Ukraine War Diary

Perhaps this should just be called 'War Diary'

Chris Johns

I write a (short) daily post for Powerscourt, a Strategic Communications company, based in London and Dublin. The idea is to summarise the news flow around the war in Ukraine - not so much the news that makes the front pages but more the stuff that we find interesting/relevant. News that may have not attracted the attention it deserves. Anyone interested in receiving the short email on a daily basis is welcome to contact Powerscourt here: insights@powerscourt-group.com.

Monday October 23rd

Old and new ways of war have been in evidence since Russia invaded Ukraine in February 2022. The increasing use of drones has proved extremely effective, helped by rapid technological advances in both their construction and deployment. Drones and precision artillery are used to devastating effect on any soldier or armoured vehicle that ventures into the open. If that is relatively new, entrenched fortifications more reminiscent of World War 1 await any side that manages to make it across no man’s land. 

It appears that the only ways for the attacking side  to respond to massive battlefield losses are, first, to change tactics or, second, send even more men and tanks.

Current battles around the settlement of Avdiivka contain both elements of the old and new. Ukrainian troops are well dug in behind defences constructed over many years - the conflict here started in 2014, not 2022. Spotter drones help direct artillery and attack drones onto any Russian attack. Moscow’s losses of men and heavy armour have been extensive. One of the oldest lessons of war is being applied: no matter what the losses amount to, whoever has the most men and guns wins. At least, that is what the Kremlin believes. Despite horrific losses, Russia is daily sending reinforcements and replacements to the battle for Avdiivka.

Russia’s experience to date in Avdiivka is very reminiscent of the early days of Ukraine’s June counteroffensive. Kyiv was forced to change tactics in the face of heavy losses of men and armour every time a frontal assault was attempted. Rather than those set piece battles, Ukraine changed to small-scale skirmishes aimed at incremental advances that minimise losses.

The big difference between the two sides is that Russia has more men, more armour, and doesn’t appear to care how much of either it loses. Memories of the Second World War are strong: whereas the U.K. and the US saw less than 1% of their pre-war populations killed, the Soviet Union suffered 14%, or around 26 million, fatalities.  Russia’s ally Belarus lost the most, roughly 25% of its people died. Poland and Ukraine lost around 16 - 17% of its citizens, many of whom were Jewish victims of the Holocaust. 

Tuesday October 24th

US defence officials have confirmed that a quantity of 155mm artillery shells earmarked for Ukraine have been diverted to Israel. The Pentagon tried to downplay the significance of this move, claiming there would be no immediate impact on Ukriane’s defence of its territory. The word ‘immediate’ is doing a lot of work there.

The Russian foreign minister is in Iran, straight from his trip to North Korea. Sergei Lavrov’s visit to Tehran aims to improve defence cooperation and other ties. Russia shopping list includes Iranian drones. Tehran wants access to Russian technology and anything else that is on Western sanctions lists. Iran’s ability to disrupt the Middle East is growing, helped by its access to things like Russian satellite technology. 

The 1000 containers recently shipped from Pyongyang to Moscow are thought to have contained a lot of artillery shells - perhaps as many as half a million. Estonian intelligence officials, a consistently reliable source during the war, reckon that this new supply along with Russian manufactures will be sufficient for the Kremlin;s needs during 2024. Russia is currently firing an average of 10,000-15,000 artillery shells a day, much reduced from a previous peak of up to 80,000 daily. North Korea’s recent gift of shells will last roughly a month at current and prospective firing rates. Many more shipments are expected. Pyongyang probably expects the same gifts as Tehran in exchange. 

The cost of all this is staggering. A single guided 155 mm shell, full of GPS and other hi-tech kit, can cost up to $90,000 or more. Many of the shells fired are, of course, dumb. Estimates vary - there are multiple types of shells - but the simplest shell costs around $300 - $500. Precise estimates of the types of shells - and therefore their costs - being fired are impossible to obtain. Suffice to say that it might be worth realising that every dollar’s worth of Russian gas and oil that we are still consuming ends up financing another 155mm artillery shell.

Wednesday October 25th

Getting conscripts to do something - anything - brings varying degrees of difficulty, mostly depending on the degree of risk that is associated with any given task, at least on the battlefield. Russian commanders have found it easier to persuade ordinary soldiers to be effective defenders than to order them to attack. Perhaps, in a relative way at least, one activity is passive, the other aggressive. It has, apparently, been so difficult to find troops with both skills and willingness to attack that the Russians have had to form punishment battalions comprised of convicts and regular troops on disciplinary charges of one kind or another. 

