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It’s been a dynamic last few days in the Russia-Ukraine conflict. And it’s also put the issue of often dubious quality of war-related information front and center. That applies most of all to the kinetic war, as in the fighting. But it also applies to the economic war.

Even though this post will be mainly about military operations, let’s not bury the lede. We’ve spoken again and again about timetables, how market time moves faster than political time. Market time also moves faster than military time. It looks ever more likely that the speed of developments in the real economy and markets will well outpace the resolution of the war. We can see some dim recognition of that possibility with government officials in Europe preparing for unrest via increasing policing. But what happens in the face of Tarhir Square level protests? Or a market seizure that threatens Europe’s wobbly banks? How will a finance bailout on top of giving Ukraine an open credit line work if the real economy hits the skids?

In other words, while the physical war is where the action is now, it could easily shift to a real economy and resultant financial crisis taking the fore as early as October.

Now to the war war. The Western press is predictably agog with Ukraine getting off its first successful offensive since 2014. Even Russian Telegram was apparently in hair-tearing mode with what a great loss this was for Russia, how Putin was in trouble.

Russian defeat or pullback? As a reflexive skeptic, I was bothered by the emotionality of many of the takes. This is a very thinly populated area, mainly with small settlements. The population of Izyum is only 45,000. In the early Kharkiv “offensive” both sides had pushed each other back and forth with few men and few casualties.

As Alexander Mercouris pointed out, Russia has earlier planned to use Izyum as a key foundation for moving further south. But they found the advance blocked by a very heavily bunkered “Sherwood forest”. So Izyum became a bit of an albatross: not useful for prosecuting the war, and subject to attacks from Ukraine.

The widespread initial reaction was that Ukraine had forced Russia out, when this operation looks more like a pullback. There were few Russian casualties, no evidence of a rout or even an over-hasty retreat.1 Larry Johnson pointed out that modern militaries do not turn on a dime and that Russia had to have planned to leave. Aside from the lack of a meaningful Russian body count, which is what you’d see if Russia really was caught with its pants down, Military Summary provides anectata that Russian soldiers were being pulled out

What about all that terrain, and the civilians? Part of the distress is falling for map thinking, which is normally imperative in a conflict but is not the driving framework for Russia in this campaign. It is out to destroy Ukraine’s warmaking capacity. It needs to clear the Donbass as a key aim of the Special Military Operation, but territorial targets beyond that are elective,2 and are chosen significantly to advance the destruction of the Ukraine forces. Experts have pointed out repeatedly that in the fighting in Donbass, Russia has often pulled back in the face of a Ukraine advance, which suits Russia just fine, since those advances often make the Ukraine forces more exposed.

But but but…Russia abandoned all those civilians who’d been friendly to the tender ministrations of the SBU. That seems to be much less true than Telegram hand-wringing would have you believe.

Andrei Martyanov provides a must-listen assessment of l’affaire Kharkiv. Don’t be put off by his dismissiveness (although I agree it puts a lot of noise in his signal).

Andrei makes many important points, particularly on the poor quality of Telegram commentary and the map-reading efforts (he has a takedown of Rybar, generally well regarded in the Russia-favoring community, in a related post). Andrei finds only three commentators to be reliable: Graham Phillips, Eva Bartlett and one Russian commentator whose name I can’t hear well enough to render (at 18:55).

Andrei points out that the area had already been significantly depopulated, with only 1/3 to 1/4 of the earlier residents remaining, and that Russia had already evacuated many of the friendlies (and per TASS, apparently made a last run at it on September 8). Andrei argued that the Russians didn’t see much upside in fighting to hold territory when the people left weren’t on your side.

He also mentions the horrific casualties, a point I mentioned yesterday morning in comments, before hearing Andrei’s remarks:

So everyone is freaking out over the map. All the talk is fixated on that.

What is being ignored is the body count.

The MoD, as quoted in various sources yesterday, said:

The RF Armed Forces destroyed more than 2,000 Ukrainian and foreign fighters, as well as over 100 pieces of armored vehicles and artillery in three days.

This was quoted after the end of day Saturday in Russia. But not sure when MoD gave the account.

If the MoD figures are accurate, and most commentators have taken the MoD as accurate or at least not very exaggerated, they killed 2,000 men by at the latest end of day Sat, more likely earlier that day or end of Friday. That implies another 6,000 wounded.

