Yesterday morning, I awoke to hear the following story: in the night, the US Joint Task Force Southern Spear launched a ground invasion of Venezuela. In a daring raid preceded by devastating air strikes on key locations, SFOD-D operators infiltrated Caracas by helicopter, taking enemy fire. Using blowtorches, they penetrated layers of President Nicholas Maduro’s “heavily fortified military fortress,” abducted both him and his wife, and successfully exfiltrated the city. To add insult to injury, Hugo Chavez’s mausoleum was destroyed by a US airstrike. Reuters reported that Vice President Delcy Rodriguez had fled to Russia. Rumors swirled that Maduro’s government had apparently collapsed. Videos of Venezuelans celebrating the downfall of the regime in the streets circulated widely. Opposition diaspora members eagerly anticipated the appointment of the US’s favored replacement for Maduro, recent Nobel Prize winner María Corina Machado.

In a press conference at noon eastern time, Trump revealed the details: the operation had been like nothing seen since World War 2, he said. The Venezuelans had been waiting for an American attack, “knew we were coming,” and were “in a ready position.” Amazingly, not a single American soldier or piece of military equipment had been lost.

He then described the big picture. The US will now “run” Venezuela, at least until elections can be held. American oil companies will spend billions to repair and rebuild the Venezuelan petroleum industry. Maduro will be tried in US courts for various criminal offenses mostly related to drug trafficking.

By the afternoon, this narrative had collapsed into a mire of confusion and contradiction. The Bolivarian Navy appeared to have suffered no attrition, and the Venezuelan Air Force seemed to be intact. Videos taken in Caracas during the raid showed no resistance at all, with US helicopters hovering in place within range of small arms fire, fully vulnerable to Venezuela’s thousands of Russian Igla MANPADS and short-range air defense systems.

Delcy Rodriguez wasn’t in Russia after all, as she appeared in a video address to the world in Caracas. Even more strangely, she pledged loyalty to Maduro and demanded his release. Considering Trump had singled her out over Machado as the likely interim president of Venezuela, it was difficult to make sense of this. A collection of Venezuelan regional governors released videos affirming their support for Maduro, as did the Venezuelan military. The footage of Venezuelans jubilating over the fall of Maduro was of diaspora members in Miami and Buenos Aires, and Venezuelans within Venezuela itself have begun protests supporting Maduro.

Sites supposedly destroyed by US air strikes, including military barracks and Hugo Chavez’s tomb, were still standing and apparently undamaged. Russian Buk air defense systems at La Carlota airbase had indeed been destroyed, but were parked at the same location for months and apparently unmanned.

By the evening, a clearer picture was beginning to emerge. The raid, which took place in what should have been highly contested airspace and was preceded by a minimal or borderline nonexistent SEAD campaign, would only have been possible if the Venezuelan military had received a stand-down order. Maduro, who has been in negotiations with the US for a controlled transition of power since 2024, was either betrayed by the entire Venezuelan power structure or gave himself up willingly, and doesn’t appear to have been in a “fortress” at all at the time of the raid.

Most bizarrely, the supposed regime change operation hasn’t seemed to change the Venezuelan regime at all. Maduro’s party, PSUV, remains in control of the country, and there is zero US military presence in Venezuela currently. How the US will “run” the country in this scenario is unclear, and Marco Rubio has already publicly walked back the idea. In his press conference, Trump said the oil embargo on Venezuela will remain in effect.

The enthusiasm seen in the American media has already begun to fracture as commentators try and fail to make sense of the situation. John Bolton rapidly penned an op-ed in the Telegraph lamenting Maduro’s removal as a “hollow victory.” Elliott Abrams said in an interview on Bari Weiss’s The Free Press that he hoped the failure to appoint Machado was “just a glitch.”

Although we have no information at present about what kind of deal the Venezuelans made with the US—and a deal was certainly made – it’s a certainty at this point that this operation was more symbolic than anything, and represents another entry in what we’ll call “virtual warfare.” While all warfare has significant elements of propaganda and myth, virtual warfare crosses into something substantially different. The perception of the conflict intended by its creators isn’t a distorted version of reality; it’s something entirely disconnected from it. Both nominal sides of the conflict may collaborate to generate this artifice, and the outcome may be decided in advance. As such, it represents a work of fiction, a wholly fabricated narrative, and the underlying events can scarcely be said to have occurred at all.

“It was an incredible thing to see,” Trump said on Saturday. “If you would have seen what happened, I mean, I watched it literally like I was watching a television show.” (BBC)

In this sense, virtual war goes beyond even Baudrillard’s conception of hyperreality. While the Gulf War “did not take place” in Baudrillard’s framework, Iraqi tanks were in reality destroyed while their occupants were still inside. In virtual warfare, military casualties aren’t strictly necessary. The minimum requirement is the usage of munitions, but if all that results is an explosion in an empty patch of desert, this is typically sufficient.

Virtual warfare has become increasingly commonplace. It helped bring the so-called 12-Day War to an end, as the Iranians and Americans cooperated to stage a show for a global audience. The US struck the Fordow nuclear facility, debatably to no effect, and the Iranians retaliated with an unprecedented direct ballistic missile strike on American assets at the Al Udeid Air Base. Both sides appear to have warned each other in advance, and there were either minimal or no casualties. Prior to the Fordow/Al Udeid exchange, Israel’s attacks on Iran had a highly virtual nature. Supposed air strikes were revealed to be drone strikes from teams within the country or in Azerbaijan. Destroyed Iranian TELs were in reality decoys. Assassinated IRGC personnel later appeared alive and well.

Similarly, Operation Prosperity Guardian degraded into virtual combat as US forces in the region repeatedly bombed sites that had already been destroyed by the Saudis in 2015, and attacked gatherings of random civilians they portrayed as collections of Houthi fighters. The operation also concluded in a manner distinctive of virtual warfare, with its stated objectives ambiguously unmet, and Ansar Allah continuing to attack targets in the Red Sea and Israel.

Preludes to contemporary virtual warfare exist. In 2003, the CIA bribed Iraqi generals en masse to stand down. The killing of Osama bin Laden after a years-long manhunt has also been portrayed as a virtual event, with an essentially no-risk operation against a defenseless bin Laden conducted in cooperation with Pakistan being elevated to a daring, high-risk raid in hostile territory through the media.

The effect of virtual warfare on target populations is bizarre. Various factions walk away with entirely contradictory impressions of the events, as opposed to mass belief in a unified propaganda narrative. Basic facts are rapidly forgotten or fail to penetrate mass consciousness. Despite obvious pre-planning, virtual war narratives are typically confused and ramshackle, perhaps by design. Public statements from the Trump administration in the wake of the Venezuelan operation are borderline incomprehensible, as various figures issue a flood of incompatible motivations for it.

Combining just the narratives expressed by Rubio and Trump over the past 24 hours results in a mire of impenetrable reasoning. Is the US “running” Venezuela now, or not? Was this operation for the benefit of the Venezuelan people? To support “democracy?” Was it about oil, drugs, or US control over its sphere of influence? Was it to stop Russia, China, Iran, or even Hezbollah from gaining a foothold in the Western Hemisphere? US allies in Europe have reacted with a kind of demoralized incoherence as they struggle to fit the operation within the moral framework they’ve been projecting towards the war in Ukraine for the past four years.

The descent of US military operations into the realm of the virtual can perhaps be explained by waning American power and political aversion to casualties. While the war in Ukraine takes on aspects of virtuality, with commentators recently posting months-old maps to ignore battlefield realities, the conflict itself is self-evidently non-virtual because of the willingness of both sides to make major sacrifices in the pursuit of victory. In comparison, American-led virtual warfare is characterized by the projection of an image of risk-taking and strength over a thoroughly non-committal and risk-averse reality.

The likely primary goal of the Venezuelan operation was to serve as a warning shot to potentially sovereign states in the Western Hemisphere. This is easily provable because of multiple public warnings from the Trump administration to leadership in Cuba and Colombia in the wake of Maduro’s “abduction.” If successful, the virtual operation will be highly economical, with minimal expense, no casualties, and close to zero risk from the beginning of the campaign against supposed narco traffickers to the moment American helicopters made their exit from Caracas.

The issue with virtual warfare is that it can only succeed as long as the intended target (which is never the actual co-combatant) mistakes the artificial facade for reality. Will Cuban leadership, for example, fail to see through what was an obviously pre-planned spectacle? Even the domestic American audience already seems confused. Operations like Fordow and Prosperity Guardian have seemed to fall out of public consciousness due to the difficulty of parsing them after subsequent events.

Those who attained political consciousness during the GWOT era are equally befuddled. Expecting a decades-long quagmire with mass casualties like Iraq, we’ve instead been confronted with an unintelligible two-hour sideshow in which perhaps 40 Venezuelans were killed in total. Victory has been declared despite the situation remaining fundamentally unchanged. This morning, Marco Rubio said the US won’t be running Venezuela at all, and will pressure “changes” through an oil blockade. This is precisely the status quo. And how can the US impose a blockade on the oil it just stole for itself?

There are still many unanswered questions about “Absolute Resolve,” the Pentagon’s name for the operation. What was the precise nature of the deal the Venezuelans made with Trump? Is there cooperation between Rodriguez and the US? Was there any reality to Trump’s promises of a US oil industry takeover and “billions” of dollars of investments in Venezuela? If this event is as virtual as it appears based on the information we currently have, these questions may never be answered explicitly. Instead, the event will simply fade, remaining in a perpetual state of impenetrability, unfathomable and impossible to parse, until largely forgotten.

On the 18th, the European Commission finally met for the climactic moment of the reparations loan saga. At stake were Ukraine’s war effort, the future of the European banking system, the sovereignty of EU member states, and €210 billion in frozen Russian cash. “No one will leave the EU summit until a solution on financing Ukraine is found,” said EC president Ursula von der Leyen that morning. Von der Leyen was serious, as European leaders spent a marathon session attempting to hash out a solution to the seemingly insurmountable obstacles that had thus far prevented the reparations loan scheme from becoming a reality. A last-minute attempt to satisfy the Belgians with an “uncapped” EU backstop for their potential liability was rejected as leaders realized they’d potentially face a bailout of the entire Belgian banking system. Late that night, diplomats involved in the negotiations reported that the scheme was finally dead. Ukraine will instead be provided with €90 billion raised through joint EU debt from capital markets. The British plan to use the frozen Russian assets stored in their banks failed simultaneously.

With the full collapse of the scheme, diplomats are speaking more freely, and we have confirmation of Belgian prime minister Bart de Wever’s hint that other EU states were “hiding” behind him, or in other words, quietly supporting him. The full coalition contains, of course, Belgium and Russia-neutral renegades Hungary, Slovakia, and the Czech Republic. Banking microstates Luxembourg and Malta were on Wever’s side, along with Ukraine-skeptical Italy and Bulgaria. The most significant revelation of the past few days is that Emmanuel Macron’s France played a significant role in torpedoing a last-minute attempt to make a deal whereby the EU would agree to bail the Belgians out for the entire amount of the Russian assets if things went south.

Readers of our reporting on this were likely unsurprised by the EC’s failure to find a path forward for the reparations loan. But the last-minute decision to take on new debt to fund Ukraine happened despite there having been just as many obstacles to doing so as there were to the reparations loan. Von der Leyen, Merz, and their allies had to make major compromises to overcome the roadblocks.

The first compromise is notable more as a moral defeat than a practical one. Hungary, the Czech Republic, and Slovakia were sure to veto the joint borrowing plan, which would have forced the EC to again activate controversial emergency powers for the second time in a month to force the scheme through with a simple majority. Doing so would have opened von der Leyen’s coalition up to legal challenges and the increasing perception that the EU’s democratic mechanisms, or what remains of them, are fully broken. To avoid this, the terms of the agreement exempt the trio of countries from any liability stemming from the new debt, meaning they won’t have to help make the EU whole if the Ukrainians fail to repay the loan. While this does damage to the image of EU unity, these three countries would have been responsible for perhaps 4% of any such liability, or a few billion euros. This risk will be spread to the remaining member states. For Orbán, Fico, and Babiš, it’s around a billion euros they can assure their taxpayers they won’t be on the hook for.

The second compromise is more consequential: the loan to Ukraine will provide only €90 billion over the next two years. €45 billion a year is just half of what the Ukrainians received in combined US/European aid each year from 2022 to 2024, and the war has gotten significantly more expensive since then. We can take the EU’s own projections as evidence of this, because they made detailed calculations when prospectively divvying up the €210 billion in Russian assets:

This chart, which was posted by Politico just two weeks ago based on EC numbers, assumes the war will end in 2026, only covers financing needs (what the Ukrainians can’t pay for themselves), and doesn’t include reconstruction costs, which the World Bank estimates will exceed €500 billion. If the Ukrainians have a €72 billion budgetary hole just for 2026, €45 billion certainly won’t cut it, even factoring in the few billion the IMF and Germany have pledged. As we’ve covered previously, even the €165 billion reparations loan wouldn’t have been enough to cover the Ukrainians for much longer than a year or two. Last month, the Economist calculated the Ukrainians would need a staggering $389 billion (€332B) in external financing over the next four years. The reality is that the Ukrainians need both massive loans from the EU and the Russian assets. Without the latter, they’ll have no choice but to make cuts. If we consider military costs, budgetary deficits, the cost of reconstruction, and Ukraine’s existing external debt, the country likely needs over a trillion euros of financial assistance over the next five to ten years.

Although this has been mostly overlooked amidst all the complexity of the reparations loan, the EU is apparently letting go of another major item with this compromise. With the Russian assets totaling €210 billion and the reparations loan plan only giving the Ukrainians €165 billion, what would have happened to the other €45 billion? The Europeans intended to use it to pay themselves back for a loan the G7 issued to the Ukrainians in 2024. The interest on this loan is currently being paid from the profits taken from the frozen Russian assets. Since this loan will now go unpaid, those profits can’t be used to pay the interest on the new one, and European taxpayers will be on the hook for €3 billion a year.

Adding these two loans to Ukraine’s other existing debt obligations, Ukrainian external debt has exploded to $298 billion. This will skyrocket the Ukrainians to fourth place worldwide in debt-to-GDP ratio (assuming Ukraine’s GDP can even meaningfully be calculated), at 155%. The Europeans will hold more than half of this debt while being significantly exposed to international lending institutions like the IMF that hold much of the remainder. If the Ukrainians are unable to pay, the EU has no plan in place to cover the over €130 billion liability other than the European taxpayer.

And the loan will have strings attached. The terms of the loan will require continued Ukrainian deference to Western-controlled anti-corruption organs like NABU. And as we’ve covered in the past, European aid to Ukraine won’t do the Europeans much good if their money is funneled to the US for weapons. Although the Ukrainians have repeatedly denounced the idea, the loan will require its money marked for military assistance to be spent on EU-produced weapons, unless the EU produces no viable option for a given need. The Ukrainians have been so resistant to this idea because it greatly limits the quantities and types of weapons they can purchase. With EU states like Italy dropping out of NATO’s PURL program to buy US weapons for Ukraine, procurement options for the AFU are rapidly dwindling.

To mitigate the perceived financial burden, the EU has declared that the immobilized Russian assets—which are now frozen indefinitely thanks to the activation of emergency EU powers—will not be released until the Russians pay Ukraine reparations. But this amounts to little more than a loose promise. Because the assets still reside in Euroclear accounts, their immobilization remains sensitive to legal challenges both from the Russians themselves and to the Article 122 invocation. And because the Europeans have no Russian pool of cash to backstop the loan, it’s an effective admission that the EU itself won’t be getting paid back anytime soon, or perhaps ever.

The Western commentariat has had a gloomy reaction to the failure of the reparations loan scheme. The Wall Street Journal’s editorial board called the loan “another half-measure.” A piece in Politico today went further, singling out the failure to pass the reparations loan scheme as an EU defeat that will lead directly to the end of the war in 2026 and an unfavorable peace for Ukraine. The piece cites falling European public support for Ukraine funding (45% of Germans want to cut aid) as a key danger in building support for the future loans Ukraine will need. The Financial Times linked the failure to a deepening rift between Macron and German chancellor Friedrich Merz, while also citing equally concerning divisions around a contentious trade deal that fractured along similar lines. Brookings Institution fanatic Robin Brooks was furious, calling it “a dark day for Europe” and a “disaster.”

As responsibility for the war falls solely on Europe’s shoulders, Ukraine’s future is an open question. If this is the best the EU can muster despite all the pressure and politicking, who will pay to rebuild Ukraine when the war is over? Can the EU reasonably expect to keep the war going with half the aid it’s been receiving? And most disturbingly (or it should be, for the EU), who will cough up the hundreds of billions more Ukraine will require over the ensuing years?

In an address to the European Commission this morning, Ursula von der Leyen revealed the “legal solution” to untying the complex knot the Europeans find themselves in with their reparations loan scheme. To unblock the loan, the EC must solve the following problems:

1. Convincing the Belgians to transfer the Russian assets they hold in Euroclear to the European Commission. The Belgians have demanded that:

   1. They be backstopped for the entire $215 billion of Russian assets they hold.

   2. Other EU countries (Germany, France) move their frozen assets too.

   3. The backstop be immediately transferable to the Belgians upon the end of the war or discontinuation of the sanctions regime.

2. Acquiring unanimous support for the scheme, because any one state can potentially veto it.

3. Acquiring unanimous support to extend the sanctions that keep the Russian assets frozen. Currently, they must be renewed by vote every six months. Any one EU state can veto the extension.

Von der Leyen’s solution is simple: invoke the emergency powers afforded to the EU in Article 122 of the EU treaties to prevent any EU state from transferring any Russian assets back to Russia. If you’re scratching your head, you’re not alone, because it isn’t obvious how this solves any of the issues listed above except issue #3.

Article 122 affords the European Commission the right to invoke temporary emergency measures without the consent of the European Parliament in the event of “severe difficulties” of an economic nature, like natural disasters. Only a qualified majority of EU member states within the EC is required to approve an Article 122 invocation, instead of a unanimous vote. It was widely used during the Covid-19 pandemic to fund unemployed programs and vaccine purchases.

So how can Article 122 be invoked to indefinitely extend the sanctions that trap Russian assets within the EU? The European Commission’s justification is that if the reparations loan is issued and a member state vetoes the extension of the sanctions regime, the ~$212 billion liability will pose an existential threat to the European economy because they’ll have to pay the Russians back.

If this doesn’t make sense, let’s put it a different way. The EU is saying it will invoke emergency powers to protect itself from something that can only happen if it invokes those same emergency powers. This circular justification, in which by intentionally creating a massive financial risk for itself, the EU can circumvent all normal democratic procedures and justify taking the risk, is bizarre and unprecedented. Article 122 is already deeply controversial and has been singled out as a major threat to democratic principles within the EU framework. The EC is currently embroiled in a lawsuit with the EU Parliament over an earlier invocation of emergency powers to fund a loan scheme for EU defense procurement. To propose using Article 122 in this way signals extreme desperation on the part of the European Commission.

Predictably, the reaction to this plan has been negative. A diplomat quoted in the Financial Times said the idea was “crazy” because there is “clearly not an economic emergency in the internal market.” The player holding all the cards here is, of course, Belgium, and it should be unsurprising that a ramshackle and openly undemocratic solution to the problem is unlikely to satisfy them. Before von der Leyen even made her speech, Belgian Foreign Minister Maxime Prévot said the proposals “do not address our concerns in a satisfactory manner.” Prime minister Bart De Wever specifically singled out prolonging sanctions through a majority (meaning through emergency powers) as dangerous: “These risks are unfortunately not academic but real… we’re not going to risk hundreds of billions on Belgium. Not today, not tomorrow, never.”

Pieter Cleppe, in a scathing critique posted in the Brussels Signal earlier today:

Today the European Commission decided to ignore Belgium’s concerns, presenting its plan anyway, not only proposing to use the Russian assets, but even claiming that this can be decided with a qualified majority of EU member states – 55 per cent of member states comprising 65 per cent of the EU’s population. In other words, the European Commission thinks it should be possible to outvote Belgium on a decision which according to the Belgian government risks the bankruptcy of the country. This is completely without any precedent and can serve as more evidence of how out of control the institution led by von der Leyen is.

The Belgian position is understandable, because freezing the Russian assets in the EU under emergency powers seems no safer than dealing with a potential veto, as it will almost certainly face legal challenges. If a legal challenge succeeds, the legislation created through the Article 122 invocation will be void, which is potentially just as damaging as a veto. Diplomats briefed on the EC’s legal arguments say that Article 122 may also be used to change the interval in which the sanctions regime is extended from every six months to every three years. EU states outside von der Leyen’s coalition have little reason to agree to any of this, because it fundamentally undermines their position. If the precedent is that the EC can intentionally generate a crisis whenever it wants and use that crisis to sideline parliament and effectively deny the right of veto to any individual EU state, much of the EU will be giving up substantial power.