It should come as no surprise that these troop formations are not proving to be very effective. But their use in ever increasing quantities, albeit with horrendous casualty rates, smacks of the tactics previously employed by General Valery Gerasimov, perhaps the biggest winner of the internal blood feud with Wagner boss Yevgeny Prigozhin (more accurately, the joint winner alongside defence minster Shoigu). Prigozhin, it should be recalled, repeatedly described both men as incompetent. The quality that has most contributed to their longevity is not military prowess but loyalty to Putin.

When we talk about conscripts we need to be precise. While there has been a mass mobilisation of sorts, Putin has been careful to ensure that the big population centres of Moscow and St Petersburg have been relatively unaffected. Indeed, wider efforts have been made to convince Russia’s middle classes that the war doesn’t really affect them. Conscripts have come from poorer parts of the country and have increasingly been drawn from minority groups such as immigrants from the central Asian Republics. Yesterday, allegations from the Internal Affairs minister amounted to saying that migrants commit more crimes than ordinary Russians. Such criminals are finding that, post-arrest,  the army is an alternative to prison. 

Thursday October 26th

Great care should be taken when choosing the lens through which we view current events and the words that we use to describe them. Post hoc ergo propter hoc is the classic phrase that comes to mind; confusing causation with correlation puts it another way. Joining dots that have nothing to do with each other is perhaps the most basic, but consequential, error the analyst can make. The temptation to paint an overarching story is always strong.  

‘The Cold War’ was a conflict never declared, never officially over. During the years 1945-91, almost every regional war was seen as a proxy Russian-US fight. Plenty of analysts saw the Arab-Israeli wars during that time as just another version of the ongoing Cold War between the two superpowers. The Ukraine war is seen by many people, particularly in Moscow, as another proxy Russian-US fight. 

In the early days of Israel’s modern existence, the Soviet Union cosied up to the Jewish State, hoping for a like-minded socialist ally. When it became obvious that US and Israel would grow into close allies, Moscow’s strategists turned to Arab countries and a desire to see America essentially removed - in terms of both physical presence and alliances - from the region. 

In a reprise of those times, it is said that the current war between Hamas and Israel is yet another proxy war between Russia and the US. ‘Cold War 2 (CW2)’, according to prominent US public intellectuals such as Noah Smith, has started. This time, the US is up against a unified bloc comprising Russia, China, Iran and North Korea. ‘The Global South’  is spotting who is likely to win CW2, getting off the fence, and joining this ever growing bloc.

Seen through this lens, the US is now fighting two wars, one in Ukraine, the other in the Middle East. At least one of those wars threatens to spiral out of control, and a third war beckons once China can no longer resist the temptation to flatten Taiwan prior to invasion. 

It could well be that far too many dots are being joined here. Your correspondent struggles, however, to see where this analysis is seriously flawed. The hope is that that expanding four country ‘bloc’ is badly labelled - as Jansen Ganesh argues in the FT, they are just as likely to end up fighting each other as staying unified. But, as The Economist suggests, the US does not have the resources to fight a three-front war. And Donald Trump has reiterated his determination to pull the US out of NATO. If his current poll lead over Biden persists, CW2 may not last much longer.

Friday October 27th

Global stock markets are, generally, down since the invasion of Ukraine 20 months ago. That’s not to say that the war has caused equities to be weak, although there is definitely more than just correlation going on here. Share prices are actually weaker than the headline indices would suggest. A narrow range of familiar US tech companies have done rather well over past few years - the usual names, Alphabet (Google), Gacebook, Amazon, Microsoft, Meta and one or two others are the usual suspects. Once we exclude this very small list of stocks, world share prices have been very weak. And things look weaker still if we simply look at markets outside the US.

There is no rule that says war is always bad for stock markets; arms manufacturers are often obvious beneficiaries and this time has been no different. One historical fact, a rather obvious one if you think about it, is that if a war is fought on your territory your equity market will do very badly. Especially if you lose. Japan and Germany during World War 2 are cases in point.

Many things affect equity prices and most stories that seek to explain financial asset prices are just that: stories. If we ever know the truth, it is often not until much time has passed. During the intervening period an army of investment bank analysts and newspaper headline writers create narrative fallacies about why prices move around.

Vague statements about ‘war is rarely good for markets’ are ok. We know, additionally, that rising inflation and interest rates are also intensely disliked by equities. Inflation has been a big driver recently. Interest rate markets have been in turmoil, especially bond markets. Bonds, especially of the government variety, are supposed to be stable and boring. Recently, they have been highly volatile and very interesting.

Historically, war is often inflationary. The more war, the more inflation rises. Ukraine and the Middle East will probably be no different. History is, sometimes, a good guide to the future. Higher interest rates are, on this analysis at least, likely to stick around for some time yet. That’s about as precise a forecast for interest rates as you should ever listen to. It could also just be another narrative fallacy.