A weekly round-up of the most important stories.
Monday July 8
Many Ukrainians are making the point that this morning’s daylight hypersonic missile attack on Kyiv could have been averted if the West had dropped its restrictions on using NATO-supplied weapons against Russian territory. A children’s hospital has been reported to be damaged and there have been multiple fatalities. Kyiv wasn’t the only target of the most intense Russian missile and drone barrage for some time.
Ukraine is hitting targets in Russia with its own limited supplies of domestically produced weapons - particularly drones. A large ammunition depot was hit in Sergeevka, Voronezh Oblast, over the weekend. The Institute for the Study of War reports also on a Ukrainian Air Force strike against a Russian regimental command post in Belgorod Oblast. The ISW suggests that Ukraine is getting better at using their own capabilities to intercept Russian drones in mid-air. If Ukraine can deploy these interceptor drones at scale, Russia’s dwindling supplies of hypersonic missiles will have to be replenished and do more of the work.
In a sign of how the world is realigning, Narendra Modi, the Indian Prime Minister is in Moscow today. The two day visit resulted from an invitation from Vladimir Putin. India is one of the largest importers of Russian oil, taking 20 times the amount it bought three years ago. That’s not all for domestic Indian consumption of course, Some of that petrol in your car is quite possibly Russian oil, brought into the country via Indian middle-men.
Unconfirmed reports that Hamas has dropped its demands for an Israeli commitment to a permanent ceasefire are significant if true. Israel has always reserved the right to restart anti-Hamas operations, should the terrorist group reconstitute itself during any armistice.
Tuesday July 9
An underground blood vault has been built by Israel as “it prepares for war with Hezbollah” is this morning reported by Sky. Built fifty feet underground, the exact location of the vault is a closely guarded secret - that depth protects it against missile and other attack. Mass quantities of blood of all types are being stockpiled to be used in anticipation of potential large scale casualties. The report states that many in Israel say that war with Hezbollah is a matter of when not if. This would be a war with the potential to dwarf the one in Gaza, at least in terms of the risk of escalation.
Following the October 7th attacks everyone was worried that the conflict would spread throughout the region, dragging in Iran and the US. That didn’t happen but the risks are once again rising. The consequences could be dire. War between Hezbollah and Israel is something that the Iranians have said they would definitely get involved in.
Putin has another ‘dear friend’, making that at least two pals. India’s Prime Minister Narendra Modi has joined Putin and Xi Jinping’s exclusive friendship group. The Indian leader was warmly embraced by the Russian President yesterday at Putin’s home just outside Moscow. A tour of the grounds in what looked like a golf cart was one of the highlights of the day. India does have a border dispute with China which has resulted in fatal clashes between the rival countries. Chinese and Indian troops died as recently as 2020 after a fight along that border. Tensions have remained high ever since. Xi Jinping’s thoughts on his new pals are as yet unknown.
Indian media sources are reporting that Modi told Putin that no solution to the war in Ukraine exists on the battlefield and that the UN Charter, particularly the bits about territorial sovereignty and integrity, should be respected. Independent verification of these remarks has not been established. There are no reports shedding light on Putin’s response.
Wednesday 10 July
Joe Biden’s continuation of Trump’s trade war with China is one of the lesser known stories of the last four years. One of the things that must alarm the incoming Labour government in the UK is that Biden’s economic policies have been wildly successful - the US economy has created over 15 million new jobs and investment has drastically picked up in the industries that Biden has picked to be winners. Yet Biden receives no political credit whatsoever for these successes.
The EU has joined Washington in a competition to see how much domestic auto industry jobs can be protected from Chinese completion: huge tariffs have been slapped on the import of Chinese electronic vehicles. The resulting almost complete absence of Chinese-made cars on our roads speak to the success of the low-level trade war. Australians, by contrast, are happy buyers of Chinese EVs, which now rank third in the league table of new car sale sales down under.
European and American car buyers are being denied access to cars that have made huge technological strides, both in terms of price and quality. Bloomberg today quotes the price of lithium iron phosphate batteries, the key component of any EV, as having fallen 51% in the past year to $53 per kilowatt-hour. Because we are mostly barred from buying Chinese batteries, the global price is stuck at $95/kWh. One factor driving down prices is competition: China has more capacity than global EV demand, so manufactures can only compete by dropping selling prices - and innovating to lower costs of production. The result is that profit margins in Chinese EV manufacturing are wafer thin. That’s unlikely to be true for Western EV makers.
Bloomberg’s New Energy Forum reckons that technological improvements and the resulting fall in battery (and EV) prices mean that the world could, if it so chose, completely decarbonise road transport. In the interests of that trade war, we are choosing not to.
