Russia-Ukraine: Where Will It All End?

What Really Happened Last Weekend?

Early on 24 June 1812, the Emperor Napoleon’s Grande Armée of about 700,000 men crossed the river Nieman (Nemunas), in what is now Lithuania, into the Russian Empire. The era-defining French-led invasion of Russia had begun.

On 24 June 2023, we woke up to the news that, overnight, a mercenary army, under the control of the notorious mercenary chief Evgeny Prigozhin, had seized the Russian army’s command-and-control centre in Rostov-on-Don, from where the Russian assault on Ukraine has been orchestrated. Over the next 12 hours, we watched in a state of anxious fascination as Prigozhin’s ragged band of convicts and gangsters progressed along the motorway towards Moscow. Museums were closed in the Russian capital and barricades were erected in the expectation of some kind of shoot-out. Muscovites were urged to stay at home.

Footage broadcast on the BBC was unmistakeable. Russian army helicopter gunships attacked a mercenary column just adjacent to the Leroy-Merlin Sad (garden centre) on the M4 just outside Voronezh – and were shot down with an estimated 12 pilots dead. Russians were killing Russians.

Just before six o’clock London time, it was announced that a deal brokered by President Lukashenko of Belarus (another bad egg) had halted the ‘march on Moscow’. Prigozhin – once known as ‘Putin’s chef’ before he emerged as the leader of the Wagner mercenary force – was to go into exile in Belarus but the charges of treason against him, which President Putin had referenced in his TV address that morning, would be dropped. Prigozhin returned to Rostov (had he ever left it?) and from there to Minsk, where his presence was confirmed on Tuesday. For his part, Putin dropped out of sight until Monday evening, when he made another broadcast to reassert his authority. He sought to frame his own role in the Saturday crisis as the man who averted civil war.

But after the drama last Saturday, the dynamics of Russian politics have changed in fundamental ways.

First, Putin no longer looks invincible. The armour worn by Dolgoruky, founder of Moscow, has been pierced. (Kyiv is older than Moscow). Many Russians will be asking: How could the Commander in Chief allow this appalling lapse of discipline to happen? How could the arch-intelligence officer, an ex-KGB man, not have seen this coming? Prigozhin’s mutiny followed an incursion into Belgorod Oblast by anti-Putin Russian forces. What other ant-Putin forces lurk beneath the surface?

And Prigozhin is Putin’s creature: the president facilitated the rise of a mercenary army that could carry out acts of violence in Africa and elsewhere for which official Russian state units could not be blamed. Now, Putin’s rottweiler has ferociously bitten the hand that fed it – and many Russians, even those who do not instinctively support Putin, will take the view that the dog should be put down. Even the most nationalist Russians who consume the Kremlin’s war propaganda uncritically, will have noticed that their president, for a brief moment, looked like he was on the run. He will only be able to recover any lost credibility by meting out violent retribution. I doubt that Prigozhin can look forward to a quiet retirement in a well-appointed villa in downtown Minsk.

On Monday (26 June), Prigozhin claimed in a video posted on Telegram – the last uncensored portal in Russia − that he had not been trying to oust Putin at all but rather to preserve the Wagner Group, which had been subject to an order of termination.

It is true that on 10 June the Russian Ministry of Defence decreed that all “volunteer regiments” must disband and agree to merge with regular forces. What happened, Prigozhin said, was not an attempted coup, but a protest. The casus belli was probably the claim – not authenticated, but credible – that Russian army artillery deliberately shelled Wagner units in the region of Bakhmut last week. When Prigozhin derides Russian Defence Minister Sergei Shoigu and Chief of the General Staff Valery Gerasimov with profane expletives, many Russians will agree with him that their military leadership has been shoddy, incompetent and possibly corrupt.

All this reflects badly on the man who launched the war. It is now conceivable that Putin will not be a candidate in next year’s Russian presidential election, scheduled for Sunday, 17 March 2024. It is possible that, over the course of the summer and autumn, Putin will announce his impending retirement and will then endorse a candidate to succeed him. That might well be someone such as Dmitri Medvedev (Russian president 2008-12) who holds ultra-nationalist views. An orderly transition of power is something the US and its allies (as well as China) would much prefer to a descent into factionalism and possibly anarchy.

On the other hand, Putin probably wants to stay in office to see the outcome of the other big presidential election of 2024 – the one on Tuesday, 5 November in the US. Putin might be calculating that if Donald Trump returns to power, America’s unequivocal backing for Ukraine might be withdrawn. That would be to his advantage.

