of Donbas, the RF Armed Forces continue their slow offensive towards the cities of Seversk, the cities of Bakhmut, and the cities of Soledar and captured the area of the Vuglegorska TPP.
The Ukrainian armed forces are probably preparing a counteroffensive in the Kherson or Zaporizhzhia direction. In other directions, local clashes and mutual artillery shelling along the front line continue. Both sides (Ukraine and Russia) announced decisive battles over the next 3-6 weeks.
The Russian Federation makes it clear that they are trying to establish control over the entire territory of Ukraine, which should potentially be included in the Russian Federation as a region. That is, it implies the complete absorption of the Russian Federation of all the occupied territories of Ukraine and we are not talking about any interstate associations or confederations. In the occupied territories, active preparations are underway for the so-called "referendum " on joining the Russian Federation. In response to the mass distribution of Russian passports in the occupied territories by the Russian Federation, the Cabinet of Ministers of Ukraine is developing a bill on criminal liability for obtaining a Russian passport in the occupied territories.
The demonstrative deprivation of citizenship of G. Korban and one of the major Ukrainian entrepreneurs I. Kolomoisky and other persons are probably a demonstration to the Ukrainian elites that any competition with the presidential vertical is unacceptable today and will be suppressed. The situation with I. Kolomoisky was probably also influenced by the investigations and lawsuits that are now being conducted against him in the United States. Separately, the situation around G. Korban is connected with the accusations of US Congresswoman Victoria Spartz against the head of the Office of President Andriy Yermak. Probably, the OP believes that it was G. Korban who turned V. Spartz against the Ukrainian leadership.
The dynamics of arms transfers by Western countries demonstrate that differences in positions remain between the US and European countries. While the US, Poland, Great Britain, and the Baltic countries are delivering weapons at a faster pace, Germany, France, and other countries either delay these deliveries or distance themselves from them. Most likely, Europe is trying to avoid a new round of escalation by the Russian Federation. In particular, the strike on the annexed Crimea can serve as a pretext. The Ukrainian authorities have announced more than once that they have "technical capabilities." But in general, the volume of arms supplies and funding is significant and significantly affects the situation at the front and maintaining the controllability of the Armed Forces of Ukraine, but they are not enough to turn the tide in the war.
Due to the ongoing hostilities, the economic situation in Ukraine is deteriorating: an increase in the budget deficit, an increase in public debt, and a decrease in foreign exchange reserves and export earnings. All these factors lead to a further increase in inflation, and the devaluation of the hryvnia, and also caused the default of the state company Naftogaz of Ukraine (along with political factors). In general, the country's economy is totally dependent on the financing of international partners.
Military situation
Fighting
On the Slobozhansky direction: no significant changes. The city of Kharkiv is regularly shelled. The RF Armed Forces are building pontoon crossings to improve their logistics. In the Izyum direction to the north Sloviansk, there are fights in the village of Bogorodichny.
In the Donbas: on the outskirts of the city of Seversk, fighting is taking place in the area of the settlement Verkhnekamensky. Russian troops gradually moved south of the city of Bakhmut. The statement of the General Staff about the " partial successes " of the RF Armed Forces at the Vuglegirsk TPP may indicate a controlled withdrawal of Ukrainian troops from the station. Near Soledar – The RF Armed Forces attacked the settlements of Semigirya and the settlements of Kodema. Fights for settlement Pokrovske continue.
In the South direction: in the Kherson region near river Ingulets, the RF Armed Forces attacked in the directions of the settlements of Pavlivka and Blagodatne, Mala Semeydinukha – Andriivka, and Davydiv Brid - Bilogorka.
Black Sea-Azov direction: no significant changes. Coast of the Odessa region. subjected to regular Russian rocket and artillery attacks. There are two Russian carriers in the Black Sea cruise missiles.
Both sides (Ukraine and Russia) announced decisive battles over the next 3-6 weeks. In particular, the Russian Federation announced that they plan to capture the entire Donbas by autumn. This was announced by the so-called "Deputy Minister of Information" of the "DPR" D. Bezsonov. For his part, President of Ukraine V. Zelensky believes that Ukraine should return the territories occupied by Russia within 3-6 weeks. In his opinion, this period is decisive, since with the approach of winter it will be more difficult to conduct hostilities.
Combat maps
The situation in the occupied regions.