One trade-off that is whispered only quietly is the strategic - rationale - rationale behind the trade war. It’s not just jobs or the interests of Western car makers. Manufacturing capacity will be key to winning any future war. Because it has been key to winning most wars. You can’t turn your factories into bomb, aircraft and tank manufacturers if you have outsourced all your production facilities to China. There are trade wars and trade-offs.
Thursday 11 July
Russia has changed its tune regarding Viktor Orban’s ‘shuttle diplomacy’ in search of a peace settlement inUkraine. The Hungarian leader has been in Kyiv and Moscow and, most recently, Beijing. The Kremlin initially joined the EU in dismissing Orban’s efforts but yesterday described Orban’s ideas, whatever they are, as being potentially ‘very valuable’.
A Kremlin spokesman had previously stated that Orban would be “serving Brussel’s interests rather than Hungary’s national interest”. At the same time, sources inside the Brussels said that Orban represented nobody but himself.
If Moscow really has changed its mind it must only be because Orban’s plan is aligned with its own interests. Reading between the lines, it seems likely that Putin would accept a ceasefire if Kyiv - and the West - trades territory for peace.
That proposal immediately runs into a formidable obstacle: the widespread belief that Putin would merely rearm behind a new ceasefire line and will one day once again try to take all of Ukraine. The Poles are just one nation in the region that believes Putin won’t stop there. Warsaw has just signed a new security pact with Kyiv that stops short of committing Polish troops to the defence of Ukraine but contains more than a hint that it might do just that. Poland worries that its economic success now represents a threat to Putin.
The Polish economy has made great strides as a member of the EU. Gloomy UK forecasters have made much of projections that Poland could become richer than Britain by 2030, not something that might have been expected from a moribund ex-Soviet satellite. That kind of comparison really alarms Putin, not least because Poland already is far richer, on a per capita basis, than Russia. The last thing the Russian President needs is an economy once under Moscow’s thumb, geographically close, sitting there as an example of how life could be compared to the average Russian citizen’s experience.
Friday 12 July
The former President of Russia, Dmitry Medvedev, has, during the course of the war in Ukraine, become infamous for his ultra hawkish threats about the use of Russian nuclear weapons against various Western targets. Yesterday, he confirmed suspicions that a peace deal involving Russia keeping bits of Eastern Ukraine would merely represent a staging post to an eventual capture of all of the country. “This will not be the end of Russia’s military operation…..the time will come to finally crush the reptile. Drive a long steel nail into the coffin of Bandera’s quasi-state”. That was a reference to Stefan Bandera, often described as a far-right Ukrainian nationalist, who cooperated with the Nazis in World War 2. Russia eventually caught up with Bandera in 1959 when he was assassinated by the KGB in Munich. Bandera, was never, in fact, a Ukrainian citizen.
The sub-text behind the press conference smiles and gaffes at NATO’s 75th anniversary celebrations in Washington DC has been ‘how to Trump-proof the alliance’. The only way they can do that is to assume the US is no longer a de facto member of the alliance and to completely replace its military spending and capabilities. Easy.
Amidst the self-congratulations in public, and the Trump worries in private, NATO stands accused by many people of totally messing up in Ukraine. The problem all started at a previous summit in Bucharest in 2008 when George W. Bush wanted to invite Ukraine and Georgia to join NATO. Plenty of leaders, including Angela Merkel and Nicolas Sarkozy, thought this was a dreadful mistake. The compromise was a Ukraine, neither in nor out of NATO. A mistake that the current summit has merely repeated.
Andreas Kluth, a Bloomberg columnist, argues that the open-ended NATO onboarding of Ukraine ‘helps nobody..it probably prolongs the war, by retroactively validating Putin’s perverse narrative’. Not giving Ukraine enough arms to defend itself merely encourages Putin, who knows that Article-5 assistance to Ukraine is further away than ever. Kluth rightly concludes that instead of muddled thinking and strategy, NATO should say to Ukraine: “Sorry, we can’t defend you. But we’ll give you everything you need - and much more than we’ve given so far - so that you can beat Putin on your own’.
Finland is reporting multiple Russian GPS jamming operations that have disrupted aviation and maritime operations. GPS and radar outages have occurred in several locations, including areas off the Southern Finnish coast.
Viktor Orban has gone sufficiently rogue that the EU is reported to be considering restricting Hungary’s role as the current EU Council President. The most effective sanction against Orban would be to kick Hungary out of the EU, something that should have happened a long time ago. Orban isn’t just weakening the EU has is seriously damaging NATO.