Second, the mutiny has helped the Ukrainians to advance in the Donbas in previously Russian-occupied territory. Virtually all Wagner’s troops were withdrawn from the theatre of war during the attempted putsch. Wagner claimed to have 25,000 troops in Ukraine, but the force assembled for Prigozhin’s adventure probably amounted to just 8,000 men. In addition, hundreds – possibly thousands − of Russian elite forces were withdrawn from Ukraine to protect their threatened masters.

This represented an opportunity for the Ukrainians. Kyiv claimed on Sunday night to have liberated the village of Rivnopil, outside Donetsk – one of nine it has now retaken since its counteroffensive began three weeks ago. On Tuesday, it was reported that Kyiv has recovered territory in Donetsk Oblast which has been under the control of pro-Russian separatists since 2014. And on Wednesday, it was claimed that Ukrainian forces had crossed the Dnipro River in the Kherson region north of Crimea, to establish an important bridgehead. That said, Russian forces are reported to be dug into defensive positions and it will be difficult to dislodge them.

It is too early to judge definitively but the Ukrainian counteroffensive could bring tangible results over the summer months even if, thus far, Ukrainian gains are marginal. If Ukraine were to pull off its presumed masterplan – to split Russian forces in two by driving to the Sea of Azov, north of Crimea – then the Russians might become even less risk averse than previously. It was a surprise when Russian forces (as seems most likely) blew up the Nova Kakhovka dam, thus flooding huge swathes of Kherson Oblast. It had been assumed that the Russians would refrain from ecocide. In the same way, in extremis, Russian forces might seek to weaponise the Zaporizhzhia nuclear power plant with even more terrifying consequences.

Third and critically, in one of his foul-mouthed rants captured on video, Prigozhin questioned the Kremlin’s logic for Russia’s invasion of Ukraine. It is one thing to accuse the Russian high command of incompetence; but to claim that the war itself is unnecessary is something else. Prigozhin has accorded the Ukrainian armed forces his grudging respect; he even said that the war had “legitimised” the government in Kyiv in the eyes of the world. There are probably still Russian soldiers who believe that they are fighting “Nazis”; but henceforth they will be fewer, and their morale will be slacker.

Napoleon, we recall, took Moscow in late September 1812, just at the start of the Russian winter, but his apparent victory was pyrrhic. The Tsar, Alexander I, retreated with his guard to Voronezh and bided his time. With his supply lines overstretched and Moscow in flames, Napoleon ordered the winter retreat. He abandoned his army and fled back in Paris in December 1812 to counter an attempted coup. Only about 100,000 French and allied soldiers of the original 700,000 got out of Russia. Napoleon’s grip was weakened, and his days were numbered. He fell in April 1814.

Downside Risks

If the situation is bad, it could be worse.

First, there is the fear that if Putin were to fall, someone even more dangerous will come to power in a country which has more nuclear warheads even than the US. There are no friendly, pro-western contenders for power lurking in the wings. An overt fascist might emerge. That is why Washington used diplomatic channels to reassure Moscow this week that it does not seek regime change.

Second, there is the possibility – though in my view not a likelihood – that if a power vacuum opened up then Russia might descend into some kind of slow-burn civil war. The Russia of the oligarchs was one thing; a Russia of competing warlords would be another. Wagner is not the only private army in Russia. Gazprom, one of the most dominant corporations in the Russian Federation, controls its own militia. Its St. Petersburg HQ is the tallest building in Europe. Gazprom is untouchable.

Third, there is a real possibility that Putin and his regime might rachet up the conflict further, possibly even by the use of tactical (ie battlefield) nuclear weapons. Putin recently announced the deployment of nuclear weapons to Belarus. The Chechen leader, Ramzan Kadyrov, and Alexander Khodakovsky, a Russian militia commander in Donetsk, have called for the Kremlin to use nuclear weapons against Kyiv. Such a move would raise the terrible prospect of a full-on nuclear exchange between Russia and the West. It is significant that many wealthier Russians are still trying to get out of the country. Dubai has emerged as a safe haven for Russian money.

Fourth, right now we don’t know whether Wagner will continue to exist or not. Many Wagner fighters originally received pardons for crimes in exchange for a rifle. Will they meekly join the regular army? Will they slink back to their homes in Russia? Or will they join their boss in Minsk? And what about the Wagner units which are already active in Mali, Sudan and possibly elsewhere? According to the BBC, Wagner is still recruiting in boxing clubs across Russia. Wagner yet remains a wild card with a worrying potential to do harm.

The master geopolitical analyst Ian Bremmer wrote on Wednesday: “The likelihood of regime change in Russia remains near zero … until it happens. But these events show that the tail risks are fatter than we thought.”