The Russian and occupying "authorities" continue the process of preparing the occupied territories of the Zaporizhzhia, Kherson, and Kharkiv regions for their inclusion in the Russian Federation. Holding the so-called "referendum" may take place in the first half of September in all occupied territories. In particular, in the Kherson and Zaporizhzhia regions, the “authorities” appointed by the Russian Federation are already creating election commissions to carry out the so-called "referendum". Since the Ukrainian special services continue to effectively terrorize the pro-Russian leaders of the occupied territories and have already made a number of assassination attempts on them, the occupying "authorities" have strengthened the police regime in the Kherson region. In particular, the relevant "document" refers to the prohibition of activities that impede the work of the occupation administrations, "election commissions" and other bodies. “Discrediting the authorities of the Russian Federation” and any informational propaganda directed against the occupying authorities is prohibited, and in case of violation of the curfew, violators are threatened with execution on the spot. It is also planned that in the occupied part of the Kherson region, the hryvnia will be withdrawn from circulation. Earlier it was reported that in the territories of the Kharkiv region controlled by the Russian Federation they began to pay pensions in rubles.
At the same time, the Russian Federation makes it clear that they are striving to establish control over the entire territory of Ukraine, which should potentially be included in the Russian Federation as a region. That is, it implies the complete absorption of the Russian Federation of the entire territory of Ukraine.
In particular, Russian Foreign Minister S. Lavrov, at a meeting with the permanent representatives of the member countries of the League of Arab States in Cairo, said that Russia would help the people of Ukraine get rid of " the anti-people and anti-historical regime ."
In response to the mass distribution of Russian passports in the occupied territories, the Cabinet of Ministers of Ukraine is developing a bill on criminal liability for obtaining a Russian passport in the occupied territories. On July 11, Russian President Vladimir Putin signed a decree simplifying the acquisition of Russian citizenship by all Ukrainians, regardless of the place of residence. Thus, the Ukrainian authorities are trying to develop a mechanism that will reduce the number of those wishing to obtain Russian citizenship. And, accordingly, they will ensure a low turnout at the "referendum".
The internal situation in Ukraine
Public opinion.
According to a study by the Kyiv International Institute of Sociology (KIIS), 84% of Ukrainian citizens are not ready for territorial concessions in order to end the war. Every tenth person agrees to concessions (10%). Compared to May, the mood of the population remained practically unchanged, the number of those who are not ready for territorial concessions increased by 2%.
In particular, in all regions of Ukraine, the absolute majority of the population is against any territorial concessions. Even among residents of the eastern regions, where intense fighting is now taking place -77%.
Also, according to the data of the Sociological Group, "Rating", 90% of respondents believe that the Russian Federation should compensate for the economic and infrastructural losses of Ukraine as a result of the war. 21% of citizens believe that European countries should join this. 18% - international organizations. 11% - USA. The number of those who believe that Ukraine should also be engaged in restoration has increased - from 10% to 15%.
The financial situation in the country.
Due to the ongoing hostilities, the economic situation in Ukraine is deteriorating: an increase in the budget deficit, an increase in public debt, and a decrease in foreign exchange reserves and export earnings. In general, the country's economy is becoming increasingly dependent on financing from international partners.
The Cabinet of Ministers decided to turn to the United States for a "gas lend-lease". According to Prime Minister Denys Shmyhal, this is necessary for a stable heating season.
Also, Naftogaz of Ukraine officially announced a default on Eurobonds, as the Ukrainian government actually forbade it to fulfill its obligations due to lack of funds and the inability to defer payments. In July 2022, Naftogaz had to fully repay its 3-year Eurobond issue (placed in 2019) for $335 million and pay interest. Earlier, Naftogaz tried to negotiate deferrals for the payment of three types of its Eurobonds. In order to pay nothing on them in 2022-2023. But foreign creditors refused Naftogaz to defer debt payments, as the company is considered profitable.
All this complicates the financial situation in the country and increases the need for additional financial resources. The Ukrainian government spends about UAH 150 billion just to cover the difference in tariffs between the international and domestic market prices.
Earlier, Ukraine asked for a two-year delay in the payment of external debts. Until September 1, 2022, Ukraine had to repay $1.4 billion in interest on its external debt.
According to the statement, international creditors have agreed to a suspension of Ukraine's debt service from August 1, 2022, until the end of 2023, with the possibility of a year's extension. In this connection, Fitch downgraded Ukraine's rating to pre-default. The agency does not rule out a downgrade to RD (limited default). Fitch notes that inflation in Ukraine accelerated to 21.5% in June and will reach 30% by the end of the year. Inflation will be around 20% in 2023, due in part to the depreciation of the hryvnia. They predict that the war could continue into 2023, and the prospects for "a political settlement through negotiations are very weak."
