March 2, 2022
War
During the last day, Russian troops made significant advances in their offensive. Russian troops achieved the greatest success in the south of Ukraine: they took control of the city of Kherson (280,000 inhabitants), came close to Mykolaiv (475,000), and advanced strongly toward Zaporizhzhya (720,000). A group of troops advancing from Crimea joined the group advancing from the LNR/DNR. Ukraine was completely cut off from the Sea of Azov. Mariupol (475,000) is completely blockaded by the Russians, who do not enter the city and conduct constant artillery fire.
The Russian group advancing from the northeast has not yet been able to capture Kharkiv (1.4 million), but, having passed between the cities of Sumy (260 thousand) and Chernihiv (285 thousand), has noticeably approached Kyiv (3 million) from the east.
The goal of the Russian attack on Ukraine can be seen more and more clearly: A change of power in Kyiv. My Ukrainian friends have confirmed in telephone conversations that Russian troops are not forming governing structures in the captured cities, leaving everything in the hands of Ukrainian local authorities. Sometimes, as in Konotop, the local authorities agree with the Russian military that the troops will not fire on the city and will march past it, and that the townspeople will not shoot at the Russian soldiers in the meantime.
Russian soldiers are looting stores in many captured towns, primarily food stores, because food supplies brought from Russia have run out. As a rule, Russian soldiers tell residents: “You don’t provoke us, and we won’t touch you,” and in this way, calm is maintained. In some Ukrainian cities, citizens peacefully protest; in Melitopol, Russian soldiers fired into the air to disperse them.
Today, the Russian Defense Ministry acknowledged casualties in the war with Ukraine for the first time, naming the Russian death toll at 498.
Journalists from Ukrayinska Pravda spoke to those caught up in the occupation in southern Ukraine. If you want to know how the takeover of this region took place, what the locals feel and see, read this material—Google Translate will allow you to do so.
The website of the Russian propaganda agency RIA Novosti has an article that was supposed to be published on the day Russia’s victory was proclaimed. The report is dated February 26, indicating that the Kremlin was counting on how it could bring about a change of power in Ukraine in as little as three days. The most significant theses of this article are:
Without a bit of exaggeration, Vladimir Putin has taken on a historical responsibility by deciding not to leave the resolution of the Ukrainian issue to future generations. After all, the need to resolve it would always remain a significant problem for Russia—for two key reasons. And the issue of national security—i.e., the creation of Ukraine as an anti-Russia and an outpost for Western pressure on us—is only second in importance among them.
Now this problem is gone. Ukraine has returned to Russia. This does not mean that its statehood will be liquidated, but it will be restructured, re-established, and returned to its natural state as part of the Russian world. In what borders, in what form will the union with Russia be fixed (through the CSTO and the Eurasian Union or the Union State of Russia and Belarus)? This will be decided after the end of the history of Ukraine as anti-Russia. In any case, the period of the split of the Russian people is coming to an end.
The first would always remain a complex of divided people, a complex of national humiliation—when the Russian home first lost part of its foundation (Kiev) and then had to put up with the existence of two states, no more an extended one, but two peoples.
Did anyone in the old European capitals, Paris and Berlin, seriously believe that Moscow would give up Kyiv?
...The operation in Ukraine is incapable of rallying anyone but the West against Russia. Because the rest of the world sees and understands perfectly well—this is a conflict between Russia and the West, it is a response to the geopolitical expansion of the Atlanticists. It is the return by Russia of its historical space and its place in the world. Russia has not just defied the West; it has shown that the era of Western global dominance can be considered thoroughly and finally over.
The article was originally posted here. Then it was removed from the site but remained in the archive pages. If you have a desire to read it, it is here.
Sanctions
The White House said the United States and its allies are imposing a new package of sanctions, mainly targeting Russian defense industry enterprises and Russian companies that cooperate with Russian security agencies or research centers working for the defense complex. Restrictions are also imposed on exports of oil and gas processing equipment to Russia, “not to limit current supplies of energy resources to the world market, but to undermine Russia’s leading position in the global energy sector in the future.”
In addition, the export restrictions imposed on Russia last weekend have been extended to Belarus, which closes the most apparent loopholes for escaping sanctions.
The European Union published a decision that seven Russian banks will be cut off from SWIFT, and European banks will not be allowed to sell euro banknotes to Russia. I do not think these measures will seriously impact the current situation: Banks disconnected from SWIFT account for 26% of the banking system’s assets; unlike the U.S. sanctions, Sberbank did not fall under this restriction. In addition, the inability to use SWIFT makes it very difficult to work in the financial markets but does not interfere with international payments.1
Fighting against sanctions
The Central Bank introduced new currency restrictions: Foreign currency transfers from Russian banks are banned for all companies registered in 43 countries, which joined the sanctions against Russia.