Regardless, without approval from Belgium, von der Leyen’s proposal is dead on arrival. Perhaps sensing this would be the case, she offered a fallback plan: loaning the money to Ukraine straight out of the EU’s budget. But as we’ve covered previously, there’s even more internal resistance to this plan than to the reparations loan scheme. European governments have no interest in raising hundreds of billions of euros out of their own pockets and have publicly signaled their opposition to doing so.

At this point, it’s difficult to see what the purpose of this charade is. Short of tearing up the EU treaties or threatening Belgium itself with sanctions, the European Commission doesn’t appear to have any cards left to play. We’ll have to wait and see if the EC has an ace up its sleeve for the climactic meeting scheduled for the 18th.

Today, an update on the status of Ukraine’s funding debacle. To summarize our previous reporting on this subject:

• Ukraine is facing a $60B – $80B hole in its 2026 budget due to the end of US financial aid, the reluctance of international lenders to issue new loans, the EU’s own budgetary shortfalls, and the rising costs of waging the war.

• Without a large injection of cash, the Ukrainians will run out of money as early as February or as late as April.

• The only obvious solution is to issue the so-called “reparations loan,” a ~$150 billion loan to Ukraine backstopped by Russian assets held by the Belgian financial institution Euroclear.

• To maintain a remotely plausible argument that the EU is operating within international law, the loan is a convoluted scheme whereby Euroclear will transfer the Russian assets to the European Commission, which would then use those assets to backstop a new loan to Ukraine. When the war ends, the Russians would pay “reparations” to Ukraine, who would pay the EU, who would pay Belgium, who would pay back Russia.

• The EU has so far failed to clear a series of forbidding political and legal hurdles to make the loan a reality. The Belgians, who control the Russian assets, are refusing to accept sole liability for repaying the Russians, which would be necessary in several realistic scenarios.

The only clear path forward since the Belgians began to dig in their heels has been for the EU to provide “binding commitments” to backstop Euroclear. The Belgian proposal is that every member state would share in the liability in proportion to the size of its economy. In the event that a vote to renew the sanctions on Russia fails, or the war ends in Russia’s favor, the entire EU would repay the Belgians, who would then repay the Russians.

Belgian prime minister Bart De Wever outlined additional conditions for Belgian cooperation in a letter to the European Commission last week. First, the backstop guarantee must be for the entire amount of Russian assets held by Euroclear, which totals roughly $215 billion. Second, the guarantee must be “unconditional, irrevocable, and on-demand.” The “on-demand” aspect means the EU would transfer Euroclear’s entire liability instantly, and would ensure the Belgians would be operating within international law, which requires that “countermeasure” sanctions be “immediately reversible” if the sanctioned party ceases its illegal actions.

Third, De Wever demanded that other EU countries holding frozen assets be forced to put skin in the game by contributing to the loan, spreading the legal liability across the Union. While Belgium holds the vast majority of frozen Russian assets within the EU, Germany, France, and Luxembourg hold tens of billions of dollars of Russian funds between them. By forcing them to participate directly in the scheme, these states would be just as legally liable as the Belgians, decreasing the likelihood of a scenario in which the EU would hang Euroclear and Belgium out to dry on their own.

“When we talk about having skin in the game, we have to accept that it will be our skin in the game. Talk is cheap but helping Ukraine will unfortunately be expensive.” - De Wever

De Wever’s conditions read more as a rhetorical argument for the infeasibility of the loan itself rather than a realistic set of demands as a negotiating position. In the letter, he warned that illegally seizing the Russian assets is likely to sabotage any peace deal and referred to the entire scheme as “fundamentally wrong.” There is no politically acceptable mechanism through which the European Commission could conjure up $215 billion of taxpayer money to repay the Belgians overnight. And European politicians in Germany and France are highly unlikely to willingly step into Belgium’s position by contributing their own frozen Russian assets to the scheme. Much of their holdings are held in private banks, and seizing that money would present an unprecedented legal challenge.

In the letter, De Wever suggests an alternative: the EU simply issuing a new loan to Ukraine equalling the amount of its budget shortfall, without touching the Russian assets. But De Wever likely knows that this prospect is only slightly more palatable than the reparations loan. Joint EU borrowing falls under the Treaty on the Functioning of the European Union (TEFU), and raising the money for a new loan scheme would require unanimous support from all EU member states, just like the reparations loan scheme. While the amount of this EU-only loan would be only a third of the reparations loan, both Hungary and Slovakia are still likely to veto a joint borrowing plan. Neutral states like Ireland, Cyprus, and Austria have also limited prior joint borrowing approvals to non-lethal aid, complicating German, French, and Swedish demands that new aid be spent on military procurement deals with their defense industries. And multiple EU leaders have been explicitly rejecting the idea of new joint borrowing since at least October. With budgets already strained across the continent, the reparations loan plan is “the only way forward.”

Zooming out, it’s possible to see the shadow political battle being waged beneath the surface of these negotiations. The most reckless and hawkish members of the European Commission have been plowing forward with the reparations scheme, knowing full well the loan would never be repaid by either Russia or Ukraine. Unconcerned with asset flight or the health of the European banking system, they have consistently refused to expose themselves to liability and are content with leaving the Belgians on the hook. All signs point to an eventual military defeat of Ukraine and the increasing risk of a veto by Russia-neutral or friendly EU states on the extension of the sanctions regime that keeps the assets legally frozen. With the clock ticking, these states’ priority has been to funnel money to their own military-industrial complexes at the expense of the Belgians and the EU as a whole. From this perspective it’s understandable that the Belgians have chosen to take a stand despite the political consequences and why other EU states are quietly supporting Belgian resistance to the plan.

Complicating matters is the mystifying US peace plan unveiled last month, which would immediately unfreeze the Russian assets. $100 billion of the assets would be spent on Ukrainian reconstruction, with half the “profits” from reconstruction going to the US government itself. The EU would match this with $100 billion from its own pockets, while the remaining $200 billion of Russian assets would flow into a joint Russian-US investment vehicle to be used for whatever the two states agree on. While this proposal has since been walked back, it adds to the sense of uncertainty around the potential consequences of touching Russia’s money.

In the midst of this contention, European governments are unsurprisingly refusing to meet Belgium’s demands. Four EU diplomats spoke to Politico about their rebuke of De Wever, referring to his request for a backstop as a demand for a “blank check.” If this wasn’t bad enough for the reparations loan’s prospects, today the European Central Bank (ECB) rejected the European Commission’s alternative plan of using it as a backstop, declaring it would “violate its mandate” and EU law if it did so. To provide direct funding to reimburse member states for the liabilities to Russia, it would be engaging in “monetary financing,” a banned practice under EU treaty. It would also be unable to raise the money with the speed the Belgians demand, exposing them to violations of international law, and failing to meet one of their key conditions.

Meanwhile, the Ukrainians have been sounding the alarm as their financial prospects look increasingly dire. They’ve been negotiating with the IMF for a new 48-month loan agreement, called the Extended Fund Facility (EFF), for the past several months. The EFF agreement would provide the Ukrainians with $8.2 billion in total, paid in installments over the course of the next four years. The IMF has been candid about just how little this will do to address the problem. First, unsecured Ukrainian external financing needs over the length of the agreement will be a staggering $140 billion, which doesn’t include military expenditures or the cost of servicing existing debt. Second, the Ukrainians have a $162 billion funding gap for military expenditures just for 2026-2027. Adding these figures together with the presumption that Ukraine will survive for another four years of war without further military spending increases (military costs have ballooned from $140 million a day to $172 million within the past year), Ukraine has a $464 billion funding gap through 2029. This is three times the amount the reparations loan would provide.

With political turmoil within Ukraine reaching a fever pitch, the Verkhovna Rada can’t even agree on a 2026 budget it doesn’t currently have the money to pay for. The opposition is demanding the resignation of the entire Zelensky government, while Ukrainian government sources express concerns about alienating the IMF. The nightmare scenario for Ukraine is that further debt from the IMF and other international lending instruments is effectively contingent on the reparations loan. The IMF’s open concern about Ukraine’s massive funding gaps has been read as a coded message to the EU that it needs to get its act together or risk the international financial system divesting from Ukraine entirely. This is a plausible prospect, as no one wants to be the one left holding the bag if the Ukrainian project implodes completely, and lenders have already expressed concerns about Ukraine’s existing—and massive—debt burden.

The EU will meet on the 18th in an attempt to secure a deal on the reparations loan. European Commission president Ursula von der Leyen has projected a public sense of confidence, saying the EC will present a “legal proposal” to assuage Belgian concerns. There’s little reason to think any legal argument could secure Belgian cooperation, and it’s difficult to imagine how the outlook for Ukraine could be more grim.

On Wednesday, an Afghan national shot two members of the West Virginia National Guard in Washington, D.C., killing one. Preliminary reporting suggests this Afghan, who was living legally in the US after having his asylum request granted in April, was a member of a “Zero Unit,” a type of special forces unit trained and armed by US forces in Afghanistan to conduct irregular warfare. Zero Units worked closely with American special forces and intelligence agencies during the war and have been characterized as a type of death squad.

This event was wholly unsurprising to a certain type of historically aware observer. Whether characterized as “blowback” or something more sinister and deliberate, it represents just another entry in a lengthy legacy of former proxy forces committing acts of terrorism, assassinations, organized gang activity, and random violence on American and European soil after the conclusion of their proxy conflict.

The projection of this legacy into the future with reference to the war in Ukraine is referred to with the tongue-in-cheek moniker “Azov 9/11.” Without historical context, this concept is likely incomprehensible. But when placed within a broader analysis, a clear pattern emerges. In this piece, we’ll establish the case for the enormous danger posed by a postwar Ukrainian proxy force, both as a tool of nefarious state actors and as an organized political entity with its own agenda. First, we’ll establish the historical precedent by tracing the activities of former proxy forces in America and Europe before arguing that Ukraine War veterans are likely to present the most dangerous form of this phenomenon to date.

Cuban Exiles

Following the Cuban Revolution (1953-1959), hundreds of thousands of middle and upper-class Cubans fled the island for the US. From this influx of anti-Castro Cubans, the US military and intelligence apparatus created a network of overt and covert proxy units. Former members of the Batista government’s secret police, which had received funding and support from the CIA since the mid-50s, were a crucial source of operatives.

The most brutal of the secret police agencies was the Bureau for the Repression of Communist Activities (BRAC), which was led by WW2 Nazi hunter Mariano Faget Diaz. Members of BRAC entering the US were organized into a covert special operations unit called Operation 40, so-called because it had 40 initial members.

Operation 40 was overseen by both Richard Nixon and George H.W. Bush, and subordinated to the CIA. The unit was primarily directed to engage in assassinations and acts of terrorism against the Castro government from bases in Florida. With the failure of the Bay of Pigs invasion in 1961 – in which several Operation 40 members were arrested by the Cuban government – the unit transitioned into a small mercenary army operating on US soil. Strong evidence links its members to the JFK assassination. The majority of the “plumbers” who participated in the Watergate burglary operation were either direct Operation 40 members, Cuban exiles associated with them, or American CIA agents who led the group. The assassination by car bomb of Chilean diplomat Orlando Letelier and his aide, US citizen Ronni Moffit – one of the most prominent examples of the assassination of a foreign national on American soil in history – was conducted by Operation 40 members. Operation 40 formed the spearhead of an espionage operation on the Cuban population of Florida throughout the 60s. Church committee disclosures revealed the program violated US law.

Operation 40 eventually degraded into a likely state-sponsored drug trafficking organization, which is unsurprising considering their close association with notorious drug runner Barry Seal. In the late 60s, a CIA-chartered flight piloted by an Operation 40 member crashed in Southern California. First responders found kilograms of cocaine and heroin in the wreckage. Shortly afterward, another Operation 40 member trafficking drugs was killed in a shootout with the Miami police. The unwanted attention these incidents brought to the unit resulted in its disbandment, with its membership being transferred to other covert groups. In 1976, former members, including CIA asset Luis Posada Carriles, orchestrated the Cubana Flight 455 bombing, which killed 73 people. Carriles had been trained at the US Army Officer Candidate School in Fort Benning. After a lengthy series of arrests, escapes, prosecutions, and extraditions, Carriles was acquitted of all charges against him by a US court and freed amidst the Global War on Terror, despite being one of the most prolific terrorists in the world.

As Operation 40 members were dispersed, some found a home in the Cuban exile paramilitary force known as Alpha 66. The unit’s activities increased as Operation 40’s declined. While Operation 40 was a CIA initiative, Alpha 66 was primarily organized by US Army intelligence, with secondary support from the CIA. From bases in the Everglades, the group used US government supplies to conduct a bloody string of bombings and killings. From the mid-70s to mid-80s, Alpha 66 was involved in two bombings of the Cuban UN mission in New York, bombings of the Cuban Museum, FBI field office, Social Security office, and airport in Miami, several bombings targeting pro-dialogue Cubans in Miami, the assassination of moderate exile leader Euliano Negrin, and bombings targeting Cuban businesses and offices in Florida. The group assassinated a travel agent in Puerto Rico, and attempted to gun down Cuban diplomat Raul Roa Kouri in New York. To finance these operations, Alpha 66 trafficked drugs. Its members were caught with thousands of kilos of cocaine in arrests as late as the 90s.

Alpha 66 grew completely beyond the control of its US government handlers, or so those handlers would later claim. The CIA allegedly terminated its relationship with the group because of its inability to keep their operations in check. The ATF began conducting raids on the group’s bases in the Everglades in the late 70s, seizing automatic weapons and substantial quantities of explosives as late as 1994. Alpha 66 still exists today and maintains a presence in Miami.

Alpha 66 wasn’t the only Cuban exile group to allegedly go rogue. The small cell known as Omega 7 was exposed in 1984 when its leader, Eduardo Arocena, was indicted on 26 charges, including murder and a lengthy list of bombings. Arocena, a Bay of Pigs veteran, claimed he was trained by CIA personnel in bomb making and had attempted missions to Cuba to engage in biological warfare to start a war between the US and Cuba. Omega 7 was involved in several of Alpha 66’s operations and assassinated fellow exile Eualio Jose Negrin in New Jersey in 1979. Negrín had been negotiating with the Cuban government to secure the release of political prisoners.

In 1980, the group assassinated Felix Garcia, an attaché to the Cuban mission to the UN, in New York. Garcia was the first UN official to have been assassinated in New York since the founding of the organization. The group also bombed a sporting goods store near Madison Square Garden, the Avery Fisher Hall, JFK Airport, the Mexican Consulate in Manhattan, a cigar company in Miami, and more than 30 other locations. To finance their operations, Omega 7 served as security for various drug trafficking organizations and engaged in racketeering. Arocena served 37 years in prison and was released in 2021.

Other Cuban exile groups engaged in similar activities include CORU (an umbrella organization that coordinated operations between smaller groups), Accion Cubana (prolific bombers), FLNC (bombers and assassins), Comandos L (bombed an FBI office), CNM, Gobierno Cubano Secreto (planned to bomb oil refineries in New Jersey), Joven Cuba, Comandos F-4, RECE, Abdala, JURE, and PUND. This spiderweb of terrorist cells shared personnel and missions, and its complex structure ensured it was able to conduct operations on American soil with impunity. All of these groups received funding, training, and supplies from the US government at various times. Their acts of mass murder and terrorism led to domestic instability in the US and prevented US/Cuban détente.

Outside anti-Castro operations, they formed a useful yet dangerous manpower pool for illegal intelligence operations and funding of those operations through drug trafficking. It’s difficult to find a US intelligence scandal, terrorist attack, or black operation Cuban exiles were not involved in from the early 60s up to the late 90s. FBI documents show that Oklahoma City bomber Timothy McVeigh ran explosives to a Cuban exile group – likely PUND – in Florida in the 90s. Cuban exiles also participated in Iran/Contra. When the Department of Defense explored generating a casus belli for war with Cuba using a series of potential false flag operations – including the possible fake shootdown of a drone made to look like a civilian airliner – exile groups were to provide the operatives.

The groups participated in over 100 hijackings of flights between the US and Cuba from 1960 to the 2000s, with a hijacking occurring on average every 13 days from 1968 to 1972. Although this history is largely forgotten, Americans have US government-sponsored Cuban terrorists to thank for the permanent securitization of American airports up to 9/11.

It’s impossible to definitively say at what point these groups became more of a liability than an asset to the US deep government, and it’s likely the case that some of them were still working for covert arms of the government while being raided and prosecuted by overt arms like the FBI and ATF. Rather than acting purely as a tool in the hands of US intelligence, the exile groups became a political force unto themselves, blocking détente long after US public opinion shifted to support it.

By the 90s, divisions formed within the radical exile community, with significant minorities eventually breaking off from the anti-Castro core as they began to see the logic in detente. Still, these groups had long ceased to be purely political in nature and had become something closer to criminal enterprises. Their activities resulted in the deaths of thousands and ensured the steady flow of hundreds of millions of dollars of drugs into the US. They protected and supported other criminal organizations across Latin America, which engaged in mass fraud, gang violence, human trafficking, and gunrunning.

It’s crucial to understand the reason Cuban exiles were so widely used for covert operations. Barred from returning home, they were wholly dependent on the largesse of their sponsors in government and intelligence. Their ideological zeal and disconnection from the population of their host country made them ruthless. Desperation, anger at their loss in the Cuban Revolution, and unlimited funding and resources made them an indispensable asset of nefarious actors planning operations both abroad and at home.

ARVN

After the US defeat in Vietnam, a wave of refugees from the diverse collection of US proxy forces used during the war arrived in the US. Among these were a collection of US-trained ex-ARVN special forces and military officers who formed the National United Front for the Liberation of Vietnam (NUFLV, or “The Front”). The Front was an overt organization advocating for the overthrow of the Vietnamese government, but it maintained a covert wing called “K-9.”

K-9 became an assassination and terrorism unit that forcibly quelled dissent among the Vietnamese diaspora in the United States, and from 1981 to 1987 it targeted and successfully murdered five Vietnamese journalists on American soil. Meanwhile, Front members engaged in racketeering, extortion, arson, and illegal gun running while allegedly enriching themselves using diaspora money supposedly meant to fund a future invasion of Vietnam.

Organized Vietnamese gangs began to flourish across the country. In 1984, police in California uncovered a criminal gang composed of 75 former ARVN military personnel and special forces operators who had been trained by the US. Narcotics officers in the southwest alleged that a “Vietnamese mafia” led by former Republic of Vietnam Air Force general and once South Vietnamese prime minister Nguyen Cao Ky and a collection of ex-ARVN generals was overseeing criminal networks nationwide. Testimony before the President’s Commission on Organized Crime lent credence to the idea, but the accusations were never proven.

El Salvador

During the Salvadoran Civil War (1979-1992), the US provided billions of dollars in military and economic aid to junta forces combating left-wing FMLN guerrillas. Applying lessons learned from counterinsurgency operations during the Vietnam-era Phoenix Program, the US brought thousands of Salvadoran soldiers to bases like the Army School of the Americas in Fort Benning and Fort Bragg to be trained. From these US-funded, armed, and trained Salvadoran personnel, CIA advisors formed elite death squads in El Salvador. These death squads conducted a bloody campaign of terrorism and assassinations, killing over 75,000 civilians and displacing a million native Salvadorans. In 1980, a US-equipped death squad within the Salvadoran National Guard raped and executed four American nuns who were supporting a humanitarian aid mission.

Many of the displaced Salvadorans found a home in the US as refugees. Seeking to protect themselves from well-established ethnic Mexican and black gangs in the Los Angeles area, a group of these refugees formed a gang of their own, called MS-13. In 1990, former Salvadoran special forces operator and School of the Americas graduate Ernesto “Satan” Deras assumed control of the group, and transformed it into a paramilitary organization. Further influxes of US-trained Salvadoran civil war veterans allowed the gang to expand its operations and successfully compete with rival gangs in Southern California.

With the conclusion of the civil war in 1992, the US government began deporting thousands of Salvadoran gang members, including ones from MS-13, back to El Salvador. In a highly unstable postwar environment and with hundreds of millions of dollars of American weapons available, the gang was able to seize significant amounts of power. It professionalized and expanded into a transnational, highly organized criminal organization that controlled drug, arms, and human trafficking in El Salvador and beyond. This produced further destabilization, generating more refugees and creating a feedback loop that contributed significantly to both the Central American refugee crisis and MS-13’s status as one of the most powerful and dangerous criminal organizations in the Western Hemisphere.