As of June 1, 2022, direct loans from foreign countries accounted for $2 billion of Ukraine's external public debt. While all issues of Ukraine's Eurobonds amount to $22.68 billion. And the total external debt as of June 1, 2022. amounted to - $ 51.23 billion. The total public debt is - 101.4 billion dollars.
According to NBU estimates, this year inflation will increase to 31% (from 21.5% at the end of June), and next year it will decrease to 20.7%. This year, real GDP will fall by 33.4%, and in 2023-2024 it will increase by 5.5% and 4.9%, respectively, subject to the resumption of the work of seaports. International reserves will be reduced to $20.8 billion at the end of this year from $22.8 billion by the middle of the year.
According to the government, the total budget expenditure per month is about - 250 million hryvnias, of which 130 million hryvnias. are military spending. The monthly budget deficit of Ukraine is in the range of $5-$9 billion.
The main sources of funding, according to the Ministry of Finance, are war bonds, loans from International Financial Institutions, as well as bilateral loans, and grants. In total, the state budget was financed (for the period from February 24, 2022, to July 12) for UAH 720.9 billion. or $24.6 billion By the end of the year, Ukraine expects funding from Western partners from 16 billion to 17 billion dollars. But these funds are not enough to cover the state budget . Covering the state budget deficit is also due to the issue of the hryvnia. Until the end of the year, the NBU will print another UAH 180 billion - UAH 30 billion per month. The NBU predicts that next year the need for emission will remain, but its volume will decrease. And in 2023, the emission will be about half as low, that is, about UAH 15 billion per month.
Ukrainian President Volodymyr Zelensky may revoke the citizenship of several influential politicians.
There was information that businessman Igor Kolomoisky, co-chairman of the pro-Russian party Opposition Platform for Life Vadim Rabinovich banned in March 2022 and the current head of the territorial defense of the Dnipropetrovsk region Gennady Korban could be deprived of Ukrainian citizenship. After that, the head of the terrorist defense of the Dnepropetrovsk region, G. Korban, was not allowed into the country. On the border of Ukraine and Poland at the checkpoint Smilnitsa, border guards seized the passport of a citizen of Ukraine under the pretext that the document was annulled.
American congresswoman Victoria Spartz reacted to the situation, who had previously accused the head of the OP A. Yermak of collaborating with the Russian Federation. In her address, without naming names, she stated that “ they ( A. Yermak and V. Zelensky ) have now decided to attack people who were simply “lucky” to meet me at some point and who are not their political puppets ”. She also accused A. Yermak of " establishing a dictatorship ." And once again demanded to establish tight control from the West over the use of military aid, which is transferred to Ukraine. New accusations by Congresswoman V. Spartz against representatives of the Ukrainian authorities may negatively affect the supply of weapons to Ukraine.
Also, the Migration Service marked as invalid the passport of businessman I. Kolomoisky . Probably, Igor Kolomoisky could also lose his Ukrainian citizenship, since his passport is listed as invalid in the register of the State Migration Service for checking passports. I. Kolomoisky retains a significant influence on state energy assets, controls potentially the largest media holding (TV channels 1 + 1, 2 + 2 and others), has significant influence in the Dnipropetrovsk region.
The situation with I. Kolomoisky was probably influenced by the investigations and lawsuits that are now being conducted against him in the United States. The situation around G. Korban is probably connected with the accusations of US Congresswoman Victoria Spartz towards the head of the Office of the President Andriy Yermak. In particular, Aleksey Arestovich , adviser to the head of the OPU, accused Mayor of Dnipro Boris Filatov and leader of the National Corps Andriy Biletsky of allegedly "twisting" Spartz against A. Yermak.
The deprivation of citizenship of one of the major Ukrainian entrepreneurs I. Kolomoisky , G. Korban and other persons is probably a demonstration to the Ukrainian elites that any competition with the presidential vertical is unacceptable today and will be suppressed.
Personnel changes.
Personnel changes in the main government structures continue . After the resignation of the Prosecutor General I. Venediktova and the head of the SBU I. Bakanov , Andrey Kostin (a figure who is considered close to the OP), the former head of the parliamentary Committee on Legal Policy, was appointed the new Prosecutor General of Ukraine. Denis Maslov, a member of the Servant of the People faction, will probably be appointed to his position. During the appointment of the new Prosecutor General, President V. Zelensky was present in the parliament hall. The parliament also appointed Olga Sovgirya to the position of judge of the Constitutional Court.