The government adopted an anti-crisis package, which, in my opinion, does not solve in any way the problems that the Russian economy faced due to the imposition of sanctions, but allows them to report to the President that “decisions have been made, support will be provided.” The pact includes:
- A moratorium on inspections of individual entrepreneurs and small businesses.
- Small and medium-sized enterprises will be compensated for six months for the use of the Russian system of fast payments.
- IT enterprises will be exempt from income tax and inspections for three years and will be given loans at a rate of no more than 3%. Employees of such companies will be able to apply for a preferential mortgage and get a deferment from the draft for the period of work in Russian companies.
- Support of the bill on the abolition of VAT for individuals for the purchase of investment gold.
An analysis of the behavior of the Russian authorities suggests that they were not prepared for such a set of sanctions. Many of the decisions were not prepared in advance, and the texts of the regulatory documents were written in a hurry and did not pass a thorough legal check. Lawyers point out the poor quality of all records that introduce various currency restrictions, identifying inconsistencies, possibilities of ambiguous interpretation, and contradictions with the legislation.
The development of new proposals is constantly being brainstormed, and sometimes very radical proposals are revealed. For example, the Russian Ministry of Transport is seriously discussing nationalizing foreign-made aircraft in Russia.
At the same time, it is evident that the Bank of Russia has managed to create a system of mutual correspondent accounts in dollars and euros, which links at least 20 major banks, allowing transfers between them, without withdrawing payments outside the Russian banking system. This design will allow the Russian economy to accept and send international payments through the correspondent accounts of banks that sanctions have not hit.
In addition, the Russian authorities managed to keep the currency market from collapsing: Partly because the government forced large exporters to sell the currency received in the previous two months, partially because the Bank of Russia does not allow banks to use loans received from the Bank of Russia to buy foreign currency. However, overall, the situation on the currency market cannot be called calm: The price of the dollar has been growing daily by 5%-7%, and since mid-February, it has already increased by 41%; the difference between the buying and selling rates of cash currency in exchange offices of banks is 20%-30%.
Respect
Roman Abramovich is one of the most famous and controversial Russian oligarchs; his fortune is $12.4 billion. In the late 1990s, he was a junior partner of Boris Berezovsky, and many believed he was the “treasurer” of the “family,” relatives of President Boris Yeltsin and his inner circle. In the early 2000s, after Vladimir Putin came to the Kremlin, Abramovich became the sole owner of the assets, which were considered to be his joint property with Berezovsky.
In January 2001, he became governor of Chukotka, a heavily subsidized region of Russia, which he held until mid-2008, before the end of Vladimir Putin’s second presidential term.2
In 2003, Abramovich sold the oil company Sibneft to Gazprom for the then-enormous sum of $13.6 billion, after which he left Russia and lived mainly in London. After selling Sibneft, Abramovich bought London’s soccer club Chelsea. According to experts, over 18 years, he invested about 1 billion pounds sterling in its development and made Chelsea one of the leading clubs in Europe.
After the start of Russian aggression against Ukraine, the British government banned Abramovich from entering the country. He handed over the management of Chelsea to the club’s charitable foundation. Today Roman Abramovich announced that he is selling the soccer club and will send the proceeds to help victims of the war in Ukraine.3 However, the businessman’s statement does not say explicitly that this aid will be given to Ukraine and its citizens; the very recognition of the war and willingness to help those affected by it is certainly worthy of respect.
The ban on the report to Russia of euro banknotes may lead to some discomfort for Russians who have deposits in the European currency. Russian banks have accumulated a sufficient amount of dollar banknotes, and all depositors wishing to receive funds from their deposits can do so. But the stocks of euros turned out to be insufficient, and some banks cannot return to the depositors in this currency. At the same time, banks are ready to give out funds to depositors in rubles or dollars.
As governor, Abramovich paid income tax to the regional budget, which allowed him to solve many of Chukotka's problems.
Abramovich brokered the first round of talks between Ukraine and Russia on February 28.
At some point Ukraine will surrender rather than have its people slaughtered and its cities and infrastructure destroyed. There would be no shame in that given that NATO will not intervene and the bravery already shown by Ukraine.
A surrender would be worse for Putin than a ceasefire and a settlement in exchange for a lifting of sanctions. Thoughts?