That is out of 9,000 to 15,000 troops. 15,000 is the highest number I have heard attributed to the Ukraine side. So more than half taken out in at most three days.

If this is true, the misreporting/cognitive capture is massive. This “counteroffensive” will have been a worse slaughter than Kherson, but since Russia has not yet moved its troops in to retake ground, and instead is taking them out largely from the air (not the normal Russian order of battle, BTW) this will be the biggest PR headfake in a very long time.

The reason this is not implausible is Big Serge indirectly confirmed that Ukraine was taking a beating in his account, citing a Ukraine reporter:

“There is heavy fighting near Kupyansk, worse than Balakleysky. We are taking heavy losses. The enemy is transferring a bunch of reserves by air. The “Wagnerites” have already arrived in the city itself. The sky is filled with aircraft. Hearing about all this, a haunting feeling of an ambush arises in the soul. What if this all really turns out to be a strategic level ambush?”

The Ministry of Defense reported another 450 total killed in the Kharkiv region in its Sunday report. That would bring the total of dead and wounded, assuming the usual 1:3 ratio, to 10,000 (although between Kharkiv and Kherson, from September 6 to 10, the MoD is reporting a total of over 4,000 eliminated and 8,000 wounded; perhaps they are being conservative on wounded?). Andrei claims that the MoD estimates for Kharkiv are low and insinuates he has some reports from the field.

I have heard second hand that there are higher estimates for Ukraine forces committed to Kharkiv, now more like 30,000. Even so, the loss rate is awful and the fighting isn’t over. And was this increase planned or were reinforcements sent in?

Was this a trap? The Russia bulls seem a bit over-confident that Russia will (further) lower the hammer on Ukraine. But if so, my guess is not that they planned this lure but saw Ukraine massing forces and figured out where they could best take that. But this is the argument, as made by Larry Johnson:

I agree with Andrei Martyanov’s take–the Russians knew it was coming and chose to let the Ukrainians flood the zone in order to eventually hit the Ukrainian forces with a massive counter attack. The Ukrainians are no longer in fortified defensive positions and their lines of communication to support the forward troops are now defined precisely. The Ukrainian attack has not destroyed nor disrupted Russia’s air, artillery, rocket and missile assets. Attacking the Ukrainian units is an easier task, not more difficult.

I am not privy to the Russian plan. But what I do know is that the planning process required to deploy the troops and equipment moving into Kharkov was not a panicked response. Hollywood can create the illusion of rapid movement of military troops, but the real world requires alerting units, making sure they are properly supplied and then undertaking the logistic task of moving those units into combat. This means the planning was deliberate, not a crisis response.

What about damage to Putin? Even though the professionals have been pretty chill about the “Kharkiv offensive,” that does not mean they have a lot of share of mind in Russian media or social media. The explosion of criticism on Telegram suggests there are a lot of people there, and probably in Russia too, who’d like to see the war prosecuted more aggressively.

Brian Berletic pointed out that Putin got a lot of criticism during the Syrian conflict, where he repeatedly allowed humanitarian corridors to be opened, which not only slowed the resolution of the war but even allowed the rebels to get food. Berletic argued that even though Putin looked wrong in the short term, he played the right long game. Russia would not have been able to restore relations with Turkey if it had gone full bore.

Some have said Putin doesn’t have as many degrees of freedom with public opinion with Ukraine as he did with Syria. But Russia engaged in major strikes in southern and eastern Ukraine to take out part of the electrical grid (Ukraine is whining about the damage). This follows Ukraine operators shutting off the last reactor in the Zaporizhzhia nuclear power plant and thus taking that electricity supply to Ukraine to zero.

This move was not in retaliation for the Kharkiv offense. Among other reasons, it would have taken some planning to identify targets. Moon of Alabama says instead it is to whack Ukraine for hitting civilian electrical infrastructure, both in Donbass and Belgorod. But the timing worked out well for shoring up optics in Russia.

And in the style Russia has chosen to adopt, this was pretty mild on the pain scale compared to what they could have inflicted. From Moon of Alabama:

Over more than 200 days the Russian special military operation in Ukraine had never attacked the basic infrastructure of the country…

One thus wonders about the Ukrainian decision makers and their ‘western’ intelligence minders who thought that attacking electricity networks under Russian control would somehow benefit their cause.

