In Geopolitics This Week
Russia’s War in Ukraine Enters its Second Month, The US, the EU and the G7 Announce More Sanctions on Russia, The European Union Relies on the United States, and other stories.
Russia’s War in Ukraine Enters its Second Month
As the war in Ukraine enters its second month, the initial Russian military campaign appears to be culminating without achieving its objectives. This failure of Russia’s initial manoeuvres in the war marks an important inflection point as Russia’s offensive thrusts come into increased resistance along all axes of the advance. Russian military logistics and supply lines have come under intense fire, slowing a sustainable advance and forcing Moscow to adjust to the chaotic nature of an evolving battlefield in Ukraine. Under such conditions, the war is gradually settling into a condition of stalemate.
Russian forces continue their attempts to secure key positions, yet no major movements have occurred around Kiev for some days. Russian forces continue to dig in as they shell Ukrainian-held positions without conducting major offensive operations. Russian forces are continuing to fight for positions in Irpin and around Hostome, and their forces have pushed into the town of Slavutych just north of the capital. From there it is likely they intend to tighten their encirclement of Chernihiv.
In the South, Russian forces are likely to make important progress in seizing the city of Mariupol in the coming days, and will probably take the city sometime next week. In the coming days, the scale of Russian losses in the fight for Mariupol will be more clearly understood, and these will surely determine the extent to which Russia will be able to reposition its forces for a renewed large-scale operation elsewhere in Ukraine. Meanwhile, the city of Kherson appears to be resisting Russian control, which has resulted in the Russian military and national guard concentrating more forces on securing the city. The need to secure captured cities can impose significant costs on over-stretched Russian forces, and constrain their ability to conduct offensive operations going forward.
Rising costs further for Russia is Ukraine’s demonstrated ability to inflict serious damage on expensive assets, as was demonstrated very recently when major Russian naval assets came under fire while docked in Berdyansk. Ukrainian forces reportedly conducted a successful attack on Russian ships docked at the occupied port, likely sinking a landing ship and damaging another. Incidents such as this will work to disrupt Russian forces from carrying out reinforcement operations in Mariupol and Kherson.
In the East, Russian forces apparently have shifted their focus away from a ground offensive aimed at capturing the capital to instead focus on the Donbas region. Colonel-General Sergei Rudskoi said Russian forces had “considerably reduced” the combat capabilities of the Ukrainian military, which now allows Russian forces to focus on “main efforts” to achieve the “liberation” of Donbas. It is too soon to tell, but current indicators suggest that Russian losses throughout the war have been, and will continue to be, high. With costs rising and losses mounting for both Kiev and Moscow, the war appears to be entering a new phase in which the armed forces of Ukraine and the armed forces of Russia solidify their positions and secure their supply lines, while each side further digs in for a protracted conflict.
The US, the EU and the G7 Announce More Sanctions on Russia
The United States and its allies have continued to make sure Russia incurs severe economic costs for its invasion of Ukraine. The sanctions regime is becoming near-total in economic terms, meaning that the economic war is now being conducted at almost all levels of economic and political interaction between the major powers. In the latest attempt at tightening Russia’s economic activities, the US and its allies have announced a joint commitment to block Russian gold transactions as a means to prevent Russia from selling energy and other goods in gold rather than in US dollars.
The rule effectively bans individuals – including gold dealers, distributors, wholesalers and financial institutions – from buying, selling or facilitating gold-related transactions involving Russia and other parties on the sanctioned register. According to the US Treasury Department, US persons are “prohibited from engaging in any transaction – including gold-related transactions – involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation or the Ministry of Finance of the Russian Federation.” The secondary effects of these sanctions will be considerable, as the US imposes penalties on persons and organizations in other jurisdictions, prohibiting international entities based in other legal jurisdictions from engaging in any transactional dealings with Russia’s sanctioned individuals and institutions.
Compounding issues for Russia, the US treasury statement was followed by the announcement of fresh sanctions against Russia’s defence sector, parliament, and banks. Under the new US-imposed sanctions, 48 of Russia’s state-owned defence companies; 328 members of Russia’s parliament; and the head of Russia’s largest lender — Sberbank — are all prohibited from carrying out transactions in US and allied jurisdictions. These prohibitions include punishments for anyone making contributions or providing funds, goods, or services that benefit any sanctioned entity, and even target anyone who receives any contribution or provision of funds, goods, or services from the blocked institutions or entities.
