Page 5 - UKRRptSept22

1.0 Executive summary
The war grinds on in Ukraine with no end in sight. There was the hope a peace fire could be reached in April during the Belarusian talks, but that faded away after the massacre at Bucha* and Ukrainian President Volodymyr Zelenskiy has taken an increasingly hard line: Ukraine will not surrender and not stop fighting until all its territories – both the Donbas and the Crimea – are returned to Kyiv’s control.
The US has also taken a hard line and offered multiple packages of military support. The introduction of the US M142 High Mobility Artillery Rocket Systems (HIMARS) was particularly effective, able to strike deep into Russian control territory, forcing Russia to move both its command posts and ammo dumps back from the front line and effectively trebling its supply routes.
The result has been to bring Russia’s progress to a halt and leave the conflict in a stalemate . At the time of writing Kyiv had launched a large counteroffensive in an effort to retake Kherson that fell to Russia in the first days of the war. However, both sides are looking increasingly exhausted. Kyiv was preparing the Kherson operation for two months and Russia moved troops from Donbas to reinforce the city, thus slowing its operations in Donbas even further. Russia has taken the whole of the Luhansk region but increased its share of Donetsk by only 5% in a month of fighting from 55% to 60%.
While weapons like the HIMARS have caused Russia real headaches and it has had to pause to remake its logistical support, these are high tech, very precise weapons, but they don’t kill a lot of infantry. Russia’s dumber but far more numerous artillery do. It seems increasingly unlikely that the West, and the US in particular, will supply Ukraine with infantry-fatal arms like tanks and planes so the war is likely to drag on, possibly all winter.
Ukraine now has no production facilities at all to arm itself and is entirely dependent on western supplies. But there too there are problems as both Russia and the West do not have the production capacity to make more munitions in the short-term which will lead to supply bottlenecks soon as the existing stocks of munitions are running out fast.
In the meantime, Ukraine’s economy continues to be smashed, although outside of the combat zones life is returning to something that resembles normal.
The budget remains in deep crisis and in July, Ukraine’s budget deficit grew significantly. The National Bank of Ukraine was obliged to devalue the national currency by 25 per cent and is keeping the prime rate at 25%, but after the US released $4.5bn in budgetary aid and the EU promised to add another €8bn in September, the outlook improved significantly. The main ratings agency increased Ukraine’s rating by one notch above default and Kyiv has been given debt holidays for two years by its creditors, as have the major state-owned enterprises.
The resumption of grain exports following the Istanbul grain deal on July 22 has also improved the outlook further
as Ukraine expects to earn some $20bn from grain exports this year.
5 UKRAINE Country Report September 2022 www.intellinews.com