By the 1990s, 25% of El Salvador’s population had fled the country. Included in these refugees were dozens of death squad commanders and personnel wanted for war crimes by the postwar government. A small wave of deportations beginning in 2013 returned many of the higher-ranking officers back to El Salvador to face prosecution after decades of living in the US.

Mujahideen

While the example of Osama bin Laden is so well known as to be unnecessary to explore here, there are multiple other cases of members of the Afghan mujahideen during the Soviet-Afghan War who fit our pattern well. The first of these is the Egyptian cleric Omar Abdel-Rahman, the “Blind Sheikh,” so-called because of the permanent blindness he developed at ten months old.

Abdel-Rahman grew out of Qutbist Islamist movements in Egypt during the 1970s. His fatwa is commonly blamed for the assassination of Egyptian president Anwar Sadat in 1981. Expelled from Egypt, he migrated to Afghanistan in the mid-80s, linking up with US-backed radical groups fighting the Soviets, including Osama bin Laden’s Maktab al-Khidamat (MAK), the supposed precursor of Al-Qaeda.

The cleric moved to the US in 1990, where he assumed control of MAK’s American operations under the auspices of the CIA. During the war, the organization had established branches in 33 US cities and an extensive fundraising network. He gained entry to the country under a tourist visa despite being on a State Department terrorist watchlist. A sequence of absurdities revealing the disconnection between covert and overt US government operations ensued. The State Department appropriately revoked his visa five months after he entered the country, but Abdel-Rahman subsequently obtained a green card from INS five months later. While attempting to re-enter the US after a trip four months later in August of 1991, the State Department again took steps to revoke Abdel-Rahman’s visa, but he was allowed to enter the country so he could appeal the decision. He took no steps to do so, and his green card was revoked. He then claimed political asylum. The CIA ensured that he was able to stay in the US unimpeded.

Throughout this period, Abdel-Rahman was actively preaching anti-US doctrine, promoting random acts of violence, and coordinating sabotage against the West. A core group of jihadists around Abdel-Rahman allegedly committed the 1993 World Trade Center bombing and planned dozens of terrorist attacks in Egypt. Egyptian authorities expressed their confusion about why Abdel-Rahman was allowed to operate freely within the United States.

The FBI eventually arrested Abdel-Rahman and prosecuted him for planning attacks on US civilian and military infrastructure and conspiracy to assassinate Egyptian president Hosni Mubarak. His arrest inspired the mass killing of 58 Western tourists in Egypt in 1997.

Many of Abdel-Rahman’s followers, who planned and executed terrorist attacks on US soil, had been trained, funded, and protected by the American government. El Sayyid Nosair, who assassinated Rabbi Meir Kahane in New York in 1990, attempted to use his US training as a defense in court when fighting conspiracy charges. 1993 WTC bomber Mahmud Abouhalima received combat training in Peshawar camps paid for by the CIA through the Pakistani ISI. Several of Abdel-Rahman’s followers who were convicted in 1995 for the New York City landmark bomb plot to blow up the UN building, Lincoln Tunnel, Holland Tunnel, George Washington Bridge, the FBI’s New York office, and other major landmarks had received US-funded training in Afghanistan.

An even more curious case is that of Ali Abdul Saoud Mohamed. Mohamed was an intelligence officer in the US-backed Egyptian special forces, obtaining the rank of major. His unit had close ties to radical Islamist elements within Egypt and abroad, and it carried out the aforementioned assassination of Egyptian president Sadat in 1981. At the time, Mohamed was participating in a four-month SOF training course at Ft. Bragg. During the course, he was approached by the CIA recruiters. Upon graduating, he received a green beret.

After returning to Egypt, Mohamed joined Egyptian Islamic Jihad, which was headed by future Al Qaeda founder Ayman al-Zawahiri. His open fundamentalism led to his discharge from the Egyptian military in 1984. He then obtained a job at EgyptAir as a counterterrorism security advisor, where he gathered crucial information that EIJ would later use to conduct hijackings.

Zawahiri then allegedly ordered Mohamed to infiltrate the US intelligence apparatus, though this idea is dubious considering he may have already been a CIA asset for several years. Mohamed then simply walked into the CIA’s Cairo station, announcing he was interested in becoming a spy. He was immediately sent to Hamburg, Germany, to infiltrate a Hezbollah-linked mosque.

Bizarrely, he revealed himself as a US spy upon entering the mosque, and another CIA asset already present there reported this immediately to his superiors. Mohamed was, supposedly, placed on a watchlist to bar his entry to the US and dropped by the CIA. He then immediately moved to the US, with the CIA ensuring the State Department wouldn’t bar his entry.

After a year of living in the US, during which he established contacts with local EIJ members, Mohamed enlisted in the US military. His excellent marksmanship, physical fitness, and prior military experience (including US training) ensured his quick promotion and assignment to the Special Operations Command at Ft. Bragg, with which he was well familiar. He made no effort to hide his Islamist views and became a trainer at the John F. Kennedy Special Warfare Center. He was then put in touch with the CIA and perhaps “recruited” for a third time.

Mohamed was then allowed to travel, while on leave, to Afghanistan to support the Mujahideen in their war against the Soviets. Suspicions from his superiors sent up the chain of command received no response. Upon returning, he began taking weekend trips from Ft. Bragg to EIJ groups in New York and New Jersey. Using his US Special Forces training and stolen intelligence and supplies from Ft. Bragg, Mohamed trained dozens of EIJ operatives who would go on to commit terrorist attacks. Mohamed supplied EIJ with classified material, including ship docking locations for American ships in the Middle East and US SOF deployment points. He wrote a lengthy training manual on asymmetric warfare and terrorism for Al-Qaeda, which was widely distributed to radical groups around the world. During this period he was extensively surveilled by the FBI.

Mohamed was honorably discharged from the army in 1989 and received multiple commendations, including for patriotism. He immediately devoted his life to supporting Al Qaeda and EIJ operations. From Santa Clara, California, he acted as a central hub for the transfer of communications, weapons, forged documents, and money between terrorist networks run by the likes of Abdel-Rahman and Osama bin Laden. He returned to Afghanistan repeatedly and, meanwhile, worked as an FBI informant. Despite stolen documents and intelligence plainly traceable back to Mohamed being repeatedly found after arrests of Islamic radicals, no effort was apparently made to shut down his activities.

Mohamed was instrumental in resolving a partisan divide within Al Qaeda on who the group should next target after the Soviet withdrawal from Afghanistan. On one side was MAK founder Abdullah Azzam, who believed the next logical battlefield for jihad was Palestine, while on the other were Osama bin Laden and Abdel-Rahman, who wanted to target Muslim countries and the United States. Azzam was assassinated in 1989, and his close associate Mustafa Shalabi, who represented his position in the US, was murdered after telling Mohamed he feared for his life. Three of Mohamed’s trainees were suspected of the killing.

Mohamed took control over Al-Qaeda training centers in Afghanistan, Pakistan, and Khartoum. He set up the cell that would perpetrate the US embassy bombing in Nairobi in 1998. He secured documents for Ayman al-Zawahiri to enter the US multiple times to conduct fundraising tours. His work for the FBI continued during this period, supposedly informing on Mexican human trafficking rings. In 1993, he told his superiors at the FBI about Al-Qaeda’s activities, but the report was never shared beyond the San Francisco field office and was later “destroyed in a reorganization of intelligence components within the Department of Defense.” Mohamed trained militia members involved in the shootdown of multiple Blackhawk helicopters in Mogadishu in 1993 and may have been directly involved.

Mohamed was “called in” by the FBI after the US government was subpoenaed about his activities by Abdel-Rahman’s defense attorneys in 1994. The attorneys were hoping to use official US government support of Abdel-Rahman as a defense strategy. The Justice Department arranged an interview with Mohamed, who flew back from Kenya and met with officials at the San Jose FBI field office. Whatever happened in this meeting, it didn’t result in Mohamed’s arrest, and he continued his domestic activities supporting Al-Qaeda. Mohamed again met with the FBI in 1997, where he openly admitted to all the activities detailed above, but he was once more allowed to stand up and walk out a free man.

Mohamed was finally arrested after the 1998 bombings of the US embassies in Kenya and Tanzania, for which he had provided training, funding, and intelligence. He pled guilty to five counts of conspiracy in 2000 and hasn’t been sentenced or seen publicly in the 25 years since. His current whereabouts are unknown.

The cases of Ali Mohamed and Omar Abdel-Rahman are just two examples of US-supported Islamist fighters among thousands. These Islamists derived their funding, expertise, training, and intelligence directly from the United States, first as a proxy force against the Soviets, then against Muslim states in the Middle East and Africa, and finally against the United States itself. The scale of their activities worldwide vastly exceeds that of the Cuban exiles. The results of arming these groups cost the US trillions of dollars and tens of thousands of lives. It was used as the justification for a decades-long global war, the curtailing of civil liberties, and unprecedented destabilization in the Middle East that caused the deaths of millions and displacement of tens of millions, spawning a refugee crisis of unprecedented scale.

However, it’s almost impossible to explain continued US intelligence backing of Islamic extremists as they planned and perpetrated terrorist attacks on US soil solely as institutional incompetence or a series of comical mistakes. The case of the Islamist proxies is unique in that the lag time between their status as proxy and transition to an enemy collapsed so completely that they were actively being protected even as they were directly attacking the US.

Blowback?

These four examples: Cuban exiles, the South Vietnamese, Salvadorans, and the Mujahideen should be sufficient to prove the first part of our case, and this already long piece would become unwieldy if we detailed any of them in their full scope or covered the numerous other examples US and European history have to offer. For the curious, however, we can recommend researching:

• The Contras (drug trafficking)

• ISIS

• Libyan rebel groups (2017 Manchester bombing)

• Operation Gladio (terrorism across Italy and Europe, 60s - 80s)

• Brabant killers, Belgium (unproven connection to SDRA VIII stay-behind network)

• Operation Valuable (Albanian mafia networks)

• Ustase, Croatia (hijackings and bombings in Europe and Australia)

• Release of Yakuza by US occupation authorities in Japan

• Hmong organized crime in the US

• US collaboration with the Italian mafia in WW2

• Kosovo Liberation Army (human/drug trafficking)

The pattern, in the broadest terms, is one of “blowback,” where the creation of a proxy force results in that proxy force becoming a liability to its backers after a proxy conflict ends. The popular narrative of blowback portrays the phenomenon as karmic retribution for short-term thinking. But this idea has justifiably been criticized as the gaps in a patchy history of covert operations are gradually filled by the evidence. In the most extreme cases, blowback is intentional. While proxies have been powerful tools in conflicts worldwide, factions within state power structures have frequently turned this weapon inwards and used the remnants of those forces against their own domestic enemies and their populations.

We’ll now turn towards the case of Ukraine.

Ukraine

Ukraine’s use as a proxy force against Russia dates back to the Grand Duchy of Lithuania’s deployment of Ruthenian levies against Muscovy in the 14th century. Leverage of a succession of ethnic and political entities within present-day Ukraine by the Polish-Lithuanian Commonwealth, Ottoman Empire, Sweden, Austria-Hungary, Poland, and Nazi Germany against various Russian political entities continued over the centuries. The CIA armed, trained, and inserted UPA remnants into Soviet Ukraine for intelligence gathering and partisan activity beginning in 1949 under Project Aerodynamic.

Political instability in post-Soviet Ukraine initially precluded deep and direct US intelligence ties within the Ukrainian state, with soft power mechanisms like the National Endowment of Democracy (NED) taking the lead in sabotaging Ukrainian ties with Russia. The NED and other intelligence-linked, state-sponsored funding sources flooded the country with Western cash starting in the early 2000s and quickly established firm control over parts of the Ukrainian media. In 2013 Carl Gershman, the head of the NED, described Ukraine as “the biggest prize” among post-Soviet states in countering Russia in an op-ed in the Wall Street Journal.

These efforts were successful in shifting Ukrainian public opinion and bolstering the position of Ukrainian nationalist paramilitaries, contributing to the successful overthrow of the government in the 2014 Maidan Revolution. With the Russian-neutral Yanukovych government ousted, Western intelligence had a free hand in the new Ukraine.

The CIA and MI6 immediately established direct ties with Ukraine’s internal security service, the SBU, and military intelligence directorate, the GUR. SBU head Valentyn Nalyvaichenko created a “three-way partnership” between Ukraine, the CIA, and MI6 whereby the foreign intelligence services would rebuild Ukraine’s intelligence apparatus from scratch. SBU and GUR personnel were flown to locations across Europe for training by CIA and MI6 instructors, and the CIA established over a dozen bases within Ukraine, an unusually high number for a country of Ukraine’s size.

The CIA created secret Ukrainian special forces units dedicated to collecting intelligence on the Russians. CIA-trained Ukrainian spies were inserted into Russia, Europe, and Cuba. Current Ukrainian defense intelligence head Kyrylo Budanov was a member of one of the CIA’s clients, Unit 2245. Budanov led an amphibious landing in Crimea to plant explosives at an airfield in 2016. The unit was ambushed immediately by Russian Spetsnaz operators and was forced to retreat. The incident caused significant controversy in the US/Ukrainian relationship, as there was supposedly a moratorium on the CIA orchestrating lethal operations against the Russians at the time. Budanov was wounded and was flown to the US for treatment at Walter Reed Medical Center.

In 2015, the CIA helped establish the “fifth directorate” of the SBU, a dedicated assassination and sabotage unit. In 2017, the UN Human Rights Monitoring Mission in Ukraine expressed “concern” that the newly rebuilt SBU was perpetrating human rights abuses through the systematic killing and torture of journalists within Ukraine.

Meanwhile, the US Special Operations Command established a dedicated military and intelligence training program in Ukraine in 2015. By 2022, Ukrainian special forces units had doubled in size and been trained in sabotage, underwater demolition, and irregular warfare. The British established a permanent training presence in the country in 2015 under Operation Orbital, training 17,500 Ukrainian personnel by 2019. The US intelligence relationship with Ukraine was expanded under Trump and then further under Biden.

Azov 9/11

Western-trained Ukrainian forces present a looming danger that has the potential to be larger in scale than any of the other cases we’ve covered here. First, the scope and scale of the training and direct military assistance dwarfs that of any proxy conflict since the beginning of the Cold War era.

Ukraine has been flooded with hundreds of billions of dollars of weapons, with oversight over those weapons being infamously lackadaisical. Western authorities have been sounding the alarm about this issue since the beginning of the conflict. The Global Initiative Against Transnational Organized Crime (GI-TOC) said in a report earlier this year that Ukrainian organized crime arms trafficking is already a much larger issue than it was in past conflicts like Afghanistan and the Balkans.

Spanish police have identified incidents in which drug trafficking organizations have been armed with NATO weapons donated to Ukraine. A Europol report released in April said that these criminal gangs are increasingly armed with “explosive weapons.” A 2024 DoD audit report admitted the agency had failed to track over a billion dollars in military equipment sent to Ukraine.

In 2024, GI-TOC detailed some examples of weapons for sale on the international black market that Ukrainian authorities had confiscated: a Zu-23-2 23mm anti-aircraft gun, US-made machine guns, automatic rifles, automatic grenade launchers, and explosives. Many of these items were being sold by active-duty AFU servicemen.

When the conflict in Ukraine ends, whenever and however that might be, the quantity of military-grade weapons in the country will dwarf that of past Western proxy conflicts. And while international arms trafficking presents a worrying threat, the more disturbing prospect is who will be holding those weapons when the music stops.

Hundreds of thousands of Ukrainians have obtained direct experience in one of the largest conflicts since the end of WW2. Under the AFU umbrella is a hodgepodge of semi-autonomous, ideologically motivated paramilitary units. Some of these units have been conducting sabotage and assassination campaigns for a decade. Their expertise in drone warfare is unparalleled outside the Russian armed forces, and the mainstream narrative is that they’ve already perpetrated the largest terrorist attack on industrial infrastructure in modern history.

The Ukrainians also possess a unique skill set. Even before the war, Ukraine was a hotbed of scam call center activity, with large organized criminal networks operating hundreds of call centers across the country. This expertise has been put to work by the Ukrainian intelligence services, who trained the scam callers to use blackmail and threats to coerce elderly Russians into committing terrorist attacks.

In 2024, American Ryan Routh attempted to assassinate Donald Trump. Routh, who had traveled extensively in Ukraine, was communicating with British-trained Afghan special forces units to recruit them to fight in the AFU. He was also in contact with a Ukrainian source in an attempt to obtain a rocket launcher. He cited support for Ukraine as a motive in the assassination attempt. In February of this year, 17-year-old would-be Trump assassin Nikita Casap killed his parents in preparation for a plot after communicating extensively with an unknown Ukrainian source. Casap was reportedly influenced by the Order of the Nine Angles and MKU groups, both of which have connections to Ukraine. He planned to flee there after killing the president.

The danger presented by postwar Ukrainian personnel is twofold. First, that they will provide a similar manpower pool for black operations as the Cuban exiles once did. In an increasingly fractured European order and amidst regular and mysterious “accidents” at important military and industrial sites across the continent, their spiderweb of relationships with various Western intelligence agencies makes it difficult to predict what or who they’d be used against. Ukrainian special forces and intelligence agents will already possess vast quantities of firearms, explosives, and drones, and they have the training to use them effectively. They also have the expertise to manipulate third parties into conducting attacks for them. Just as the Cuban exiles provided a mercenary army for assassinations, bombings, hijackings, and drug trafficking, Ukrainian exiles will give nefarious actors within deep factions of western governments the ability to execute operations with plausible deniability. The Ukrainians will be much better trained and equipped than the Cubans ever were, and they have millions of Ukrainian refugees in Europe and hundreds of thousands in the US to support them. Ukrainian organized crime will be capable of funding operations through arms and human trafficking.

The second danger is posed by Ukrainian exiles as a violent political force unto themselves. Over the past year, a Ukrainian stab-in-the-back narrative has been forming steadily and is at risk of becoming mainstream. An increasing number of Ukrainian military and political figures, including right-wing nationalists, have gone on the record to warn about an impending or already underway betrayal by their European or American sponsors.

“What has happened is a stab in the back, there is no other way to describe it.” - Genadi Kostov, AFU (ret.)

Ukrainian sentiment regarding its western partners is increasingly souring. Divisions within nationalist elements have formed, with some angrier at the Europeans for pushing for a continuance of a pointless war as others are at Trump for attempting to force Zelensky to end it. In a postwar environment, even small numbers of committed and ideologically motivated Ukrainian soldiers will be capable of attempting to pay the West back asymmetrically.

Last week, Ukrainian journalist Maksim Kukhar posted this on Facebook:

“1. The plan is as follows.

Officially condemn the United States for switching to the side of aggressive Russia in its war against Ukraine.

In connection with the betrayal by the United States, expel the entire staff of the U.S. Embassy and all American citizens from Ukraine within 48 hours.

Freeze the accounts and activities of American companies in Ukraine. Begin the process of their nationalization, as well as the nationalization of any U.S. assets in Ukraine.

Offer EU countries Ukrainian troops to blockade U.S. military bases in Europe. Since, with the United States now definitively siding with Moscow, these bases may also threaten the independence of EU states.

Prepare for military confrontation with U.S. forces in Europe. Develop pre-emptive strikes against their bases and concentrations of forces.

2. When Russia attacked us, we were told we wouldn’t last even a week. Today they will say that if we don’t listen to the U.S. and capitulate, we won’t last even two weeks. But that is a lie—just like the first time.

Russia has already broken its teeth on us. Now we must force the United States, which from the first days of the war has helped Moscow far more than it helped us, to understand that it has no right to dictate anything to our country.

3. On the military aspect. The United States has no political possibility to create a significant grouping of forces near our borders, nor is such a possibility expected.

Trump cannot say, “I will send troops to Ukraine so they can force Kyiv to submit to Moscow.”

Therefore, the U.S. is now simply gifting us the position of Europe’s military leader for decades to come.

The main thing now is not to be frightened by empty words and not to give up this position for nothing, for reasons no one understands. Only escalation with Washington and accusing it of betraying everything sacred and democratic—there is no other path.”

No matter how delusional his screed may appear, Maxim’s sentiment is one of many anti-Western narratives developing within Ukraine. The immense scale of Ukrainian losses, both in personnel and infrastructure, has the potential to motivate decades of anger and potential violence.