The new set of sanctions are likely to deal a considerable blow to the Russian economic and political spheres, especially as the US directly sanctions members of the Russian parliament, setting the stage for open hostilities for years to come. Yet Russia may be able to find alternative markets for the diverse set of goods and minerals the country regularly exports. Russian President Vladimir Putin has already announced that Russia intends to require the countries it considers as “hostile” to purchase its natural gas exports in rubles going forward. The Russian President ordered the country’s central bank to develop a system for payments in rubles this week as a means of securing state assets from the wide-ranging sanctions regime which has been applied to the Russian economy.
The Russian government has listed as “hostile” a number of states which have joined the US-led sanctions regime, including all EU member states, Canada, Japan, Norway, South Korea, Switzerland, and others. Putin stated that it no longer makes sense for Russia to conduct natural gas transactions going to the EU or the United States in dollars or euros, seeking to protect the Russian economy from a potential fallout resulting from further sanctions being applied to its energy sector. While no formal decision has yet been made, Putin was clear that these plans do not apply to existing contracts, emphasizing that Russia will continue to supply natural gas according to the volumes and prices established in previous agreements.
The European Union Relies on the United States
European Union norms are trending toward viewing Sino-US relations as the defining factor affecting disruptions in global markets in the coming years. This view is common in many European think-tanks today, some of which promote the idea that the EU already recognizes the reality that some form of ideological rivalry exists between China and the United States, and that this rivalry compels the EU to consolidate and centralize its power if the bloc is to play a role in this developing geostrategic competition.
In such an increasingly hostile international environment, EU member states are now in a position to choose how best to approach this reality. Yet economic considerations continue to dominate the agenda for much of Europe. Some EU member states have talked of rising to the challenge by advocating for others within the EU to lean into the bloc's economic strengths. But as trade barriers go up due to COVID restrictions, sanctions regimes, and wars, the costs associated with conducting trade rise. And with economic considerations at the centre of European politics, EU member state governments have been particularly easy to sway from Beijing.
In a bid to cultivate internal European resiliency to outside powers and enhance military preparedness going forward, the defence ministers of EU member states have adopted a long-awaited Strategic Compass document, presenting a plan to drastically boost collective defence efforts. The Strategic Compass highlights the EU’s growing alignment with NATO doctrine and infrastructure, as well as the continent’s continued reliance on the United States as its primary geostrategic partner of choice. EU defence ministers jointly agreed to work to uphold the “international rules-based order” by continuing to strengthen ties with established allies within the UN, NATO and G7 frameworks.
For the first time in the Union’s history, Russia has been directly branded as the primary geopolitical threat. According to the document, countering Russia will require the United States to remain the EU’s “staunchest and most important” strategic partner. Aside from setting a clear path toward deeper alignment with the US, the EU Strategic Compass document outlines ways EU member states will go about improving European security going forward. To achieve this, the EU will establish a Rapid Deployment Brigade of up to 5000 troops, conduct regular live exercises on land and at sea, enhance military mobility, boost intelligence analysis capabilities, develop hybrid warfare capabilities, improve offensive and defensive cyber tools, develop an information manipulation and interference toolkit, formulate a collective space strategy, and strengthen the bloc’s role as a maritime security actor.
At the same time, the US and select members of the EU have worked hard to persuade the broader European community that Russian energy must be gradually phased out of European markets. As a part of this determination, the European Union and the United States have announced an energy deal which will see EU member states import more liquefied natural gas (LNG) from the US. The move comes as US sanctions make buying Russian energy a risky investment, and is aimed to replace Russian energy supplies to Europe over the next five years. The deal will see the US deliver at least 15 billion cubic meters more liquefied natural gas to the EU previously planned. While considered a boost for EU member states, the deal comes at a time of high natural gas prices, and will work to only slightly reduce the share of Russian energy imported into the EU.
As part of the deal, the EU and the United States agreed to set up a Task Force which will work to facilitate deeper energy integration across several areas of interest. The United States will work to ensure additional LNG volumes for the EU market in 2022, with additional increases expected going forward. In addition, the US and the European Commission agreed to undertake efforts to advance the production and use of renewable hydrogen to displace fossil fuels, affirming their commitments to a joint resolve seeking to terminate EU member state dependence on Russian energy by the year 2027. Moreover, the US and the European Commission will jointly work to engage private sector stakeholders in order to formulate recommendations aimed at reducing overall gas demand in European markets.