Although I am supposed to be working on some material on banking, I have been distracted by the flood of news out of Ukraine. Although there is always great uncertainty, I think that a lot of geopolitical commentary has been based on the premise of a drawn out war (a “forever war” according to one economist). The problem with that view is that it assumes that the Russian troops are willing to fight in line with their theoretical capabilities. However, a collapse in morale means that theoretically superior forces can be rolled up. The classic example was the British/French army in 1940 that not only outnumbered the Germans, they had arguably better equipment — and lasted six weeks of contact.The implicit belief among many analyses is that military operations in the winter are impossible — giving the Russians time to regroup. Although mud season is very unfriendly to mechanised forces — as the Russians discovered this spring — once the mud freezes, tracked vehicles can operate. The Finnish Winter War and the counter-attacks around Moscow in 1941 happened in winter time.
Realistically, the only positive diplomatic outcome attainable by the Russians is a return to the 2021 borders. This is only possible if the combat capabilities of their forces in Ukraine are not annihilated, which implies a greater willingness to pre-emptively withdraw forces. (They abandoned their positions in Karkhiv oblast saving troops, but abandoned their heavy equipment.)
So far, the Russians have followed a diplomatic policy of belligerent threats against NATO countries. Although this has impressed the red-brown extremes in the west, there is a large political bloc that does not care. Meanwhile, hitching your wagon to a loser is normally not popular.
The most likely outcome is that Russian policymakers will continue this belligerent stance until the very end — which means that peace will only be achieved as a ceasefire freezing the conflict wherever the front lines end up. However, it is possible that they may realise that with natural gas flows cut off, Russia has almost no value to Europe, and the path of least resistance is to supply Ukraine with heavy weapons to hasten the end of the conflict. As such, I see a chance of natural gas flows resuming as a negotiating tactic.
In the short term, one of the largest concentrations of Russian ground forces is caught on the wrong side of the Dnipro. It appears that casualties are high on both sides, but the Ukrainians are announcing victories that are consistent with the Russians being worn down as a result of a perilous logistical situation. Russian defeats here could easily exacerbate morale problems elsewhere.
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(c) Brian Romanchuk 2022