If the Ukrainians adhere to the pattern we’ve established in this piece, they will present an enormous risk to societies worldwide. Whether they’re used as a tool by unscrupulous state actors, take revenge for perceived betrayal, or are simply left to their own devices in a devastated Ukraine, the potential for blowback here exceeds most, if not all, prior historical examples. Perhaps most disturbingly, there’s little to be done to mitigate this threat. The weapons can’t be unsent, the Ukrainian soldiers can’t be untrained, and the hundreds of thousands of Ukrainian war dead can’t be brought back to life. While random acts of violence punctuate the end of the Global War on Terror, the seeds of future violence have already been sown.

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We’ve previously covered in extensive detail the relationship between the European defense industry and the war in Ukraine. I recommend reading the piece linked below first for a primer on this subject, if you haven’t.

In the midst of sudden and chaotic peace negotiations between the US, EU, Ukraine, and Russia, astute observers have been quick to dismiss the likelihood of a negotiated settlement happening any time soon. While this cynicism has a solid grounding in the lengthy legacy of failed negotiations in the war so far, European markets are reacting as if a conclusion to – or at the very least a shift in – the war is a real possibility.

The first rumors of potential US/Russia negotiations began to spread around November 14th. Subsequent reporting from Bloomberg revealed that a secret meeting took place between Steve Witkoff, Russian Special Presidential Envoy on Foreign Investment Kirill Dmitriev, and – interestingly – Jared Kushner in Miami in October. As the negotiations continued, US Secretary of State Marco Rubio was excluded, while JD Vance ally and US Army Secretary Dan Driscoll was brought in. A fundamental shift on Ukraine policy within the Trump administration seems to have occurred.

European markets reacted quickly to the rumors. The STOXX European Aerospace and Defense index (SXPARO), which tracks a basket of major defense stocks within the EU, began to slide on the 14th. The decline accelerated on the 19th with the appearance of rumors that the US proposal came with a “deadline” issued to Zelensky to sign a deal by the 28th. While the negotiations have now apparently devolved into a series of increasingly unrealistic European and Ukrainian counter-proposals, there’s been no reversal in this trend. The EUAD ETF, which closely tracks the index, has posted a 12% loss in the past month. This is a larger drop than the fund has experienced since the beginning of the war in Ukraine, and comes on the back of a 5% decline in the first half of October.

There’s reason to think that the markets are reacting to more than just the latest rounds of (possibly futile) peace negotiations.

Pump and Dump

Over the past few months, major European defense concerns have announced the signing of letters of intent with the Ukrainians for defense deals of unprecedented scale. The first of these came in late October, as Swedish Prime Minister Ulf Kristersson held a joint press conference with Zelensky to unveil a potential purchase deal through which Saab AB would provide the Ukrainians with up to 150 new Gripen E multirole fighter aircraft. This announcement raised eyebrows for several reasons.

First, if the deal were to come to fruition, it would be the largest defense procurement order in Sweden’s history. The value of just the aircraft, discounting maintenance contracts with Saab, would well exceed $20 billion. With Ukraine facing a $60 billion budget shortfall for 2026 alone, they do not have the means to pay for the aircraft, even in small installments. Swedish officials have made vague references to using the windfall from the deadlocked reparations loan to finance the deal, but as we’ve covered previously, the loan isn’t even enough to fund Ukraine’s current levels of expenditure, let alone a new $20 billion procurement contract.

The Swedes have tried to build support for EU funding for the deal by suggesting production could take place across the continent, but with EU budgets already stretched to their limits, it’s not clear where the money would come from.

Second, the rate of delivery for these aircraft seems wholly disconnected from the realities of the war itself. Swedish officials have suggested that the deliveries will only take place “after the war ends,” while “limited access” to older Gripen C/D airframes may be provided in the meantime. With current production rates of the aircraft being only in the low teens a year, delivering 150 of them would take as long as 15 years, according to the Swedes. Messaging from Zelensky seems disconnected from these statements – he says he hopes Ukraine will be operating the fighter “as soon as next year.”

Saab posted a sharp initial 7.8% gain as the letter of intent was announced, but that gain has now been erased, with a 15% loss month over month, as its share price declined precipitously with the announcement of renewed peace negotiations. This is unfortunate news for Saab, which has faced a long string of setbacks in Gripen sales. Without the Ukraine deal becoming a reality, the future financial success of the platform is uncertain. The Swedes are currently lobbying the Canadian Air Force to acquire the Gripen E.

Not to be outdone, the French announced on the 17th the signing of a letter of intent for a similar deal to provide Ukraine with up to 100 Rafale F4 fighters. If the prospect of one procurement deal for aircraft valued in the tens of billions seems implausible, the simultaneous procurement of two incompatible platforms defies belief. Just like Saab, Dassault estimates it will take at least a decade to deliver the quantity of airframes specified in the letter of intent, with the first deliveries being years away. And just like the Swedes, the French point to the reparations loan scheme as the way to finance the deal.

These two announcements, which involve no obligations for any parties involved, and only constitute vague commitments to explore future deals, paint a strange picture of the European defense industry. France and Sweden are now competing for the same potentially non-existent pool of funding. The Ukrainians are signaling their intent and ability to place $40 billion or more of procurement orders while being steadily cut off from debt financing and facing a $60 billion hole in their 2026 government budget. Prior transfers of western fighter jets have failed to gain them a noticeable operational or strategic advantage. And operating such a large fleet of hundreds of incompatible fighter aircraft would place enormous strain on their finances, even in peacetime.

Both Dassault and Saab face stiff competitive pressure from the F-35 program, as rising manufacturing costs in Europe reduce the low-cost edge platforms like the Gripen and Rafale once had. US political influence and economy of scale has left bleak prospects for both firms in competing with the F-35. Saab recently pitched to the Canadians that local production of the Gripen could create 10,000 new jobs in Canada – an absurd prospect considering localized production in Brazil has created only a few hundred.

Though it hasn’t been stated publicly, the Europeans and the Ukrainians fully understand that these deals are fantasies only remotely achievable through the reparations loan, and even then are unlikely. But they announced them all the same in the hopes of boosting the public perception of their domestic defense industries. It’s also possible they’re using these deals to pressure other EU member states into funding the reparations loan, banking on promises of joint-production across the Union.

“There’s no money in the budget, period. Not happening. If the whole Russian assets deal doesn’t go ahead, these deals don’t go ahead.” - Richard Aboulafia, managing director of AeroDynamic Advisory (Kyiv Independent)

For their part, the Ukrainians get an optimistic headline that grants some temporary confidence to their less observant supporters, who often fail to read the fine print. Both Saab and Dassault have also suggested establishing joint production facilities in Ukraine, which plays well in the Ukrainian media. But Ukrainian sources have been less than triumphant about these potential deals.

“From the political leadership’s point of view, this looks like an attempt to offset internal corruption scandals with big foreign-policy signings. These are not shells or equipment that can protect us today. Strategically, yes, it’s important. But does it protect us now? No.” - Mykola Davydiuk (Kyiv Independent)

Of all the European defense contractors to benefit from the war in Ukraine, Rheinmetall has benefitted the most. We’ve previously covered how 2,000% gains since the beginning of the war have catapulted the German firm into “insanely overvalued” territory. German plans for unprecedented deficit defense spending justified by the war in Ukraine undergird its success, and so it’s more susceptible to changing sentiment around the war than any of the other companies we could discuss here. Accordingly, it’s posted a 16% loss in the week since the US peace proposal was unveiled.

While the latest peace negotiations are clearly responsible for the sudden downturn in European defense markets, they’re likely not the sole causative factor, in and of themselves. As we’ve covered extensively over the past few months, the Ukrainians are facing an all-time peak in battlefield, financial, political, and infrastructural pressure. The markets may be taking the negotiations not as a likely conclusion to the war, but a sign that the writing is on the wall for Ukraine.

There’s little reason to think the Europeans will execute a total reversal in their plans for debt-driven defense spending. An ambiguous Russian threat can remain even if the war concludes, and pressure from the US to meet new NATO spending targets will ensure governments continue to dump cash into defense concerns.

However, the mind-boggling overvaluation of firms like Rheinmetall will likely not survive a conclusion to the war, as a negotiated settlement could force the EU to scale back some of its spending. Other defense firms like Saab (+935%), Leonardo (+833%), BAE Systems (+485%), and Thales (+324%) have all posted enormous gains since 2022, but each has also lost more than 10% of its value in the past week. Unless the Europeans can ensure the war continues for the long term, these defense companies will have a long way to fall.

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The last time I covered the Russo-Ukrainian energy war, the Russians had just targeted – and apparently destroyed – a key 750kV substation linking the nuclear power plants in the west of the country to the Kiev metro area, and beyond. In that piece, I said the following:

Over the next few days, the blackout schedule for Ukraine as a whole and especially Kiev will be a key signal to watch. If Ukrenergo is unable to restore full service to the city within a few days, the Kievska station was likely completely destroyed.

Today we’ll be evaluating this statement, and will make an attempt to get a clear picture of the Ukrainian grid as a whole. This is a daunting task if hard data is what you’re after, rather than anecdotal reports and typically vague media stories.

Luckily, we have some public information. DTEK, Ukraine’s largest private energy firm, publishes public, daily outage announcements for three service regions: Kiev, Odessa, and Dnipropetrovsk. Using these announcements, we can determine the relative state of the Ukrainian grid, compared to before the major Russian attack on the 7th.

The announcements for Kiev on the 17th of November look like this:

Each city in Ukraine is split into twelve “queues” (черги), or “turns.” Every service address belongs to a queue, and Ukrainians can find out when their lights will be shut off by referencing these images or using an online, address-based tool. Each queue has its own outage schedule, which can vary somewhat from queue to queue. In the first image above, we can see that queue 1.1 will have outages from midnight until 2:30am, and from 8:30am to 12:30pm.

Cities not serviced by DTEK have a smattering of other online tools or Telegram channels that provide outage announcements. One of these is Kharkov:

Here, queue 1.1 will have outages from midnight to 3am, 6:30am to 1:30pm, and 5pm to midnight. Some regions only allow outage lookups by individually selecting a queue or even an address, so they’re not conducive to easily scraping data.

The DTEK announcement images can be downloaded easily enough, but a relatively complex OCR and programatic solution is needed to extract, parse, and process the outage schedules. The Kharkov announcements can be parsed somewhat easily because they’re already in text, and follow a consistent format. Once we have the schedules, we can then total up the number of outage hours for a city within a day, and divide it by 12 (the number of groups) to receive an average number of outage hours that’ll apply city-wide.

After lots of trial and error and burning some free AWS credits on OCR, here’s the result:

First, a caveat: while queues are evenly distributed in terms of energy load, they are not necessarily evenly distributed in terms of customers. So we can’t take the outage hours as a proxy for what the average person in each city is experiencing, since a queue may contain commercial or industrial customers. However, my general assessment of the data is that individual queues are not being singled out for continuous service, and the distribution of outage hours is generally similar across groups when viewed across multiple days. Regardless, we can get a good sense of the relative state of Ukraine’s grid compared to the beginning of the month.

So what does this data show us? The Russian attack that destroyed the Kievska substation and brought the Centrenergo power plants offline is obvious here, with all four cities/regions increasing their outage hours by a factor of six from the 7th to the 9th. We can also see that Kiev has been receiving priority in terms of service, with its hours consistently lower than the others.

Apparent repair efforts appeared to be mitigating the pressure for Kiev and Odessa until a slight reversal on the 16th. A moderately-sized overnight attack on the 16th targeted energy infrastructure, including a 110kV substation, in Odessa oblast.

On the 19th, a major Russian attack using over 60 missiles struck dozens of targets across Ukraine. This attack damaged or destroyed substations and thermal power plants in central and western Ukraine, including in Lvov, Ladyzhyn, and Burshtyn. The effect of this attack is immediately apparent in the data, with Kiev surging to 15 hours of blackouts a day, a peak for the month.

It’s clear that the Ukrainian grid is severely degraded, and continued Russian attacks are doing more than enough to keep up with the rate of repairs. No city we have data for has dropped to less than three times the outage hours it was experiencing before the 7th. Dnipropetrovsk and Kharkov have shown no improvement, and efforts to keep a higher level of service in Kiev have had limited success.

To try to get a sense of how widespread the damage is, we can use SvitloBot, a webapp that tracks outages for connected devices across this country. This is nowhere close to a perfect tool, as large numbers of devices mysteriously go on “technical breaks” and much of the country’s status is unavailable while air alerts are active, which is now much of the average Ukrainian day.

The key takeaway from SvitloBot is that service in western Ukraine has dropped precipitously. Until recently, cities like Lvov were solid green for much more of the day than central and eastern parts of the country, likely because the western regions have been sustained through imported electricity from Poland and Hungary. Ukrainian electricity imports surged from 140 Mwh in September to 360 Mwh in October. But import infrastructure is vulnerable to destabilization through long-range Russian strikes like the one we saw on the 19th.

The available evidence suggests that Russian strikes are outpacing Ukraine’s ability to repair its grid. Two weeks after the strike on the 7th, a generous timeframe to complete major repairs considering how efficient Ukraine’s engineers have become, the situation has only continued to deteriorate. Major urban centers are now without power for the majority of the day. With the situation spiraling out of control, outage schedules have been temporarily discarded in some areas. Ukrenergo announced emergency outages this morning:

The damage to transmission infrastructure has been severe enough that Ukraine’s three nuclear power plants, which provide more than half of its energy, have been forced to further limit their output as their connections to the rest of the country are severed.

A perfect storm is hitting Ukraine, as political, battlefield, financial, and infrastructural pressure mount to unprecedented levels since the war began. Full grid collapse is now on the table. It’s just a question of if the Russians will choose to pull the plug.

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The European Commission and Belgian leadership met in Brussels on the 7th of this month in an attempt to resolve the impasse on issuing the controversial “reparations loan” backed by frozen Russian assets to Ukraine. After failing to reach a consensus in October, the EU committed to “exploring alternative proposals” through December, but the Belgians remain unconvinced by said exploration:

“For Belgium, it is essential that all options are explored. Every possible approach must be examined with rigour and transparency, to ensure the best solution. To be frank, we are still waiting for the other options that the European Commission was meant to present, as agreed at the European Council in October.” - EU source (Euronews)

This is all quite difficult to parse for the average observer, who likely doesn’t understand how the highly complex reparations loan scheme works in practice. The common perception of the situation is that the Russian cash can effectively be stolen and given to the Ukrainians, but this is not the case. Here’s the plan, step by step:

1. Belgian clearing house Euroclear transfers the roughly €175 billion in Russian assets it currently holds to the European Commission.

2. €35 billion will be used to cover already outstanding loans the Ukrainians owe to the G7.

3. The remaining €140 billion will sit in an EU controlled account.

4. The EU will issue a €140 billion loan to Ukraine that’ll be disbursed in tranches over an unspecified period of time. If German chancellor Friedrich Merz has his way, all of this money will be spent on weapons from the EU.

5. The Ukrainians will only be required to pay back this loan if the war ends and the Russians agree to pay them reparations.

6. The Ukrainians would then take this reparation money and use it to pay the EU.

7. The EU would repay Euroclear, and Euroclear would repay the Russians.

This complex series of moves is necessary because there is no legal mechanism through which the EU can outright seize the assets. Freezing them is legally possible – perhaps – under the UN’s Articles on the Responsibility of States for Internationally Wrongful Acts, or ARSIWA. These rules allow for a state to engage in otherwise illegal “countermeasures” intended to dissuade another state from engaging in its own illegal behavior. However, the form of countermeasures that can used for this purpose is limited to those that are “immediately reversible” once the state being punished ceases its illegal actions. The only other relevant provision is for countermeasures designed to provide “reparations” for an injury caused by illegal actions.

This makes the reparations scheme much more comprehensible. First, the EU won’t actually be confiscating the money, just issuing a loan theoretically backstopped by it. Second, the loan is, nominally at least, designed to provide reparations to Ukraine.

But the issues should be obvious. In order to maintain the “reversibility” of issuing a loan backstopped by the Russian assets, it must be theoretically possible that the Russians could recover the money the moment the war concludes (or, technically, the moment they cease their “illegal behavior”). If this were to happen, the Russians would have every right to demand the immediate transfer of the entire amount out of Euroclear, but it would have nothing but worthless IOUs from the EU on its balance sheet. In other words, the Belgians would be liable for somewhere around $150 billion of cash they would not have.

Another major issue is that the “reparations” the loan would theoretically provide wouldn’t come anywhere close to adhering to the definition of reparations as outlined in ARISWA. Those reparations are supposed to be for spending like repairing infrastructure. But German chancellor Friedrich Merz has publicly said that the entire amount of the reparations loan should be spent on weapons procurement contracts, ideally with EU firms.

Flagrantly violating the law could have severe ramifications that have been thoroughly outlined elsewhere, the biggest of which is triggering asset flight from EU banks in response to an apparent shift where EU (and UN) banking regulations could no longer be trusted. Scholars of international law are divided on these issues because there’s no precedent for anything like this. It’s debatable if the EU has any right to apply countermeasures at all, considering it’s not – on the surface at least – a party to the conflict.

To summarize the Belgian concerns:

• The transfer of Russian assets they have custody of is illegal. As the legal custodian of the assets, Euroclear will break international law if they do so.

• Once those assets are transferred, they’ll have to be treated as IOUs on Euroclear’s balance sheets.

• They could be left fighting costly legal challenges from the Russians, potentially for decades.

• If the legal challenges succeed, they’ll be the ones on the hook for repaying the Russians.

• A veto from a EU country blocking the extension of the sanctions regime immobilizing the Russian assets (even temporarily) will give the Russians the right to reclaim the cash from Euroclear. Without a mechanism for refusing them, the Belgians would have no choice but to pay. Currently the sanctions regime must be extended by vote every six months.

Any possible solution to each of these concerns has major tradeoffs, and the only proposal that would seem to satisfy the Belgians is an airtight guarantee that the entire EU will backstop Euroclear. But with EU budgets already strained by deficit spending, this is an impossible ask.

One idea floated by policymakers both in and outside of Norway is using its sovereign wealth fund – the world’s largest – to backstop the loan. At over $2 trillion in value, ~$150 billion would be a relatively small liability for the fund, or so the thinking goes. On the 12th, the Norwegians dashed these hopes, citing fiscal responsibility regulations that would prevent opening up such a large liability to the famously risk-averse fund’s structure. Former NATO head, now Norwegian finance minister, Jens Stoltenberg said using the fund as the loan’s sole guarantor was “not an option.”

Meanwhile, the Financial Times gained access to EU documents outlining the dire situation the EU will face if it needs to put up the money for Ukraine’s loan itself, rather than confiscating the Russian assets. The Union will need to pay as much as €5.6 billion a year just in interest “indefinitely” to loan more money to the Ukrainians:

It said that if such a plan remains off the table, the bloc’s 27 member states must either authorise joint borrowing that would load up already strained national budgets with billions in fresh liabilities or provide Ukraine with direct grants totalling €140bn.

It added that both options would “potentially require fiscal adjustments in some member states” and “would directly affect their deficit and debt”.

The cost of servicing a joint-borrowed loan would run to as much as €5.6bn a year once the entire €140bn is borrowed and lent to Ukraine, the commission paper estimated, with heavily indebted France paying almost €1bn of that.

It added that Italy would contribute €675mn, and Belgium itself — which is already struggling to pass a national budget for next year — would shoulder almost €200mn a year in interest payments.

The commission document also warned that borrowing the €140bn could entail “potential knock-on effects both for market absorption and, notably, the rate that the Union will generally pay on its borrowing”.

“It cannot be discounted that it may also have additional indirect costs” for other EU finance programmes, it added

Yesterday, Le Monde dropped a major bombshell. Friedrich Merz announced his latest major proposal on issuing the reparations loan without even informing Euroclear, and the clearing house’s director Valerie Urbain found out about it when reading the news on September 25th. Given this, and the concerns outlined above, it’s understandable that the proposal has ruffled so many feathers in Brussels.

In the same piece, Le Monde reveals that the Belgians are hardening their stance in response to the enormous EU pressure on them to release the funds. Euroclear hasn’t ruled out suing the European Commission if it attempts to confiscate the funds:

If the European Union ultimately adopts a solution that resembles confiscation, Urbain said she is ready to respond in court: “There are laws. Depending on the legal framework, we will decide what we can and want to do.”

Does she envision legal action against EU bodies if Euroclear’s board believes its “fiduciary duties” are being compromised? “It is not out of the question,” she warned, while acknowledging that her teams have not, for now, prepared a case. Nevertheless, Euroclear has already had to strengthen its legal team since 2022, growing from about 10 to nearly 200 employees.