Endgame Scenarios

The events of last weekend oblige us to take stock of how this war is unfolding and how, after 16 months of carnage, it might conclude.

It is highly unlikely that there will be a negotiated diplomatic settlement as things stand. The minimum Russian demands would be way beyond the maximum concessions the Ukrainians could countenance. The Russians started out with the war aim of bringing all of Ukraine back into the embrace of Mother Russia. They now realise that is not going to happen – and might settle for the territories they have already annexed along the western shores of the Sea of Azov. But the Ukrainians, for their part, want all of their territory back and think that anything less would be to legitimise Russian violence against a peaceful neighbour. They also want to regain Crimea, a strategically pivotal territory which Russia seized back in 2014. There is currently not even a starting point for potential peace talks.

It is more likely that, after a summer Ukrainian counteroffensive which proves inconclusive, there is a de facto ceasefire, and that the conflict then becomes “frozen.” Remember that the Korean War (June 1950-July 1953) ended without a peace deal beyond an agreed demilitarised zone separating North and South Korea. Technically, the two neighbours are still at war. Or again, consider that there never was a formal treaty to formalise the separation of Turkish and Greek-majority Cyprus. A barbed-wire fence was erected to divide the two parts of the island and, eventually, crossing points emerged – but to this day the state of Northern Cyprus is recognised only by Turkey.

If Putin were to announce that Russia had taken what it wanted and ordered his men to stop shooting, that might be taken as a call for a ceasefire. But it is not at all clear that the Ukrainians would heed it. They want the Russians out of their land and any unilateral cessation of hostilities by Russia would be seen as a further sign of weakness. In any case, in the frozen-conflict scenario, Russia would remain subject to western sanctions indefinitely, just as North Korea is. No doubt states which have close existing trade links with Russia such as Turkey and China might seek to profit from Russia’s continued isolation.

Then there is the possibility that either side might achieve an overwhelming military victory which brings the conflict to an end. This also seems improbable to me – and full of risk. If the Russian army were to collapse and retreat and President Zelensky were to claim victory, that would also be a dangerous moment because it would almost certainly bring about the demise of Putin, with no obvious candidate to replace him. That might entail another panic surge in energy and grain prices, further stoking global inflation. And if the Ukrainian counteroffensive were to crumble and the Russians managed to sweep back into Kyiv and proclaim victory, that would trigger a wave of panic across Europe and beyond with equally unpleasant economic consequences.

Thus, 16 months into the most gruelling European war since World War II, it is still impossible to know how the conflict will end, and when. Moreover, it is difficult to foresee any ‘good’ outcome or happy ending. A defeated Russia will become even more resentful and authoritarian than under Putin and will continue to be Europe’s major security threat until well into the second half of the 21^st century. Hybrid warfare – non-military aggression, including repeated cyber attacks – would continue for the foreseeable future.

What seems most likely, in the short term at least, is that the war will grind on as Putin seeks to chisel away at Ukrainian resolve in the hope that, eventually, Kyiv will sue for peace. So long as Zelensky and his retinue remain in power, that will not happen.

Immediate Economic And Market Consequences

For eight hours or so last Saturday, movers and shakers in the West were wondering whether, if Russia were to descend into civil war, exports of grain, oil and fertiliser, already down on pre-war levels, might stop completely. Such an outcome would have seriously discombobulated a global economy already struggling with inflation and teetering on the brink of recession.

As it turned out, such fears were unfounded; and yet the long-dated commodity futures markets suggest that some players may have started to rebuild their strategic reserves of essential commodities as insurance against another unforeseen shock. The US Strategic Petroleum Reserve is currently at a 40-year low – which seems unwise to some commentators. Expect a push by the US government to replenish it, with resulting upward pressure on the oil price.

This week, the rouble is down, and wheat prices are up. Gas prices soared by 14 percent on Monday before easing. Russia is experiencing a desperate shortage of workers – the labour force has declined by an estimated 1.5 percent since the war began. Oil and gas revenues are declining. And yet the Russian economy is still ticking over: there is no sign of impending economic collapse.

On Thursday, we learnt that a senior Russian General, Sergey Surovikin, who gained a reputation for brutality in Syria, had been arrested. Previously, the New York Times had reported that unnamed US officials had alleged that he had known in advance of Prigozhin’s mutiny. Surovikin had not been seen in public since Saturday. If this is the overture to a full-scale, Putin-led purge, we might expect further political dislocation which could affect commodity prices.

The Russia problem – how a Eurasian empire with no natural borders and a tendency towards autocracy can coexist with its liberal neighbours to the West – will never go away. There is a state of friction which resides somewhere between Cold War and ‘Hot War’. That is where we are right now – and all bets are off.