At the same time, President V. Zelensky dismissed the First Deputy Secretary of the National Security and Defense Council Ruslan Demchenko, who had been in office since June 2020. At the same time, the Office of the President claims that the dismissal of R. Demchenko was due to the state of his health and the decision was made by the President solely on this basis.
During the time of V. Yanukovych , R. Demchenko was the Deputy Minister of Foreign Affairs, he is called one of the authors of the "Kharkov agreements". Representatives of the right opposition accused R. Demchenko of allegedly working for the Russian Federation. In particular, journalist Y. Butusov claims that R. Demchenko , who controlled all Ukrainian intelligence, was involved in the failure of all special operations in 2020 (in particular, the so-called " Wagnergate ").
While the Prosecutor General's Office announced suspicion of high treason to former Minister of Foreign Affairs Konstantin Grishchenko, as well as former Minister of Justice Oleksandr Lavrynovych , for preparing the Kharkiv Accords. It is worth noting that the departure of R. Demchenko takes place quite “softly” (for health reasons) without any accusations against him from the authorities. It is possible that the personnel decision regarding R. Demchenko is to some extent connected with the statement of US Congresswoman V. Spartz , as well as with the need, in the eyes of the patriotic part of society and Western partners, to clear the authorities of people who could be suspected of connections there from RF.
It is also possible that as part of the trend towards strengthening the presidential vertical of power, there is an attempt by the Presidential Administration to seize control of the National Security and Defense Council and weaken the Secretary of the National Security and Defense Council A. Danilov by replacing his first deputy.
In addition, President of Ukraine Volodymyr Zelenskyy dismissed Hryhoriy Galagan from his post as Commander of the Special Operations Forces (SSO) of the Armed Forces of Ukraine (APU). By another decree, Zelensky appointed Viktor Khorenko to the post of commander of the MTR . Subsequently, G. Galagan was appointed first deputy head of the Special Operations Center "A" of the SBU.
The situation around Ukraine
Deliveries of weapons to Ukraine
The United States does not plan to supply Kyiv with missiles with a range of more than 300 kilometers, said National Security Adviser to US President D. Biden Jake Sullivan. In general, the United States sees several problems with the supply of weapons to Ukraine. In particular, large volumes will deplete the actual American reserves, there is no certainty that the Armed Forces of Ukraine will be able to quickly master all this and put it into battle. Also, " Kyiv may launch a counteroffensive too soon ." That is, at the moment, apparently, the West believes that Ukraine is not ready for it. In addition, a factor that may affect military supplies is the continued talk of " arms smuggling from Ukraine ." Opponents of US President D. Biden, representatives of the Republican Party, continue to raise the issue of controlling the use of supplied weapons by Ukraine. Congresswoman Victoria Spartz sent a new letter to US President Joe Biden calling for the creation of a task force within the Defense Department to oversee aid to Ukraine. And the former US President D. Trump again made a statement that the war in Ukraine would not have happened if he were now the President of the United States. He also noted that Ukraine receives too much money from the United States - more than $60 billion against the backdrop of US debt of $35 trillion.
There is increasing skepticism in the Western media about " that Ukraine can win a war of attrition or that an influx of modern weapons will turn the tide ." It is also reported that the Biden administration has $6 billion left in presidential powers to supply weapons to Ukraine. Funds from the support program must be used by the end of the US fiscal year in September.
Last week, the United States gave Ukraine a new $270 million military aid package. It included:
- 4 HIMARS multiple launch rocket systems,
- 36,000 artillery ammunition and additional ammo for HIMARS
- 580 Phoenix Ghost drones (kamikaze drones).
3 Gepard ZSUs and ammunition for them were transferred from Germany to Ukraine. In total, it is planned to supply up to 30 3SUs of this type. Poland will transfer to Ukraine up to 30 modernized T-72 tanks from its stocks. Slovakia says it wants to supply Ukraine with 11 by the end of August MiG-29 fighters.
There is a possibility of deliveries to Ukraine of more modern air defense, missile defense systems, as well as aviation. In particular, the United States has allocated $100 million for the training of Ukrainian pilots, and it is likely that they intend to transfer planes to Ukraine.