Belgian prime minister Bart De Wever has adamantly backed Euroclear’s leadership:

The Euroclear director can count on a key ally: Bart De Wever, the Belgian prime minister. Based in Brussels, the institution, a private company, relies on the Belgian Finance Ministry for sanctions. On October 23, late at night after the latest European Council, De Wever seemed energized after a day spent standing up to the rest of the 27 member states. “When you are a politician and you see a pot of gold [the frozen Russian assets], it’s irresistible,” he joked.

As head of the Belgian government, whose key role in international finance is owed to Euroclear, he opposes the Merz plan. “Is it legal? It’s not clear. (...) There is no precedent,” he noted, pointing out that even during World War II, central bank assets were not confiscated. In the event of a court sentence, it is Belgium that could be required to pay. “I am not able, and I do not want, to fork out €140 billion,” De Wever warned. He demands that each of the 27 member states guarantee the amount, in proportion to the size of their economy. “I asked my colleagues: ‘Who is ready to sign?’ I did not face a tsunami of enthusiasm.”

Urbain highlights the very real concern that EU renegades like Slovakia or Hungary will band together to block an extension of the sanctions regime that keeps the Russian money frozen. She also points to the billions of dollars in Russian funds held in diverse locations like Japan, the UK, and Switzerland. None of these states seem to be facing the scrutiny Belgium is. Meanwhile, the Russians have taken retaliatory measures by freezing between €20 and €40 billion of Euroclear client assets held by the Russian central securities repository. De Weaver: “I get calls from people saying, if you seize Russian assets, they will seize my factory, they will seize my frozen funds [in Russia].”

And Belgium is not the only EU state with concerns. An EU diplomat told the Kyiv Independent on the 13th that other member states are “hiding” behind Belgium, while Slovakian PM Robert Fico openly signals that his country will do everything it can to block the reparations loan. European officials are sounding the alarm that the IMF may divest from Ukraine entirely if the reparations loan isn’t pushed through

As Ukraine’s budgetary crisis looms, a steady trickle of EU funds continues to flow into the country. Germany has stepped up its projected unilateral aid from $10 billion to $13.4 billion in 2026. This increase will be funded by new debt. A new European Investment Bank loan totaling €200 million was issued last week to help plug the holes in Ukraine’s decimated energy infrastructure amidst a renewed Russian energy war campaign.

Meanwhile, the largest corruption scandal of Zelensky’s presidency is causing existential instability in the Ukrainian-EU relationship. Close Zelensky associate Timur Mindich has been accused by the US/EU-backed National Anti-Corruption Bureau (NABU) of embezzling up to $100 million in Ukrainian government funds through a series of bribes and kickbacks from energy contractors. Mindich is closely connected to Fire Point, the controversial Ukrainian defense contractor we’ve covered extensively. After having his Ukrainian citizenship cancelled, he fled to Israel, where he holds citizenship.

I’ve said previously that I believe the reparations loan scheme will go ahead despite opposition to it within the EU. Taking stock of the situation as it currently stands, this assessment may prove incorrect. The momentum in this case is now working against the scheme, as the Belgians dig in their heels, and seem to be capable of resisting all the pressure put on them by their neighbors. There is no clear solution on the horizon, no ace in the hole for the European Commission to play. As the situation degrades, the best path forward may be pointing the finger at the Ukrainians, rather than Belgium. A new wave of Zelensky-critical pieces in the Western media lends credence to this idea. But Zelensky has survived every other scandal he’s dealt with.

The only thing that seems certain at the present moment is that all these issues will eventually come to a head – likely soon. A combination of major battlefield setbacks, scandal, budgetary crisis, and the severe consequences of the energy war are pushing the Ukrainian-European relationship to its limits.

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At the time of writing, most of central and eastern Ukraine is subject to power outages. Last night, the Russians delivered a strike package of around 450 drones and 50 ballistic and cruise missiles against Ukrainian energy infrastructure. This combined attack was significant because the vast majority of the missiles used were Iskander-M and Kinzhals, neither of which is likely to be intercepted. Preliminary reports suggest both electrical and gas infrastructure were the targets. Large fires were seen burning in Poltava, the home of Ukraine’s largest gas fields. Gas sites in Poltava were also struck in mid-October.

The situation on the ground in Ukraine is chaotic. Where there’s power, it’s highly unstable, causing streetlights to constantly flicker, indicating that the Ukrainians are having difficulty balancing the grid. This can be seen in this video taken in Poltava:

Both of state-owned energy company Centrenergo’s two thermal power plants are currently entirely offline (note: social media posts claim Centrenergo still operates a TPP in Donetsk. Russian forces captured the facility in 2022) . Its plants supply power to Kiev and Kharkov oblasts. Preliminary reports suggest they may not be brought back online anytime soon.

Perhaps most importantly, the Russians also struck, and apparently severely damaged, the Kievska 750kV substation near the village of Nalyvaikivka, to the west of Kiev, using three Kalibrs, two Kinzhals, and two Iskander-K cruise missiles. As I’ve detailed previously, ultra-high-voltage 750kV transformer stations form the backbone of Ukraine’s grid. They connect major power stations and urban centers to each other, and without them, it’s impossible to balance energy production with consumption.

Electric grids function as an overlapping series of linked networks. Ukraine’s power generation facilities, like its nuclear power plants, use 750kV power to transmit to distant locations. The 750kV line is then “stepped down” using transformers to lower voltages, like 330kV, which is stepped down further, and so on, until the power reaches the end user.

All 750kV substations are crucial for the Ukrainian grid to operate normally, but the Kievska substation is one of the most important in the entire system. It steps down UHV power from the Rivne and Khmelnytskyi nuclear power plants to Kiev. Without it, Kiev will be largely cut off from its primary power sources, and local thermal power plants and the 330kV grid will have to pick up the slack. With Russian attacks on local TPPs and 330kV substations becoming more frequent week by week, the situation is rapidly deteriorating, and Ukrenergo has implemented rationing and rolling blackouts throughout the country.

The total payload of the strike package that hit the Kievska site was likely in excess of 3,000kg, more than two FAB-3000 bombs. Ukrainian repair crews will have to work around the clock to repair the damage, and depending on how extensive it is, they may have to essentially rebuild it from scratch.

The Ukrainians have slowly built up a strategic stockpile of essential energy infrastructure components. The Ukraine Energy Support Fund (UESF) has raised over €1.2 billion – €271 million in the first half of 2025 alone – from 22 countries to assist the Ukrainians in repairing and strengthening their grid. The fund has delivered €510 million worth of spare parts and components, including at least 18 UHV 750kV transformers.

A 750kV station like Kievska contains four UHV transformers. These components cost between $2 and $10 million a piece and weigh up to 600 tons. The Ukrainians have 5 standalone UHV stations undergirding their grid, and another four UHV switchyards at the Rivne, Khmelnytskyi, South Ukraine, and Chernobyl (its switchyard is still active) NPPs. A reasonable estimate for the total number of 750kV transformers currently in use is 40.

The effects of the destruction of any one of the standalone stations vary dramatically depending on its location. More than half of Ukraine’s power generation comes from its three active nuclear power plants. Each NPP transmits 750kV and lower voltages for local customers. The three easternmost 750kV stations – Kievska, Vinnitska, and Dniprovska – are the most vulnerable, as destroying the three of them would threaten to cut nearly the entire central and eastern regions of Ukrainian-held territory off from the UHV grid and the three active Ukrainian NPPs.

After a limited series of strikes on 750kV stations in 2024, the Russians have refrained from targeting them. As I’ve said before, this is the opposite of what you’d do if your intention was to collapse the Ukrainian grid. That these strikes have resumed is a signal, but of what?

Over the past week, the Ukrainians have launched strikes against:

• Vladmirskaya 750kV substation

• Oryol TPP

• The Frolovskaya substation in Volgograd region

• A substation in Kursk

• Smolensk TPP

• Balashovskaya 500kV substation (Saratov)

• Arzamasskaya 500kV substation (Nizhny Novgorod)

Because of this, the Russian strike on Kievska may be retaliatory. The Ukrainian attacks have caused temporary blackouts but no visible long term effect as of yet.

As I’ve described previously, the Ukrainians are at a major disadvantage in an energy attrition war against the Russians. Key Russian energy sites like the 750kV substation in Vladimir are over 400 miles from Ukrainian drone launch sites, while Ukrainian 750kV substations like Kievska are half that distance from Russian launch lines near Kursk. The Russians have plentiful ballistic and cruise missiles at their disposal, some of which are nearly impossible to shoot down, and all of which have large explosive payloads. Meanwhile, the Ukrainians have to pass through layers of intact air defenses using large numbers of light drones with small payloads, or risk scarce missile platforms like the Neptune. It isn’t within Ukraine’s capability to deliver anything close to the explosive payload of the Russian strike on Kievska on strategic Russian infrastructure outside of border areas like Belgorod, which are within HIMARS range.

Another concern is the exchange ratio at play. A facility like Kievska will cost tens of millions of dollars to rebuild, but only a few million to destroy. While the Ukrainians may be playing with European money, UHV electrical transformers are extraordinarily hard to come by, with customers having to wait years to see an order fulfilled. Repair crews have to move massive pieces of equipment and work frantically to keep up with the rate of damage.

Over the next few days, the blackout schedule for Ukraine as a whole and especially Kiev will be a key signal to watch. If Ukrenergo is unable to restore full service to the city within a few days, the Kievska station was likely completely destroyed. Another key signal to look out for is – presuming the Ukrainians are able to repair it – the Russians striking Kievska a second time.

Here’s what I said in my piece on the energy war three weeks ago:

…The logical conclusion then is that the Russian strategy in the energy attrition war is to slowly escalate as a form of deterrence, taking care to avoid a true humanitarian crisis, which would redound to the benefit of the Ukrainians… Meanwhile the Ukrainian grid has been made more and more vulnerable over time, while the Ukrainians and their European sponsors have had to exert great expense and effort to keep it functioning.

The Russian strategy hasn’t worked, because the Ukrainians have begun to call their bluff in earnest. AFU planners are aware of Russian offensive potential, but have plowed forward with the energy war all the same. The state of the Ukrainian grid is now dire, with the Russians having the ability to impose blackouts in large cities like Kiev or Kharkov at will, or near-full blackouts of the entire country with exceptionally large attacks. Because the Ukrainians have shown no signs of being deterred, the only possible direction the situation can go is towards further escalation.

I stand by this assessment, because the energy war shows no sign of slowing down. Just two hours ago, the Ukrainians launched an attack on the Voronezh CHP, starting a fire at the plant. This fits the general pattern – when the Russians retaliate, the Ukrainians retaliate back within 24 hours. One has to wonder what the Ukrainian mindset is here, considering the level of escalation dominance the Russians have. It is well within Russia’s capability to destroy every Ukrainian 750kV substation in a single night.

Today’s post will serve as an update to my recent pieces on the European military-industrial complex, the Ukrainian budgetary crisis, and the energy attrition war. In an amazing coincidence, today’s issue of The Economist addresses all three of these subjects with a quartet of remarkable articles. These pieces broadly agree with facts of the situation as I’ve outlined over the past few weeks. Their conclusions, however, are entirely different. We’ll use these pieces to get a sense of what the Atlanticist elite is thinking.

Saving Ukraine

First, a pair of pieces that echo all the major points in my analysis of European defense spending.

In the first piece, Saving Ukraine, the author (Economist writers are always anonymous) doesn’t pull any punches when describing how desperate Ukraine’s funding gap is, calling it a “savage cash crunch.” While my piece on the Ukrainian budget deficit echoed other estimates that the Ukrainians will run out of funding as late as the end of the first quarter of 2026, The Economist paints a closer D-Day: the end of February.

Two out of three of Ukraine’s funding sources are “drying up,” according to the piece, with the American money faucet slowing to a trickle, while issuing additional Ukrainian debt is becoming untenable, as Ukraine has “now borrowed as much as anyone will lend it.” This leaves Europe holding the bag.

Echoing the language I used in my piece on Ukrainian funding, the article describes the prospect of using loans backed by frozen Russian assets as “exposing the divisions inside the EU.” Belgium is threatening to hold up the plan, while “Northern” EU countries are averse to issuing new bonds, as it could “undermine fiscal discipline.” The French fear that new debt raised for Ukraine will simply be sent to the US for weapon procurement, destroying the European return on investment. And lastly, “everyone” fears a new “blank cheque” given to the Ukrainians will just worsen its already severe corruption.

These concerns are irrelevant, the author insists:

These anxi­et­ies are reas­on­able, but they are dwarfed by two gains that lie within Europe’s grasp. The first is a fin­an­cial com­mit­ment that can expose and amp­lify the Krem­lin’s longterm weak­-ness. Rus­sia has lost the lives of 200,000-500,000 troops—double the fig­ure for Ukraine. It is also bear­ing a heavy fin­an­cial bur­den on its own. Declared defence spend­ing will hit $160bn in 2025, and state-run banks have also engaged in an immense off-budget lend­ing spree to sup­port the mil­it­ary-indus­trial com­plex. It is true that sanc­tions in 2022 failed to bring Rus­sia to its knees as some had hoped. But Mr Putin’s ini­tial war boom has now given way to stag­fla­tion, with growth at almost zero, labour short­ages, hid­den bad debts, infla­tion of 8% and interest rates of 16.5%. Another half-dec­ade of this would prob­ably trig­ger an eco­nomic and bank­ing crisis in Rus­sia. If Europe can demon­strate to Rus­sia that it will under­write the war for at least that long, Mr Putin will be cornered.

Forgive me for jumping straight to the end, but it contains a startling admission: another five years of brutal warfare in Europe would “probably” result in an economic crisis in Russia. It’s difficult to process this statement, or square it with headlines from The Economist itself – in March 2022, the Russian economy was “crumbling” and attempts to insulate it against sanctions were “in vain.” In April a Russian debt default was “almost inevitable.”

With Ukrainian sources universally reporting crippling manpower shortages, who precisely will be doing the frontline fighting for Ukraine in 2031? Is the unstated assumption here that teenagers and women will be next into the mobilization vans? How could nearly four years of economic isolation, proxy war, and nineteen sanction packages not even be half of what’s required to bring the Russian economy to its knees?

Even the casualty figures cited here are hard to make sense of. How can The Economist know that Ukrainian military deaths are half that of Russia’s if it can’t estimate Russian KIA to less than a 2.5-fold range? The publication sits at the apex of the Atlanticist elite media sphere, so if they don’t know, who does? And doesn’t the European population deserve to know exactly how many deaths Ukraine has suffered, considering they’re the ones being asked to foot the bill?

If we accept the description of Russia’s economic outlook given here, a cursory comparison to the European situation will raise serious questions. European defense spending is ballooning, and its banks have waived all normal lending standards to issue Ukraine billions in loans there’s no indication it’ll be able to pay back. European growth has stagnated, with German growth specifically being essentially zero. Russia’s debt-to-GDP ratio is lower than any EU country’s, and less than half the EU average. If a Russian crisis is on the (distant) horizon due to its military spending, why is military spending the solution for Europe? Consider too that the Russians, as is almost universally acknowledged now, seem to get twice the hardware or more in exchange for what they spend. It isn’t clear why the Europeans would win a military-industrial production spending race against the Russians. If anything, the reverse seems more likely.

As for the second reason the Europeans should be willing to dive head first into a debt-driven spending competition:

Europe’s second prize would be to become less depend­ent on Amer­ica mil­it­ar­ily, a neces­sity given Mr Trump’s wobbly com­mit­ment to NATO. Any long-term fin­an­cing solu­tion for Ukraine would help Europe build the fin­an­cial and indus­trial muscle it needs to defend itself.

While this is a reasonable goal, it’s a long ways off. Untangling the complex web of arms deals, joint ventures, and NATO procurement contracts between the US and Europe is almost impossible, but imports from the US continue to form a large percentage of European defense spending. As I covered in my most recent piece, unless that percentage declines rapidly, European spending on defense has little chance of being an efficient way to drive economic growth. And no European country except France is currently capable of domestically producing nuclear weapons without US help. How independent can the Europeans reasonably be expected to become? And how long will it take? Given that the justification for this independence is a fundamentally American military adventure that has resulted in the EU being cut off from its most affordable source of energy imports – imports it’ll need to become self-sufficient – it’s hard to make sense of this.

In the second piece, titled Ukraine’s War Bill, the author compares Europe’s defense situation with regard to Ukraine to the one NATO faced with the USSR:

“History teaches that wars begin when gov­ern­ments believe the price of aggres­sion is cheap,” argued Pres­id­ent Ron­ald Reagan in 1984. He over­saw a vast increase in Amer­ica’s defence budget that the Soviet Union could try to counter only by wreck­ing its eco­nomy. By the end of the dec­ade the “evil empire” was col­lapsing.

The idea that the USSR collapsed primarily due to excessive defense spending is an old trope, and one contested by some historians. Regardless, what’s absent here is an explanation of why Reagan’s axiom would be to the detriment of modern-day Russia, which is spending significantly less on its war effort while also producing more, dollar for dollar, than the Euro-Ukrainian axis, and while simultaneously generating significantly less debt. In other words, why is Europe any less likely to spend itself into collapse than Russia?

The author highlights how dire the situation really is. Without US cash, the Europeans will be left footing almost all of Ukraine’s skyrocketing bills, but this is essential to communicate to Putin that “he cannot win a long war.”

The task is daunt­ing. We cal­cu­late that Ukraine will need approx­im­ately $389bn in cash and arms over the four years from 2026 to 2029 (for con­sist­ency we are using dol­lars and con­stant prices throughout), mainly from Europe. That is almost double the roughly $206bn that Europe has sup­plied since just before the war star­ted in Feb­ru­ary 2022… Whether Europe rises to this chal­lenge will be a test of its aspir­a­tions to “stra­tegic autonomy”, by which it means it can act in its own for­eign-policy interests without depend­ing on Amer­ica (or China).

The unsupported presupposition here is that a kind of collective self-interest is at play with the European bloc’s decision to back Ukraine to the hilt, even in the absence of American financial support. An explicit explanation of precisely why it’s in Europe’s interests to prolong the war is surprisingly hard to come by, considering how fundamental to all of this it is. And what – or who – is “Europe,” precisely, with regard to this discussion? Is it the European people as a collective? The Atlanticist ideological bloc? The European markets? The EU’s bureaucratic elite?

Answering this is difficult, because it requires explaining how an American project can seamlessly transform into a European one, even with the Americans going their own way. US support for a nascent, independent Ukraine dates back 25 years, from media funding prior to the Orange Revolution, to Victoria Nuland’s infamous “fuck the EU” phone call during Euromaidan. The Ukrainian project could be described as Atlanticist, American, or even – considering the devastating consequences for European economies – outright anti-European. But the author of this piece suggests, without explanation, that prolonging the war is inherently in European self-interest.

Next, the piece hits us with a barrage of financial estimates. Ukraine’s defense spending is currently $65 billion, around half of its total budget, and with $90 billion in government revenues, the country is running a $50 billion annual deficit. Ukraine’s spending has been increasing at 20% a year, which is around two thirds of Russia’s spending (though they say Russians may be spending twice as much as they’re publicly stating). Then, the bombshell: The Economist suggests Europe will need to give the Ukrainians an eye-watering $389 billion in military, budgetary, and reconstruction aid over the next four years, with $328 billion coming from the EU and $61 billion from Britain.

The EU has thus far only committed to a paltry $15 billion in direct aid over the next two years, while the IMF has pledged $10 billion. The first two pieces both back the idea of issuing a “reparation loan” guaranteed by frozen Russian assets, but note that the $160 billion it would provide isn’t even half what the Ukrainians need. EU budgets are tapped out, and could only provide $30 billion a year, and not without significant financial pain. The solution for increasing this amount by a factor of 16 times is to take on debt, issuing new Eurobonds, distributing the liability across the entire continent. Bonds would “deepen Europe’s single capital market” and “boost the role of the euro as a reserve currency.” But even $389 billion won’t be enough, says the author of the second piece, because Ukraine will need to replenish its ammunition stocks and “maintain a standing army” for deterrence after the war ends in a Ukrainian victory.

The second piece also hints at growing fault lines within the European-Ukrainian fiscal relationship. German chancellor Friedrich Merz apparently is only willing to issue Ukraine the reparation loan if the entirety of that loan goes towards buying weapons, instead of plugging the sizable hole in the Ukrainian budget. The author suggests Merz may be angling to get more far-flung “partners” like Japan or Canada to step up and pay Ukraine’s bills. The Ukrainians themselves reject any European control over how they spend the money, opposing Merz, and demanding they be allowed to purchase weapons from wherever they want. This isn’t going over well in Europe, where EU leaders in France and Germany are understandably nervous about taking on hundreds of billions in liabilities just for the proceeds to be funneled away to the US and beyond.