The Ukrainian military has for weeks attacked the Zaporizhzhia nuclear power plant…

It was not the only target of Ukrainian infrastructure attacks. As British intelligence asset Bellingcat mouthpiece Christo Gorzev tweeted gleefully:

Christo Grozev @christogrozev – 23:05 UTC · Sep 7, 2022Half of Belgorod is left without electricity after what appears to be a Ukrainian attack on its central electricity distribution station
Embedded video

Belgorod is a city in Russia a few miles north of the border to Ukraine.

Yesterday’s report by the Russian Defense Ministry about its war effort complained about systematic Ukrainian attacks on the electricity infrastructure of Donetsk city and other places:

In order to destabilize the situation in the territory liberated by the Russian Armed Forces and the suffering of civilians, the Kiev regime continues its deliberate shelling of energy infrastructure: generating facilities, transformer substations, and power lines….

It’s important to say that the daily strikes against civilian infrastructure are carried out by the Kiev regime in a deliberate and targeted manner.

By systematically attacking the power infrastructure in Russia and in Russian held territory the Ukrainian government has launched deliberate terror attacks against the populations in those areas.

It seemed to have forgotten the remarks of Russian President Vladimir Putin who had said:

[E]veryone should know that, by and large, we have not started anything in earnest yet.

Yesterday evening Russian cruise missiles were launched from Russian ships in the Black and the Caspian Sea. They were targeted to interrupt, not yet destroy, four Ukrainian power plants and to temporarily disable the Ukrainian electricity network:

Russia attacked power stations and other infrastructure Sunday, causing widespread outages across Ukraine as Kyiv’s forces pressed a swift counteroffensive that has driven Moscow’s troops from swaths of territory it had occupied in the northeast.The bombardment ignited a massive fire at a power station on Kharkiv’s western outskirts and killed at least one person. President Volodymyr Zelenskyy denounced the “deliberate and cynical missile strikes” against civilian targets as acts of terrorism.

Ukraine’s second-largest city of Kharkiv appeared to be without power Sunday night. Cars drove through darkened streets, and the few pedestrians used flashlights or mobile phones to light their way.

The attacks also disrupted the Ukrainian military railway transports which currently move troops from the north and west towards the Vuhledar area in the southeast from where they plan to attack in the direction of Mariupol.

And it appears that there’s more attacks today. From the comments section of Andrei Martyanov’s video post, translating a Telegram channel:

New explosions are reported in Kharkov. An air alert has been declared in the city. The local Gauleiter has already confirmed the new arrivals.

⚡️Electricity went out again in some districts of Kharkov after the shelling

Kharkov, critical infrastructure facilities have been disabled, electricity and water have gone, the metro has stopped

The mayor confirmed. A strike on a target in the Kiev region. There is strong smoke.


According to the mayor of the city, yesterday’s situation on the disabling of critical infrastructure facilities is repeated: the city lost power and stopped water supply.

Thus, the attacks on the Ukrainian energy infrastructure in the east of the country have been going on for the second day, which gives some hope for the emergence of a systematic approach.


And an interesting thought from midori as to why only now to hit electrical grids:

Kolmogorov was saying months ago that Russia will start advance to West Ukraine by cold/late Autumn, guess knocking power grid now means less time to fix and adapt psychologically for Russian advance, Ukrainians are panicking now, they probably believed that Russians won’t do it due to fear of NATO intervention, even recently clown Zelensky said they’ll export electricity to help EU cope with consequences of sanctions LOL

Needless to say, this is an overly dynamic situation with dodgy data. But it still seems like that the economic war will reach a critical phase before the kinetic one does.


1 I’m not persuaded by photos of alleged abandoned equipment without some corroboration. Ukraine has been doing fakes of Ukraine dead tanks or Russian dead tanks from earlier combats as fresh kills since the start of this conflict. Dead soldiers would be more persuasive

2 Russia is assumed to be likely to want to take the Black Sea coast, but the probable expansion of aims is due to the need to subjugate the rest of Ukraine as cheaply as possible, since they reneged on initial settlement commitments.

This entry was posted in Doomsday scenarios, Economic fundamentals, Energy markets, Media watch, Politics, Russia on by Yves Smith.