The dynamics of arms supplies by Western countries demonstrates that a significant difference in positions remains between the US and European countries. While the US, Poland, Great Britain, and the Baltic countries are delivering weapons at a faster pace, Germany, France and other countries either delay these deliveries or distance themselves from them. Most likely, Europe is trying to avoid a new round of escalation from the Russian Federation. In particular, the strike on the annexed Crimea can serve as a pretext. What the Ukrainian authorities have announced more than once when they have "technical capabilities." But in general, the volume of arms supplies and funding is significant and significantly affects the situation at the front and maintaining the controllability of the Armed Forces of Ukraine , but they are not enough to turn the tide in the war . In addition, there is no confidence in maintaining the consistency and sufficiency of these supplies in the future.
The situation around grain exports
Agreement on lifting the blockade on food exports from Ukraine was signed on July 22, 2022. From the Ukrainian side, the agreement was signed by the Minister of Infrastructure A. Kubrakov , from the Russian side, by the Minister of Defense S. Shoigu. Ukraine has signed a grain export agreement with Turkey and the UN, and Russia has also signed a mirror document with them. There was no direct agreement between Russia and Ukraine to unblock grain exports.
Main points of the agreement:
1. A coordinating center will be established in Istanbul to monitor the process. It will include representatives of Ukraine, Russia and Turkey.
2. Cargo ships will be screened at the entrance and exit to ensure that weapons are not shipped. Vessel inspections will be carried out by inspection teams, which will include representatives from all three countries (Ukraine, Russia and Turkey).
3. Grain will be exported from three ports of Ukraine - Odessa, Chernomorsk and Yuzhny.
4. Demining will not be carried out, the ships will pass through safe fairways laid by Ukraine.
5. Military escort of ships is not expected.
6. The term of the contract is 120 days with the possibility of extension. But if at least one of the parties does not want an extension, then after 120 days the agreement will end.
Unblocking ports will add approximately 5% of GDP and bring Ukraine up to $1 billion in additional export earnings per month. According to the statement of President V. Zelensky, Ukraine has about $10 billion worth of grain ready for export.
With a high probability, Russia went to de-blockade the ports of Ukraine to lift sanctions on its food exports. In addition, the Russian Federation has achieved the unblocking of the supply of goods to the Kaliningrad region, and now the Russian state-owned companies Rosneft and Gazprom will be able to supply oil to third countries. In fact, there was an exchange - a partial lifting of sanctions against the Russian Federation in exchange for the export of Ukrainian grain. Also, the Russian Federation can earn about 17-18 billion dollars from grain exports - about 3% of the total volume of Russian exports.
Obviously, both sides (Ukraine and Russia) do not want to be blamed for mass starvation in third world countries, as well as to bear financial losses from global grain traders for not fulfilling the contract.
In general, the deal regarding the export of food from Ukrainian ports showed that if there is an international consensus, the parties to the conflict (Western countries, Ukraine, Russia) are able to negotiate.
In addition, Western countries have shown a precedent for the lifting of sanctions and a willingness to compromise when it comes to critical issues of the world economy and stabilization of the situation.
At the same time, significant risks of disruption of the agreements reached remain. On the day after the conclusion of the agreement on the export of grain, the RF Armed Forces launched a missile attack on the Odessa commercial port. The Ukrainian authorities said that Russia showed what its signatures under the Istanbul agreements are worth and accused the Russian Federation of wanting to disrupt the deal. In the same vein, they spoke in the West. Russia has confirmed a strike on the port of Odessa. In particular, Russian Foreign Minister S. Lavrov said that Russia, within the framework of the grain deal, did not assume obligations that prevented the continuation of the so-called “military special operation” and the destruction of military infrastructure. Subsequently, the press secretary of the President of the Russian Federation, D. Peskov, said that a strike on the military infrastructure in the port of Odessa could not and should not affect the process of grain shipment as part of a " grocery deal ."
In Istanbul, it was reported that a coordination center had already been established to control ships carrying grain. That is, the deal will not be disrupted after the strike on the port. This was also confirmed by the Ukrainian Minister of Infrastructure Oleksandr Kubrakov , who said that preparations for export would continue. Then the Association of Sea Ports of Ukraine announced the same information. The US and Ukraine are working on a "Plan B" for grain exports, which involves the removal of food by land. The Ministry of Infrastructure of Ukraine announced that the start of grain exports will begin in the coming days.
It is reported that on July 29 the UN Security Council will hold a meeting at which the situation in Ukraine will be discussed. It is assumed that the implementation of the agreements reached on July 22 in Istanbul on the export of Ukrainian grain, as well as Russian food and fertilizers, will be discussed.
Ruslan Bortnik, Oksana Krasovskaya, Andrey Timchenko
for the Ukrainian Institute of Politics