As the scope of the plan to save Ukraine increases to encompass the financial future of the entire EU, so too does the risk that one or two renegades might implode the entire initiative. The second piece quotes a German official who is particularly nervous about a veto threat from leaders like Viktor Orban. This is a real concern, as the objections to taking on such massive liabilities are eminently reasonable, and as evidenced by clearly vocalized worries from Belgium, France, and even Germany, dissent may grow.

Industrial Concern

The third piece is titled Europe’s Rocketing Defense Industry. This article makes some frank admissions that align with the observations I’ve made. First, Rheinmetall is absurdly overvalued, being worth nearly as much as Lockheed Martin despite generating just a sixth of the revenue:

An “era of rearm­a­ment” is under way in Europe, declared Armin Pap­per­ger, the boss of Rhein­metall, earlier this year. Investors in Ger­many’s defence cham­pion cer­tainly seem to think so. Since the start of the year its mar­ket value has rock­eted from €27bn ($31bn) to €80bn, equi­val­ent to 90 times its annual net profit and within shoot­ing dis­tance of Lock­heed Mar­tin, an American defence colos­sus… Rhein­metall gen­er­ated rev­enue of just €10bn last year, a sixth as much as Lock­heed Mar­tin.

Second, the author concurs with our assessment that if any economic benefit is to be expected, the Europeans are underspending on defense research and development – European spending was €13bn in 2024 compared to American expenditures of $148 billion. The thrust of the piece is that the Europeans need to learn from the Americans, mirroring their military-industrial organization and spending. Air defense, long-range missiles, and rocket artillery production is “limited at best and absent at worst.” Increased cooperation on advanced systems, the author says, is a double edged sword – joint programs like the Future Combat Air System (a new drone swarm assisted European fighter jet) are plagued by “bickering,” though joint programs are necessary to stand a chance of matching the investment levels of American programs. Somehow, the Europeans need to find a way to be competitive.

Small, cutting-edge defense startups like the US’s Anduril are to be emulated, the piece says. Luckily, the Europeans have already demonstrated they can foster them – drone startups Helsing, Quantum Systems and Tekever are cited as examples. The author explains that private investors are helping get these off the ground, because banks are now “banging on the door” to break into the defense industry, which is now “almost glamorous” when it was once “a pariah.”

For those who have read my previous work, the objections to this assessment should be obvious. The US military-industrial complex, far from being a model to emulate, has proven itself wholly inadequate to the task of arming a military in a major peer war. The simplest munitions like unguided 155mm artillery shells are beyond its ability to produce in significant quantities, and it’s been unable to field an affordable analogue to the Shahed-136/Geran-2 platform. Its “advanced” systems like the Patriot are fundamentally marketing projects, and the current generation of strategic weapons like hypersonic ALBMs, hypersonic glide vehicles, modern ICBMs, and jamming resistant guided munitions remain mostly beyond its reach.

European counterparts to Anduril have the same laughable track record Anduril does, producing comically overpriced weapons with fudged performance specifications (we covered Helsing thoroughly in the last piece).

None of this is what Ukraine needs, which is something closer to the way the Russian military-industrial complex operates. Throughout the Game Changers series we’ve published, the refrain is always the same: Ukraine needs vast quantities of cheap, simple, reliable weapons. The US framework, which The Economist would like Europe to emulate, instead produces shockingly expensive, complex, and high-maintenance weapons in small numbers.

Reading between the lines, then, we can see that The Economist agrees with the thesis of my last piece. European defense spending has little to do with helping Ukraine achieve victory, but is rather optimized towards generating defense industry profits across the continent and in the US.

Ukraine’s Power War

This bleak piece is a succinct explanation of the results of Russia’s missile campaign against Ukrainian energy infrastructure. Most of the major points from my two pieces on the issue are reiterated here, though with less detail and context. The Economist confirms that at least half of Ukraine’s domestic gas production is still offline, while Russian strike packages have increased in size year over year by a factor of five or more.

“Critical nodes” of the Ukrainian grid, the piece says, were supposed to be protected by anti-drone defenses, but inexplicably were not. It claims Ukraine has around 90 “crucial” 750kV substations Russia is slowly destroying, a much larger number than the around one dozen I’ve seen cited in other sources going back to 2023. This point is fundamental to understanding the progressive nature of the Russian energy campaign. To fully collapse the Ukrainian grid, all that would be needed is to destroy these substations, as they form the vital links connecting major power plants to urban centers, and the regions of the country to each other. Without them, balancing the grid would be impossible, and the country’s infrastructure would become a disconnected collection of “energy islands” cut off from one another, mostly unable to meet their own electrical demand.

I’ll reinforce what I’ve said elsewhere – the Russians have deliberately refrained from destroying all of Ukraine’s 750kV substations. Whether this is out of concern for a humanitarian crisis, a method to slowly ratchet up pressure, or a cold, calculated plan to drain Ukrainian resources through favorable exchange ratios (even higher end Russian missiles cause more damage in monetary terms than they cost to produce), is unclear. As the campaign continues, keep an eye out for increased targeting of major substations. If they’re targeted more often, the Russians may be attempting to turn out the lights for the long term.

Next, we’ll briefly cover two headlines from the past week.

First, in a piece lacking in hard details, Zelensky has finally acceded to internal demands to lift export restrictions on Ukrainian defense products. This news made little sense to most observers. The idea that Ukraine could have a surplus of munitions sufficient to allow exports in the midst of constant demands for more munitions defies common sense. But this idea isn’t new. The Ukrainians have been “exporting” their “technologies” in shared production facilities in Europe since this summer. In May, an open letter written by a consortium of Ukrainian defense manufacturers pleaded with Zelensky to allow them to export their products abroad.

The rationale here is difficult to parse, especially with the vague public statements we’ve received on this so far. Ukrainian defense startup executive Kateryna Mykhalko said in May 2024 that “not all [Ukrainian produced drones] can be used in the army.” What she meant by this isn’t clear, as the Ukrainians have repeatedly demanded increased shipments of drones from the west, and signed large contracts with western defense manufacturers to buy more. Meanwhile, they’ve been expending hundreds of one-way attack drones in single strikes.

One way to understand this is perhaps that Ukraine doesn’t possess a real surplus of anything it makes domestically, but has relatively more of certain systems than it does of others. Exporting, then, would allow it to sell off its more plentiful systems for others it needs more. A reconnaissance drone could essentially be exchanged for a more direly needed interceptor drone, by this logic.

But it’s unclear how this would work in practice. Ukrainian defense companies said they need exports in order to avoid bankruptcy. With many of these startups operating essentially as private enterprises with a single customer (the AFU), how can their profits be exchanged for European equipment, while simultaneously being used to keep the enterprise afloat?

Regardless, it’s understandable that Ukrainian defense sector executives would call for this. They’ll be able to reduce their dependence on the Ukrainian government (and Zelensky), make a buck, and establish relationships abroad that will keep them in a job should the war end unfavorably. Allowing exports also opens the door for European joint ventures to produce equipment for their own militaries using dirt-cheap Ukrainian labor.

Finally, a piece in Politico that sheds led on the intensity of the conflict within the EU over issuing the “reparations loan” to Ukraine.

In stark contrast to The Economist’s portrayal of issuing bonds to fund Ukraine as a win/win, here the European Commission seems to be using them as a threat to keep EU member states, like Belgium, in line.

The European Commission is acutely aware that its plan B — joint EU borrowing known as eurobonds — is even more unpalatable for funding a €140 billion reparations loan for Kyiv than its idea of using frozen Russian state assets, which hit a roadblock last week. Governments historically hostile to big spending, especially Germany and the Netherlands, nicknamed the “frugals,” loathe the prospect of piling greater debt onto taxpayers. Spendthrift nations, France and Italy in particular, are too indebted to take on more.

But that’s the point. European officials are betting that Belgium, which houses nearly all the assets and has expressed concerns about the legitimacy of seizing them, along with other countries that have raised objections more quietly, will be won over to the plan by the prospect of the joint borrowing alternative, which they’ve long considered toxic.

Using the frozen Russian assets (keep in mind they’re not nearly enough) is “the only game in town” according to the head of the CEPS, because “the lack of fiscal discipline” in the EU is so high, and eurobonds will be unacceptable. “The idea that eurobonds could seriously be on the table is simply laughable,” a diplomat quoted in the piece says.

Additionally, EU bureaucrats are rushing to force the Belgians into cooperating, because a rapidly forming Hungarian-Czech-Slovak alliance may torpedo the possibility of issuing new bonds or the reparations loan.

This picture is almost unimaginably bleak compared to The Economist’s perspective. Bonds are an impossibility, and even as a last resort they’ll be a disaster. The Belgians are unwilling to play ball, and the clock is ticking both because of an incoming veto possibility, and the Ukrainian government being only four months away from running out of cash entirely. The situation is so desperate that we’re back to where we ended in my piece on Ukraine’s budget deficit: the reparations loan is the only solution. The European Commission will find some way, come hell or high water, to force the Belgians to agree. And the can will be kicked down the road for perhaps six months to a year. After that, it’s anyone’s guess.

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The German economy is in recession. Manufacturing has imploded, particularly in the crucial automotive sector, which has shed hundreds of thousands of jobs since 2022, and lost a staggering third of its production volume since 2018. August saw the biggest drop in industrial output in more than three years, over four times the decline analysts expected. The crucial machinery sector has dropped 22% since the pre-covid period, with a 5.6% drop expected this year alone. In recent months, massive declines have occurred in the pharmaceutical, electronic, energy, construction, and hospitality industries.

A brutal combination of energy price increases, increased regulation, tariffs, competition from China, and government policy have crushed Germany, which underpins the European economy. The supply chains for its manufacturing sector typically stretch across the entire EU, and the controlled demolition of its productive output is having ripple effects across the continent.

The German solution to this is debt – lots of debt. German borrowing has been extraordinarily reserved for a Western state ever since the “debt brake” amendment passed by the first Merkel cabinet came into effect in 2016, limiting deficit spending to 0.35% of GDP. In 2022, then Chancellor Olaf Scholz successfully led an amendment to the rule that allowed the creation of a €100 billion defense fund immune from the brake. In spring of this year, Scholz and incoming Chancellor Friedrich Merz agreed to another amendment to exempt defense spending over 1% of GDP. Over challenges from the AfD, FDP, and Die Linke, the amendment was passed in late March. In both cases, the war in Ukraine was the explicit rationale for subverting Germany’s debt limits.

With deficit defense spending now unrestrained by its constitution, the German government announced earlier this year that it plans to double its current levels of defense spending over the next five years. $761 billion will be spent by the end of 2029. More than half – $469 billion – of this total will be funded through new debt. Net German government borrowing already more than doubled this year, increasing from $38 billion in 2024 to at least $95 billion by the end of 2025. Included in the 5 year spending plan is at least $10 billion in direct aid to Ukraine.

While it may seem imprudent for the German government to attempt to revamp the Bundeswehr and simultaneously fund a proxy war in the midst of a historic economic decline, there is a certain logic at play. In this piece, we’ll explore how EU economies benefit from the continuance of the war in Ukraine, and how they use the war to offset the effects of deindustrialization.

EU defense spending since the war began has surged by over 50%, increasing by nearly $150 billion a year from 2021-2025. The only EU state which hasn’t seen double-digit growth in defense expenditures since 2021 is Greece, which modestly decreased its spending.

These figures do not include the $70 billion in military “aid” to Ukraine given during this period, some of which is considered an investment instead of an expenditure, because it often comes in the form of loans. Ukraine currently owes $117 billion in debt to external creditors, with $50 billion of this figure being to EU institutions, and the remainder being to international lenders through which the EU has significant exposure, like the IMF and World Bank. In total, the EU has provided just under $200 billion in assistance to Ukraine, and another $170 billion in assistance to Ukrainian refugees residing within the EU.

Taken in cumulative terms since the beginning of the war, and projected forward in line with planned spending and debt increases across the EU, the war in Ukraine is the justification for an enormous injection of borrowed cash into the European economy roughly at the same scale of the $700 billion emergency bank bailout during the 2008 US financial crisis. Unlike the 2008 bailout, however, this project has gone largely unremarked upon – being laundered through messaging around “peace through strength” or the “defense of democracy,” rather than being taken as an emergency measure to stave off economic decline.

While these numbers may sound astronomical, the EU is just getting started. In June, NATO collectively agreed to meet Trump’s requested target of 5% of GDP on defense spending. All NATO member states are on track to hit the initial 2% target by the end of this year, meaning spending will more than double by 2035. Spending specifically for Ukraine will count towards the target.

Out With the Old

Nowhere is the substitution of defense spending for typical economic activity more obvious than in Germany. As the share price of automakers like Porche (-41% since IPO), Mercedes (-21%) and Volkswagen (-51%) have been stagnant or declined dramatically since the war began, the German defense industry has surged. Rheinmetall, Germany’s second largest defense contractor, has seen its stock grow 2522% in value since 2020, and Airbus, Germany’s largest, has jumped 224%. The STOXX index, which tracks Europe’s total aerospace and defense market, has posted gains of 229% since February 2022.

This has resulted in an interesting phenomenon – German automotive factories being converted to defense sector production.

“So we think it’s very important for the German industry and for us to find new markets. And where are new markets? Well, government has committed a lot of new funding for defense. We are quite close to what defense industry needs, so it’s very obvious for us to look to this market.” Marin Buchs, JOPP group (NPR)

Automotive suppliers across Germany have avoided closure by switching to the production of military drones, engines for armored vehicles, and artillery barrels. Rheinmetall, which itself makes automotive components for the civilian market, has begun to convert two of its plants to defense products, and plans to purchase a VW plant that once employed 2,300 people but shut down in 2024. Rheinmetall’s automotive division has seen consistent declines in revenue while its defense divisions post triple digit operating profit increases. German/French defense group KNDS announced a similar plan to retool an east German plant which once made train locomotives to instead manufacture Puma and Leopard 2 armored vehicles. KNDS is planning an IPO, while Thyssenkrupp prepares to spin off its naval defense subsidiary TKMS.

The plans of European defense contractors universally hinge on guarantees for purchase minimums from their respective governments. Rheinmetall requested a contract for at least 1,000 armored vehicles in order to move ahead with their proposal to purchase the defunct VW factory. While building out the Bundeswehr will require vast quantities of new vehicles, there’s no better justification for large contracts than the war in Ukraine. The conflict has vacuumed up tens of thousands of infantry fighting vehicles, MRAPs, armored cars, and tanks, and because much of this material is destined to be destroyed, there will always be a need for more. Rheinmetall’s order backlog at the beginning of the year stood at $65 billion – six full years of sales at current levels.

The success of the defense industry amidst the decline of the automotive industry is the result of a simple asymmetry. While automakers compete in a relatively open market, defense contractors do not. Concerns like the costs of energy and labor create insurmountable obstacles to manufacturing within Europe, because consumers have the ability to select cheaper options from manufacturers in places like China. With real earnings for the German population still below pre-2022 levels, access to cheap overseas goods is essential to prevent a precipitous decline in quality of life.

The defense industry does not need to play by these rules. Arms deals don’t adhere to free trade principles, and are often negotiated through a combination of political pressure, bribery, and government subsidies. Input costs, like energy, are largely irrelevant, and purchase price is not a significant concern. Nowhere is this more true than in Ukraine, where any notion of free market competition is nonsensical. To understand this, we’ll analyze how procurement contracts between the AFU and the European defense sector work in practical terms.

Grants

There are three overlapping types of military aid to Ukraine: grants, loans, and the “Danish Model.” Germany issued a €5 billion aid package to Ukraine in the form of a grant in May of this year, drawing the money out of their defense budget. This package unlocked major contracts that had been in the works for months, including one with the German firm Helsing to supply thousands of HF-1 and HX-2 attack drones. Founded in 2021, Helsing is Europe’s most valuable defense tech startup, and is currently valued at over €12 billion. The company is well connected and funded – its co-founder and co-CEO Gundbert Scherf spent two years at the German defense ministry under EU commission president Ursula von der Leyen. It has competed directly against US defense contractor Anduril, winning a contract to work on an update of the Eurofighter Typhoon’s software package.

After delivering hundreds of drones from 2022 to 2024, Helsing had already started production of the HX-2 before the German government funds were made available, and signed a provisional contract with the Ukrainian Ministry of Defense to deliver up to 10,000 units. The earlier HF-1, which Helsing is in the process of delivering 4,000 units of, is manufactured as the deliberately cheap (its frame is plywood) AQ 100 Bayonet by a tiny Ukrainian defense contractor called Terminal Autonomy. The system is then transferred to Helsing, which modifies the drone with updated electronics and Helsing’s targeting software, called Altra.

The HF-1 has been the subject of enormous criticism from the Ukrainians. In March, AFU serviceman and drone expert Okeksandr Karpyuk posted a lengthy diatribe attacking the HF-1 for its “crap” explosive payload and “primitive” targeting system. NATO officials have agreed, saying Helsing’s drones have more problems than comparable models.

“We’re talking about a product that is made of cheap components and is being marketed as cutting-edge technology, I can assure you, because I disassembled it. Such a product is worth at most 100,000 hryvnia (€2,200). And it costs €16,700, which is exorbitant.” - Oleksandr Yarmak, Unmanned Systems Force, AFU (Bloomberg)

Helsing’s fundamental business model with the HF-1 is to take an exceptionally cheap, Ukrainian-made drone – once listed by Terminal Autonomy for €1,800 prior to Helsing’s upgrades, though this has now been removed from its website – upgrade its electronics and software, increase the price by a factor of up to 10x, and bill the German government for it.

The HX-2 fills a similar role to the Russian Lancet, but likely costs at least twice as much. The founder of a competing German drone startup called Quantum Systems, Florian Seibel, publicly accused Helsing of lying about the HX-2’s range and payload, and offered a €100,000 donation to Helsing’s charity of choice if they could publicly prove to meet them. A threat of legal action by Helsing forced him to sign an NDA a day later.

The negative feedback has yet to have a visible impact on Helsing’s ability to turn a profit or sell its products. Co-founder Torsten Reil suggested that 100,000 HX-2’s could form a “drone wall” to protect NATO’s eastern border with Russia, forever deterring a land invasion. EU leaders like von der Leyen and Lithuanian prime minister Andrius Kubilius have publicly echoed the concept, estimating covering Poland and the Baltics would cost approximately $1 billion (enough for tens of thousands of HX-2s). The contact to supply the AFU with the HX-2 is in progress.

The case of Helsing is a microcosm of how the European defense manufacturing industry can thrive, even while other forms of manufacturing become ever more unviable. For Helsing, market demand is not an issue, as Ukraine has unlimited need for munitions. Competition isn’t a problem, because deals are made as a matter of government policy rather than through consumer choice. Pricing is arbitrary, as the government subsidizes all purchases. High energy prices and labor costs may eat into an already sky high profit margin, but if you’re as clever as Helsing’s founders, you let the Ukrainians do the manufacturing. It’s doubtful that Helsing would be able to bring a product to market that could compete on price or capability without the peculiarities of the defense sector, or during peacetime.

Helsing has less than a thousand employees. The defense tech startup model and even the much larger scale shifts from automotive to defense manufacturing from firms like Rheinmetall have so far not be able to offset the employment decline in other manufacturing sectors. While each week seems to bring new announcements of mass layoffs of tens of thousands of German industrial workers, the defense industry has only made marginal hiring increases, adding around 15,000 jobs since 2022.

Helsing has used its profits to go on a buying spree, purchasing German aircraft manufacturer Grob in June, Australian underwater drone manufacturer Blue Ocean, and forming a strategic partnership with ARX robotics for make unmanned ground vehicles.

Loans

In March, the UK announced an exceptionally large $2.1 billion deal to supply Ukraine with 5,000 Thales lightweight-multirole missiles (LMM), also known as Martlets. The deal was a boon to Thales UK, a subsidiary of Thales Group, which is partially owned by the French government. The contract will eventually triple the output of the Thales facility in Belfast. A purchase order of this size is unusual, and the Ukrainians would never be able to afford it without help.

In July of 2024, the UK and Ukraine signed the Defense Export Support Treaty. Under the terms of the treaty, the Ukrainians would be able to draw $4.6 billion in financing for military equipment from the UK Export Finance (UKEF), an export credit agency under the UK government. The UKEF’s mandate is to support the British economy by helping firms win business, providing insurance, and most importantly issuing loans for domestically produced goods.

The ministerial department has faced criticism as a form of subsidized bribery, and historically up to 50% of its business has been in support of arms deals. The LMM deal alone will consume almost the entirety of the Defense Export Support Treaty, due to underwriting overheads, making the LMM deal one of the largest single bilateral loans for procuring a specific weapon system since the beginning of the war. It’s a new level for the UKEF, which typically doesn’t sign deals valued at even half as much. The British parliament determined that the UKEF’s typical risk standards – which require it to return a modest profit – could be bypassed when lending money to Ukraine. Under the terms of the financing agreement, the Ukrainian debt servicing responsibilities will be “at a standstill” until 2027, and the full repayment term won’t mature until 2037.

In practical terms, the deal works as follows: First, the Ukrainians secure the $4.6 billion loan from the UKEF, which is backstopped by the British taxpayer. Next, the UK MoD’s procurement arm, Defense Equipment & Support, places the order “on behalf” of the Ukrainians, and the money is transferred from UKEF to Thales. The Ukrainians pay interest on the loan, and receive the missiles. The contract is for a term of nineteen years, meaning Thales has no responsibility to deliver the final batch of the order until 2044.

The British government has proudly claimed that the deal will create up to 200 jobs in Northern Ireland, and preserve the jobs of the hundreds of workers already employed by the Thales factory in Belfast. At a liability of $23 million per job created, the return on investment here is questionable, especially as the UK manufacturing sector has shed 57,000 jobs since the war began. For Thales, with its $53 billion market cap, the benefit is more clear. In the months leading up to the deal its stock price increased by nearly 100%.

The UKEF’s counterparts in other EU states include Italy’s SACE, France’s Bpifrance, Denmark’s EIFO, Finland’s Finnvera, and Belgium’s Credendo. All have issued loans to Ukraine.

The Danish Model

Denmark, which has little defense production of its own, has pioneered a unique approach to funding Ukraine’s war effort. Rather than loaning Ukraine money to purchase European hardware, Denmark issues loans and grants directly to Ukrainian firms to produce equipment within Ukraine. Using this model, Denmark has become Ukraine’s largest sponsor by percentage of GDP, and for their part, the Ukrainians couldn’t be happier. In January, then Ukrainian Prime Minister Denys Shmyhal (currently Ukraine’s defense minister) told the Rada he hopes to see $1 billion raised by the Danish Model by the end of this year. The initiative has led to a massive expansion of Ukraine’s defense industrial capacity, which the Ukrainians are planning to reach $35 billion in 2025. If they hit their target, Ukraine will challenge the UK, France, Germany, and Italy as the top defense producer in Europe.

Denmark benefits from this arrangement in two major ways. First, as a net contributor to the EU, it has been allowed to organize collective EU expenditures under the Danish Model, but count them towards its own spending target for NATO’s 5% of GDP defense goal. In addition to allowing the Danes to avoid spending their own money, this allows them to sidestep large investments in domestic military manufacturing, eliminating the risk of building a military-industrial complex from scratch when that complex may become superfluous if the war ends.

Second, Danish firms have been incentivized to create joint Danish-Ukrainian ventures in Ukraine, with the government subsidizing up to 70% of startup costs. These joint ventures rely on Danish management, creating high paying corporate jobs, while the burden of construction and manual labor leverage low Ukrainian labor costs. Labor in Ukraine is as little as 1/10th the cost of Danish labor.

These joint ventures don’t just go one way, as certain Ukrainian companies have been allowed to accept partial Danish ownership in exchange for establishing offices and production lines within Denmark. This is both an extension and inversion of the Danish model, as Ukrainian firms take on the debt, which is issued by the EU, and in turn invest in infrastructure within Denmark, rather than placing a purchasing order. This minimizes Danish risk.

Under this alternative model, Ukrainian firms have spun up production lines for drones and repair facilitates for air defense radars. The largest deal of this kind so far comes from Fire Point, the Ukrainian drone manufacturer currently embroiled in a corruption scandal, which plans to make rocket fuel for missiles on Danish soil.

Denmark isn’t the only country to work under this framework. Rheinmetall has established repair facilities for their armored vehicles in Ukraine, and has attempted to open an artillery shell plant there, though this initiative has made little progress since being announced in 2024. Saab, KNDS, Colt CZ, and FFG have announced similar projects. Turkey’s Baykar has thus far been the only firm to establish a major defense production plant on Ukrainian territory, but the $100 million facility was largely destroyed by a Russian strike in August, before it could come online.

The wisdom of opening a large defense plant in a country under constant attack from a vast suite of Russian standoff munitions is questionable, which may explain why plans to do so face extensive delays. But it’s still useful to interrogate why European defense contractors are so enthusiastic about pouring money into Ukraine.

The conceptual basis for all of the Danish Model, according to the Danes, is turning Ukraine into the “arsenal of Europe.” After a Ukrainian victory or stalemate, European defense companies and joint EU-Ukraine defense ventures would relocate their production to Ukraine, taking advantage of rock-bottom labor costs and stringent regulations imposed on the Ukrainian government and economy by the IMF and World Bank as loan conditions. These conditions were designed to benefit the EU.

In this universe, Ukraine would become the center of European weapon production, and perhaps manufacturing in general. High labor costs and social benefits in the EU proper limit profit margins, even in the distorted world of defense. Ukraine, with its government and economy under the thumb of institutions like the IMF, could be made to import millions of migrant laborers from countries like India, keeping labor costs low while compensating for the demographic crisis caused by the war. Think tanks like EasyBusiness have already outlined the number of workers needed and the regulatory process for importing them. European conglomerates and majority European-owned joint ventures would reap the rewards.

Dirty Tricks

In the meantime, Ukraine is a military-industrial wild west. Firms like Fire Point, which only a few years ago was a casting agency for TV production, have secured billions in defense contracts. The bidding process for government contracts – typically backed by European cash – is opaque and rife with corruption. Production rates are shrouded in secrecy, and facilities are constructed in secret locations. Dozens of major Ukrainian defense contracts have been awarded to companies that place the highest bids, implying corruption. Payments are made for weapons that are never delivered. Huge overpayments are common. International arms dealers are awarded billion dollar contracts they have no ability to fill.

Several European defense companies have been caught up in corruption scandals related to supplying arms to Ukraine. Denmark has supplied hundreds of millions of dollars to Fire Point, which now stands accused of falsifying its production rates of drones and the beleaguered FP-1 “Flamingo” cruise missile. The firm received nearly 10% of Ukraine’s domestic defense procurement budget in 2024. Danish Defense Minister Troels Lund Poulsen has publicly defended the partnership.

Similar corruption scandals have mired Polish firm PHU Lechmar – the beneficiary of a highly suspect €553 million artillery shell contract from the Ukrainian Border Guard – and the Czech STV Group, which resold Turkish shells to Ukraine at massively inflated prices. In 2022, Ukrainian arms dealer Lviv Arsenal conspired with Ukrainian MoD officials to embezzle $40 million through a fraudulent deal for mortar shells. The Ukrainian government money, a 97% upfront payment – the standard ceiling for such deals is 50% – moved from Lviv Arsenal through a series of shell companies in Slovakia and Croatia before disappearing. The mortar shells, marked up nearly 100% over the market rate, were never delivered. In August, an $11 million scheme involving Ukrainian parliament members, regional government officials, the Ukrainian National Guard, and an unspecified domestic drone manufacturer was uncovered by the National Anti-Corruption Bureau.

This form of petty corruption is of little benefit to European defense conglomerates with market caps approaching $100 billion, but an environment in which such corruption is tolerated is one where more ambiguous forms of graft and bribery can thrive. Even in the tightly regulated EU, corruption is rampant. Millions of euros in bribes paid in exchange for billions worth of deals by distinguished European defense contractors like Airbus, BAE Systems, Dassault, ThyssenKrupp, and even Rheinmetall have been uncovered in recent years. In the global arms industry, corruption is the norm rather than an aberration.

Each of these defense contractors is directly involved in procurement deals with Ukraine. These companies have operated for decades in an era of relative peace in Europe, and the war presents in a once in a generation opportunity. By forming joint ventures with Ukrainian firms, they can hit the ground running with the requisite Ukrainian connections to secure favorable contracts from the Ukrainian government, which acts a central hub into which unprecedented sums of public money are flowing from Europe, then back out again. While corruption may be commonplace in the EU proper, it’s the core reality undergirding the entire Ukrainian project. Far from the watchful eyes of European regulators, the EU military-industrial complex is having a field day.

Dividends

Without the massive surge in defense spending, the German economy would have posted a net decline in GDP since 2022, instead of extremely modest 0.2% growth. For the EU as a whole, defense spending has accounted for as much as 20% of growth since 2022. While the contribution to GDP from the defense sector is still small, much of this is the result of the cruel bargain staked out between the US – which set the 5% GDP defense spending target – and other NATO member states. The EU is still importing the majority of its military products, heavily benefiting the US and non-EU states like Turkey.

But future EU plans aim to correct this. In economic policy, the effect of public spending is measured by its multiplier effect – a multiplier of one means that for every Euro spent, a Euro is added to GDP. A multiplier less than one implies that for every Euro spent, less than a Euro in total output is generated. Military spending typically has a lower multiplier (below 1) than other types of spending, like infrastructure projects. In order to achieve the highest multiplier possible, defense spending is ideally spent on high tech R&D, rather than on personnel. The Europeans currently spend much more on personnel than they do on research and procurement.

Ukraine represents an opportunity to change this. European-owned ventures providing weapons to Ukraine can effectively generate their own demand, by lobbying their own governments to issue new debt to fund procurement deals. Much of the spending in the beginning phases of the war went towards procuring existing systems, rather than researching new ones. But the Danish model envisions Ukraine as a vast laboratory for European defense contractors. As European-Ukrainian joint ventures convert vast sums of R&D money into weapons, they can be tested in the field immediately, and then sold around the world.

After several years of new industrial projects, up front construction costs can now be paid off through regular operations. And defense expenditures haven’t even reached half of the European target yet. The biggest negative impact on the European defense spending multiplier is the percentage of that spending that goes towards imports, because they add to the exporter’s GDP, rather than Europe’s. But the share of spending going towards imports is steadily beginning to fall.

There are several issues with the European plan. Public spending funded by tax increases tends to permanently lower the multiplier effect of that spending, while debt financing will increase a multiplier temporarily. But if a country’s debt-to-GDP ratio gets too high, or servicing the debt becomes a burden, the multiplier can become negative. Historically, defense spending has been financed with increasing public debt, and that’s the plan for Europe. This summer, the European Council activated a provision in the Stability and Growth Pact called the national escape clause that will allow 15 member states to exceed the normal EU limit for deficit spending. The war in Ukraine and the need for increased spending were cited as the rationale.

Taking on excessive debt to fund defense, and in turn stimulate the EU economy, is a form of kicking the can down the road. Italy, France, Belgium, and Spain have surpassed 100% debt-to-GDP ratios, while Portugal, Austria, Hungary, Poland, and Slovakia are being observed under the EU’s Excessive Deficit Procedure for their deficit spending. The UK’s ratio stands at 103%, and Germany’s ratio has increased by a massive 25% this year alone. With the German economy stagnant, and the multiplier effect of defense spending well below one, the Europeans are digging themselves into a long term hole.

Defense sector gains have been major. The sector’s weighting as a percentage of the overall European market has tripled since 2022, outperforming the market as a whole by a factor of six. But the average European hasn’t seen the benefits. Defense employs around half a million people within the EU, but employment gains have been modest, adding around 50,000 jobs. Meanwhile, traditional manufacturing has been plagued by losses of over a million manufacturing jobs over the last five years. Germany alone has lost 600,000 manufacturing jobs since 2022.

At best, the European defense spending strategy seems to offer a way to maintain stagnation, rather than achieve growth. But outside of economic concerns, it’s functioned as an ingenious political solution. Rather than dealing with the EU’s economic problems head-on, the Union’s governments have been able to launder a massive economic stimulus plan as a solution to a violent external threat. A courageous facade has been erected to cover clinical – and probably irresponsible – fiscal policy. Appealing to morality, ideology, and fear has been widely successful, and European populations have mostly accepted the messaging.

Because of this, it’s highly unlikely that the EU will tolerate an early conclusion to the war in Ukraine. They stand to lose the justification for their spending, lucrative contracts for their defense sectors, tens of billions on loans that Ukraine will be unable to pay, and the massive investments they’ve made into military-industrial infrastructure. Their dream of a generational extractive project in the form of a debt-ridden, prostrate Ukraine, a place outside the EU but with every trade and economic agreement written solely to benefit it, stands at risk of being destroyed by a steadily advancing Russian army.

Anything less than a permanent war footing could potentially spell disaster. If Ukraine or the NATO spending project collapses, expect major upheaval across the continent.

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European political and financial leaders spent much of this past week deliberating on the possibility of making the $137 billion (or $208 billion, no one seems to be able to say for sure) in Russian assets held by Euroclear Bank available to Ukraine, which is in desperate need of large infusion of cash. The Ukrainians’ hopes were dashed, however, when the “marathon session” concluded the same way every meeting on this subject has so far: a future meeting has been set, no commitment has been made, with the Europeans saying “options” must continue to be explored.

The Belgians are the primary roadblock, as they play host to Euroclear, and are understandably nervous about crossing what amounts to the Rubicon for the European financial system. There’s no precedent for confiscating such an enormous amount of sovereign money, and potential legal challenges from the Russians compound with the disturbing thought that the rest of the world might no longer feel comfortable storing its money in European banks if the plan were to be implemented.

The EU’s current idea for how to steal the Russian money is to issue a “reparation loan” to Ukraine. After a Ukrainian victory, the Russians would be forced by the international community to issue reparations, paying the Ukrainians, who would then repay the loan. In this sense, the money isn’t being stolen at all, but is rather being borrowed from a future Russian state which will be too humiliated to protest. The majority of the loan would likely return straight back to the EU in the form of weapons contracts.

It’s understandable that the Belgians are skeptical of this scheme, as there’s no contingency for who will be paying up if the Russians refuse to, or, god forbid, the Ukrainians don’t achieve victory. Belgian Prime Minister Bart De Wever has publicly stated he’ll only get on board if the EU agrees to collectively back the loan if something goes wrong:

“If you want to do this, we will have to do this all together. We want guarantees if the money has to be paid back that every member state will chip in. The consequences cannot only be for Belgium.”

But this is easier said than done. It will likely require unanimity within the EU to achieve, or it would risk widening the growing fault lines within the union.

It is, however, well within the realm of possibility that a deal of some kind will be worked out in the not so distant future, because the complex game of financial musical chairs the Europeans are playing in Ukraine is in danger of coming to an end. And to keep the music going, they’ll need to start taking major risks.

The Verkhovna Rada has passed two budget amendments this year, one in July increasing the Ukrainian government budget by $9.87 billion, and a second three days ago increasing it again by $7.7 billion. Both increases are entirely for defense spending, which will reach $70.9 billion by the end of this year, setting a new record. 63% of Ukrainian government spending is on defense, but this level of spending pales in comparison to the $120 billion both Zelensky and Defense Minister Denys Shmyhal say they’ll need in 2026.

This ambitious target likely hinges on unlocking confiscated Russian funds, as it will catapult Ukraine to a truly unprecedented level of spending for a state of its size. $120 billion would represent 61% of Ukraine’s GDP – the next biggest defense spender by this metric is Israel, at only 9%. It would become the fourth largest defense spender in the world, spending only 20% less in absolute terms than Russia ($149B in 2024) and 26% more than Germany, which is currently in fourth place.

In early September, the IMF – Ukraine’s third largest creditor – expressed concern that Ukraine has a looming shortfall in external financing of up to $20 billion. The current IMF package ($15 billion) has already been mostly spent, and Ukrainian estimates of needing another $37.5 billion in external financing over the next two years don’t seem to be enough. The lender has proposed various solutions, ranging from increasing taxes to reducing the salaries of AFU soldiers, but after a historic 2024 tax hike, the Ukrainians are running out of options. The IMF program assumed the war would end this year.

Ukraine’s next IMF loan is expected to be for a four-year term, and needs to be negotiated before the end of this year. The Ukrainians admitted the IMF projections are likely correct late last month, and the IMF shared the projections with the European Commission. With US support dwindling, the EU has taken over as Ukraine’s primary financial backer, but the Union’s ability to meet the IMF projections hinges on the frozen Russian funds sitting in Brussels.

If the EU can’t come to an agreement on utilizing the Russian funds, it isn’t clear how Ukraine will be able to fund itself past the first quarter of 2026. The Rada’s 2026 draft budget (which doesn’t account for the increased level of defense spending Zelensky aspires to) assumes a 58% deficit with a $50 billion shortfall. While new external loans will cover $31 billion of this, there’s a $19 billion gap for which no one seems to have a solution.

“We really would like to convince our allies that the EU reparation loan must be operational by the end of 2025 to avoid this financing gap and to ensure continuity of military and macro-financial support.” Iryna Mudra, Zelensky advisor

Kiev has tried to get creative, proposing that military aid to Ukraine could be counted towards NATO defense spending targets, despite Ukraine not being a NATO member state. They also suggested that the future profits on the confiscated Russian assets (the actual profits are already being sent to Ukraine) could be “anticipated” to backstop a new form of loan. Another idea is to reinvest the Russian funds into riskier asset classes in order to generate more profits. None of these proposals seem to have made much headway yet.

The Ukrainians have to get creative because issuing new bilateral loans is a tough ask. Ukraine’s gross external debt has ballooned over 100% since the war began, and now stands at $208 billion, over 100% of GDP. The vast majority of aid and financing given to Ukraine by its foreign partners and international financial instruments come in the form of loans, not grants.

“There’s growing concern about next year and many stakeholders that were banking on a ceasefire deal this year [to ease Ukraine’s fiscal strains] are having to recalculate their outlays and realising that there’s a [financing] hole whichever way they to try to slice it.” - EU official, FT

Ukraine is currently paying nearly four times more to service its existing debts, and on interest, than it is on social programs. Most of this is government-to-government debt, meaning it can’t be restructured like private debt.

This mounting pressure makes it very likely that the reparations loan plan will be implemented. Without it, a crisis could unfold in Ukraine as early as next year. EU states will be injecting the Russian money more or less straight into their own economies in the form of purchase contracts for military equipment. This places strong incentives for countries like Germany – which is dealing with the collapse of its manufacturing sector – to apply pressure to their Belgian neighbors to stop dragging their feet.

The long-term risk to the European financial system is potentially enormous, but Ukraine’s ballooning debt represents an equally dangerous time bomb. The EU is set to meet again on the reparations loan issue in December. For the Ukrainians, this is cutting things much too close for comfort.

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General Dynamics Dual-Purpose Improved Conventional Munition (DPICM)

• First referred to as a game changer: July 2023

• Appearance in Ukraine: July 2023

• Country of origin: United States

• Unit Cost: $0 (cost more to destroy than to send as aid)

• Number sent: At least “hundreds of thousands,” as many as a few million

• Manufacturer market cap: $89B

As Ukraine’s 2023 Summer Offensive stalled, dragging into the autumn of that year, AFU commanders went back to the drawing board. Their armored thrusts – designed by NATO trainers and composed of NATO equipment – had thus far been largely repulsed by the so-called Surovikin Line. For the Ukrainians, who lacked the air superiority required to soften up the Russian defenses with airstrikes, the only options available to them were artillery and drones. The problem, however, was that the Russians outgunned them. Severe shortages of both artillery pieces and ammunition meant that whatever damage they could inflict on the Russian defenses would be repaid many times over by their opponent’s guns.

Desperate attempts by Ukraine’s Western partners to scrounge up 155mm shells had only provided temporary stopgaps. US military production of shells – long hampered by a string of industrial debacles and controversies – was nowhere near what the Ukrainians needed. There was, however, a potential solution, but the world wasn’t going to like it.

The Department of Defense was in possession of a vast stockpile of long-expired artillery shells called “dual-purpose improved conventional munitions”, or DPICM. The public would be more likely to recognize them as the general term for warheads of their type: cluster munitions.

The DPICM is a broad category of warhead type that can be delivered by various platforms, from artillery shells, to unguided rockets, to guided missiles like the ATACMS. The base of the projectile is forcibly blown outwards in flight, while centrifugal force sends up to 180 bomblets flying outwards over a wide area. Depending on the model of warhead used, a cluster munition can spread its bomblets over an area as large as 57 acres. The “dual” in “dual-purpose” indicates the evolution from the warhead’s predecessor, the ICM, which was filled with simple anti-personnel grenades. The DPICM features a shaped charge beneath the fragmentary casing to provide some (limited) capability against hard targets, like armored vehicles.

While cluster munitions were first developed during World War 2, their use exploded during the Vietnam War, where they accounted for the outright majority of munition types dropped by the USAF. 260 million bomblets were dispersed over Vietnam alone between 1964 and 1973, with a staggering failure rate of 30%, leaving 80 million grenade-size bombs hanging in trees, sitting on rooftops, and lying in wait under grass.

Duds are more or less inherent in the production of cheap cluster munitions; the small mass of the bomblets means a lower touchdown speed, so impact fuzes are less reliable. A typical cluster munition has anywhere from 40 to 200 fuzes total, greatly increasing the likelihood of failures. And self-destruct mechanisms and complex sensors are cost-prohibitive, especially in a conflict where hundreds of millions of bomblets are being produced, like Vietnam.

Tens of thousands of civilians in Vietnam, Laos, and Cambodia have been killed by Vietnam War era DPICM/ICM duds. Hundreds of millions of dollars have been spent (including by the US) to find and destroy the millions of them still littering the countryside, but munitions experts estimate it could take another century to declare the region clear.

Three years after the end of the Vietnam War, US President Jimmy Carter broke the legal agreement between the US and Israel limiting military aid to defensive purposes by sending DPICMs to Israel, which then used them to bomb Lebanon during the first Israeli invasion of its northern neighbor. The dud rate for these munitions was even worse than Vietnam, leaving over a million unexploded bomblets on the ground by the end of the Israeli-Hezbollah war. In the last three days of the 2006 war – after a ceasefire had already been agreed – the IDF fired four million bomblets into Lebanon as a parting gift.

The story has been the same across dozens of conflicts since the proliferation of the munition type, with widespread use in the NATO bombing of Yugoslavia, the Gulf and Iraq wars, the Western Sahara War (1975-1991), the Nogorno-Karabakh conflicts, and the Soviet-Afghan War. In each case, civilian casualties due to cluster munition use were high.

The dire situation in Lebanon and decades of advocacy by humanitarian groups built up enough pressure to force the governments of the world to take action, culminating in the Convention on Cluster Munitions being signed by 94 states in Dublin in 2008. The treaty’s restrictions were total – banning not just the use of cluster munitions, but the development, production, stockpiling, or transfer of them, in addition to rendering assistance to a third party in doing any of the above. Notable non-signatories included the US, Russia, Ukraine, Poland, Finland, Israel, and China. Two years before the CCM was signed, a bill in the US Senate limiting the use of cluster munitions was defeated by a strong majority, which included Hillary Clinton. In 2010, the Obama-era Pentagon argued that cluster munitions actually cause less harm to civilians than “some other types of weapons.” Which weapons they may have been referring to I’ll leave to the reader’s imagination.

Nevertheless, the Department of Defense greatly reduced its use of cluster munitions by the mid 2000s. New targets were set to eliminate the procurement of cluster munition types with dud rates in excess of 1%. Development of GMLRS cluster rockets ceased in 2008 because their failure rate exceeded this margin by at least five times. The deadline for a long-planned self-imposed ban supposed to take effect in 2018 was cancelled, as defense contractors were unable to create a cluster munition with failure rates under 1%.

This left the Pentagon in a difficult situation. Cluster munitions were of limited use to them, due to the controversy, but the Army had millions of them – over 5.5 million of them to be exact, containing 728.5 million submunitions. Human Rights Watch estimated a billion submunitions were closer to the true total, because the DoD hadn’t counted what it had in the War Reserve Stock for Allies. 80% of the Army’s available tube and rocket artillery ammunition were cluster munitions. Cost intensive efforts to retrofit old warheads with self-destruct fuzes hadn’t made it far, because only .00004% of the DoD’s inventory in 2004 had been retrofitted, but Pentagon reports admitted that the retrofitting didn’t bring the dud rate under 1% anyway. 90% of the total stockpile was DPICMs, with the bulk of these rapidly approaching the end of their service life. Destroying the stockpile would be extraordinarily expensive, with estimates of tens of thousands or even a million dollars per ton, and the US stockpile contained hundreds of thousands of tons.

Just like with the massive, useless surplus stockpiles of the MRAP, the war in Ukraine presented the Pentagon with a potential win/win situation. It had deep stockpiles of aging weapons it had no use for, couldn’t sell, and couldn’t afford to destroy. The Ukrainians had a desperate shortage of 155mm artillery ammunition, and the barrels of their artillery pieces were being overused to the point of self-destruction. Cluster warheads don’t require a well maintained, accurate barrel because their area of effect can be measured in acres. As these twin needs intersected, the media and a collection of think tanks stepped up to resolve the only roadblock: public relations.

In the period before the Ukrainian 2023 summer offensive, discussion of cluster munitions in the media was almost exclusively limited to a single form: condemnation of their use by Russia.

Sporadic Russian use of Soviet-era cluster bombs and rockets was universally criticized in the mainstream press, and included in lengthy lists of alleged war crimes. The Ukrainian Ministry of Foreign Affairs joined in with the chorus, saying that the Russians were using them intentionally to increase civilian casualties.

The MFA [of Ukraine] emphasized that Russian forces deliberately use cluster munitions to maximize civilian casualties. This is part of their campaign of terror. (RBC-Ukraine)

What went unsaid was that cluster munition use by both sides wasn’t new. The Ukrainians had a stock of aging Smerch and Uragan rockets with cluster warheads, and the Russian stocks were significantly larger, though they had newer models with lower dud rates as well. In 2014, Ukrainian government forces struck downtown Donetsk with cluster rockets repeatedly, killing a Red Cross worker and six others.

This history was largely ignored during the early stages of the 2022 invasion, as Russian cluster rockets killed civilians in several incidents. The Ukrainians fired back with cluster munitions of their own, hitting central Izyum while it was occupied by the Russian army in 2022, killing at least eight Ukrainian civilians:

The total number of civilians killed and wounded in the cluster munition attacks that Human Rights Watch examined is most likely greater. Russian forces took many injured civilians to Russia for medical care and many had not returned when Human Rights Watch visited. An ambulance driver said he and his colleagues had regularly transported and treated civilians, including children, with cluster munition injuries during the Russian occupation. He estimated that he took at least one such case to the hospital every day. (HRW)

While on the ground reports like the HRW one linked above occasionally cropped up, they made few headlines. The bulk of the media response singled out cluster munition use by the Russians. The EU and NATO Secretary General Jens Stoltenberg said the Russian cluster munition use was “a flagrant violation of international law.” Meanwhile, unbeknownst to the media, the Ukrainians were lobbying the Biden administration to urgently send DPICMs to Ukraine.

Ukrainian officials and lawmakers have in recent months urged the Biden administration and members of Congress to provide the Ukrainian military with cluster munition warheads, weapons that are banned by more than 100 countries but that Russia continues to use to devastating effect inside Ukraine.

The Ukrainian request for the cluster munitions, which was described to CNN by multiple US and Ukrainian officials, is one of the most controversial requests the Ukrainians have made to the US since the war began in February.

Senior Biden administration officials have been fielding this request for months and have not rejected it outright, CNN has learned, a detail that has not been previously reported. (CNN)

An explosive CNN report in December of 2022 brought the negotiations to light for the first time. In this report, the rationale for overriding an act of Congress, Pentagon policy, and the widely held Western moral framework was starting to take hold. A Ukrainian official was quoted saying, “So what, Russians use cluster munitions against us, the US worry is about collateral damage. We are going to use them against Russian troops, not against the Russian population.” (Note: the AFU would use cluster munitions – possibly DPICMs – in a strike on downtown Belgorod in December of 2023, killing 21, including three children, and wounding 110).

The Ukrainians argued that the Russians were using cluster munitions, and had killed civilians with them; therefore it was only right that surplus US cluster munitions should be given to the Ukrainians. This may seem like an exaggeration, but this was the logic:

Ukrainian officials, however, argue that the Russians are using cluster munitions extensively, and largely in civilian areas. For that reason, the Ukrainians have approached the State Department, Pentagon and Congress “many times” to lobby for the munitions, known as dual-purpose improved conventional munitions, multiple sources familiar with the lobbying effort told CNN.

Ukrainian lawmaker Oleksiy Goncharenko is among the officials who has been pushing the US to provide the munitions. “It is extremely important, first of all because it will really change the situation on the battlefield,” he told CNN. “With these, Ukraine will finish this war much faster, to the benefit of everybody. Russia is extensively using the old styles, the most barbaric styles, of cluster munitions against Ukraine,” Goncharenko added. “Personally, I was a victim of this. I was under this shelling. So we have all the right to use it against them.” (Emphasis mine)

The Biden administration said it wouldn’t transfer the shells and rockets unless “absolutely necessary” and that it didn’t believe the munitions were “imperative to Ukraine’s success on the battlefield.” Whatever the Ukrainians said their rationale was, they knew better – it was absolutely necessary, because they were running out of ammunition. The AFU would soon exhaust its supply of Soviet caliber 152mm shells sourced from ex-Warsaw Pact allies, and the available reserves of 155mm shells in NATO stocks were much too small to sustain the rate of fire they needed to keep up with the Russians. Efforts to ramp up 155mm shell production in the US, Germany, and elsewhere would still be too little, too late, and history would vindicate the Ukrainians for being skeptical of NATO’s ability to hit them.

All advocacy for the transfer beyond this simple point was fluff, and there was plenty of fluff in the months between the release of the CNN report and the Biden administration’s announcement that the Ukrainians would be receiving DPICMs.

“As we got in May 2022 155-millimeter artillery systems, it became a game changer. In July, we got different types of Multiple Launch Rocket Systems it became the next game changer … And I hope that cluster munitions become a next game changer as weaponry or ammunition for liberation of our temporarily occupied territories.” Oleksiy Rezinov, Ukrainian Defense Minister (Politico)

Ukrainian Defense Minister Oleksiy Reznikov said he hoped DPICMs would be a “game changer.” He promised the munitions would only be used against “non-urban areas.” Analysts cited Vietnam War era DoD reports that said cluster munitions achieved a much higher kill rate, bomb for bomb, than unitary warheads. President Zelensky said the request was “about justice” and he would limit the use of the weapons “purely to the temporarily occupied territories of Ukraine.” Why it mattered whose territory they’d be used on, and why it was a good thing to litter Ukrainian territory that would presumably be reclaimed with unexploded ordinance, went unsaid.

Democratic Party representatives who had just months earlier demanded action from the Pentagon to limit cluster munitions use began to “soften” their stance. A collection of Congressmen sent a public letter to the Biden administration in March demanding the President overrule the law banning the export of cluster munitions with a failure rate higher than 1%.

The DPICM’s greatest advocate was Dan Rice, a US Army veteran and advisor to the Armed Forces of Ukraine officially registered under FARA as a foreign agent. Rice went on a press tour promoting cluster munitions, comparing them to firing “a flame thrower at a bunch of ants,” and calling them “five to ten times more lethal” than unitary artillery shells.

“This is how you increase the base lethality and win the war. If we want to win it, we need to give them something like that,” he told CNN, calling cluster bombs a “game changer.”

Rice took his advocacy for the cluster munitions to extreme heights, publicly calling for NATO as a whole to abandon the Cluster Munitions Convention, saying Europe “must break from the shackles of munitions laws.” He said the Europeans had become “seduced by the conceit” of their “own virtue” and “sanctimonious” with their “misguided” and “naive” ban on cluster munitions. He identified himself as Ukraine’s “chief advocate” for cluster munitions and called on Europe to begin manufacturing them immediately. Rice and other supporters of the move said DPICMs would end the war sooner, so any civilian deaths from their use would be made up for by a shorter war.

Rice was up against an enormous amount of opposition. Spanish, British, and German officials publicly condemned the transfer. A litany of human rights groups and a minority of US legislators issued public statements pleading with the President to reject the Ukrainian request. But in July, as the anticipation for the Ukrainian summer offensive reached a fever pitch, the Biden administration announced they had approved the transfer. Ukraine would soon join the very short list of countries to use cluster munitions on what it claimed to be its own territory.

The reaction was split. RUSI, which frequently appears in this series, said objections to cluster munitions use were “irrelevant” and “morally questionable.” RUSI borrowed the “Russia is doing it, so Ukraine can too” argument, saying it was “illogical” to claim more unexploded bomblets would add to the already existing problem:

HRW argues that because some DPICM submunitions will fail to explode, they are inherently indiscriminate. The problem with this argument is that a significant proportion of other munitions also fail to explode. In fact, up to one in five of Russia’s munitions stocks are assessed by the Russian military to be unsafe due to their age and poor condition, and yet these are routinely fired at Ukraine. HRW’s unexploded ordnance argument is one that would apply equally to a wide range of explosive weapons already in use in the conflict, and it is therefore illogical as a reason to specifically reject the provision of DPICMs. (RUSI)

RAND agreed, saying the shells could make the difference in Ukraine’s stalled offensive. The Wall Street Journal supported the transfer, while the New York Times did not. Advocacy groups like the International Campaign to Ban Landmines were outraged. More than two dozen world leaders condemned the move.

The Pentagon maintains the cluster munitions could help Ukraine advance and stop the Russian bombings. But Eric Eikenberry, the government relations director at Win Without War, countered the argument as “speculative.”

“We’ve already seen this in conflict,” Eikenberry said, dismissing “the idea that these are going to be a huge boon, the counteroffensive is going to jet forward and we’re going to save lives in the aggregate because these are going to be the wonder weapons that flip the battlefield in our favor and takes Russian artillery out of commission.”

Despite public statements of opposition from German officials like Annalena Baerbock, the Germans allowed the transfer of cluster munitions through German territory, breaking international law and violating the Convention on Cluster Munitions they had just claimed to still uphold.

The Pentagon assured the public that it would be sending DPICMs with low dud rates, around 3%. The quantities and specific models that have been transferred are classified, but all available evidence suggests that the true dud rate is as much as ten times higher, and the Pentagon has been repeatedly caught fudging the numbers.

The hard reality of the situation is that the Ukrainians couldn’t afford to care about the dud rate anyway. They needed the entire US DPICM stockpile, and they needed it immediately. By 2023, the total number of 155mm cluster shells in the US inventory was likely under 3 million, after years and hundreds of millions of dollars had been spent reducing it by destroying shells. Three million shells would buy the Ukrainians a year of parity with the Russians, who were already producing that many annually – more than the US and Europe combined. By 2022, when the Ukrainians started requesting DPICMs, the DoD program to destroy its cluster munitions stockpile slowed to a crawl.

Despite US government assurances, the Ukrainians have likely received hundreds of thousands of ancient DPICM shells – shells which had a dud rate of 30% when new, and are now decades old. Accordingly, the number of Ukrainian civilians killed by cluster munitions has increased each year since the transfer.

On the battlefield, the huge influx of shells bought the Ukrainians valuable time, and allowed them to use artillery barrels far beyond their service life. But contrary to laudatory statements from the advocates of cluster munitions, the warhead type comes with tradeoffs. Due to the proliferation of drones, the front lines have become increasingly sparse. Isolated fireteams sit hundreds of yards apart, hidden in deep trenches to escape enemy ISR. Assaults are conducted with lightning speed on buggies and dirt bikes. In this environment, the promise of cluster warheads killing dozens of tightly packed troops is unrealistic. Cluster munitions are far less effective against deep fortifications, and even against infantry their tiny bomblets have to land in close proximity to a target to be lethal.

Even the tranche of United States-supplied cluster munitions, controversial because they harm civilians long after a war’s end, has lost some of its potency on the battlefield.

“Initially in September, we could hit large groups, but now they assault in much smaller units,” said the platoon commander, who was fighting outside Bakhmut. He added that the Russians have made their trenches even deeper and harder to hit. (NYT)

However many DPICMs the Pentagon sent, it wasn’t enough. Complaints of “shell hunger” continued after the transfer, with Ukrainian artillery teams saying they were lucky to fire two shells a day. And even if the new ammunition allowed barrels to be used longer, it didn’t solve the crippling barrel shortage the Ukrainians were suffering from – the sole US factory producing M777 barrels was unable to meet even a third of Ukrainian needs. A year after the Biden administration began transferring DPICM shells to Ukraine, a Reuters expose outlined the “dire” shell shortage Ukraine was suffering, but made no mention of the game-changing infusion of cluster shells. The hope that cluster munitions would break Russian trench lines in Zaporozhye in the summer of 2023 came to nothing, as the offensive failed to achieve a breakthrough. Czech initiatives to purchase and refurbish millions of old shells prevented disaster, but a worldwide TNT shortage put hard limits on how many new shells could be made, and the Pentagon failed to reach even half of its production goals in 2025. It’s currently procuring no more shells a month than it was a year ago. An explosion at a major Pentagon TNT supplier in October of this year likely pushed these goals back even further. Dan Rice was more optimistic – he claimed DPICMs alone had caused 425,000 Russian casualties in Ukraine, half of what he said Russia’s total casualties were, despite being a tiny minority of the warheads used in the war. Rice only succeeded in convincing one European state to withdraw from the CCM: Lithuania, which dropped out of the treaty in March 2025.

The DPICM didn’t change the game in Ukraine, even if it helped stave off defeat. Perhaps more important than the battlefield effects, though, is what it cost Ukraine’s allies, beyond dollars of aid and military equipment: their sense of moral superiority.

Eikenberry said the U.S. was losing its moral high ground by providing the weapons, which he said has been key to maintaining a cohesive international coalition backing Ukraine. “You’re starting to introduce chinks in the armor of the moral argument Ukrainians have in the situation.” (The Hill)

Game changer rating: 2/10

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The Russo-Ukrainian War has entered a new phase. After an intense but short-lived drone campaign against Russian oil refineries in 2024, the Ukrainians have doubled their efforts in 2025, surpassing their 2024 total by August or September, with much of the year left to go. In response, the Russians have unleashed a missile and drone campaign of unprecedented scale and tempo, targeting Ukrainian electricity transmission infrastructure, gas production facilities, power plants, and rail assets. The reaction from observers of the war has been predictably split, with some saying the Russian economy is on the verge of collapse, while others believe the Russians have finally had enough, and are now determined and able for the first time to shut the power off in Ukraine for good. Crucially, neither side seems to show any sign of letting up, as each overwhelming Russian attack thus far has been followed more or less immediately by a Ukrainian attack of some kind. In this piece, we’ll break down the effects of the energy attrition war, and where it’s likely to go from here.

Ukraine’s Drone Campaign

Going purely off what can be gleaned from headlines, Ukraine’s attacks on Russian oil refineries appear to have struck a major blow to the Russian economy. 40% of Russian oil refining capacity is said to be offline due to drone attacks, based on widely circulated calculations.

A close analysis of reporting on this claim will show inconsistencies. Sometimes the ~40% figure is stated as “refineries,” rather than “refining capacity.” Sometimes 40% of Russian refineries or refining capacity is “idle,” sometimes “damaged,” or sometimes even “destroyed.” These descriptions gloss over the inherent realities of resource extraction, processing, and maintenance.

A key datapoint puts a serious hole in the triumphant headlines: around 22% of Russian oil refining capacity is sitting idle at any given time, whether due to maintenance, production limits, surplus capacity, or bottlenecks. Perfectly balancing the inputs and outputs of a complex chain of production across one of the world’s largest petroleum exporting countries isn’t possible, and so erring on the side of surplus capacity is the norm.

If 22% of Russian refining capacity being idle is a baseline, the effect of Ukraine’s drone campaign could maximally be a 16% increase in idle capacity. Reuters, likely the originator of the "38% offline” (typically rounded up to 40%) calculation, itself cites “extensive planned maintenance” as accounting for some of the offline capacity, though they don’t specify to what degree this adds to the total. How “extensive” this planned maintenance is will proportionally reduce the effect that can be attributed to the drone campaign. Russian sources put the current idle capacity at around 18%, slightly lower than the same period in 2024 but higher than in 2022.

The complexity of estimating the true effect of the Ukrainian campaign is compounded by the method of attack – typically small barrages of long range drones with small payloads. Without massed saturation attacks, and with attrition from air defense, only small sections of industrial sites can be struck, and the operational effect of any given strike can vary widely depending on what was hit. A strike on fuel storage may bring a refinery offline and start a large fire, but the site could be brought back online relatively quickly and with minimal expense. As an example, the Volgograd refinery, one of the largest in Russia, was struck on August 13th and 14th, but fully restored operations by August 25th.

Russia’s petroleum production mixture further muddies the waters. Gasoline, and gasoline shortages, have been pointed to as a key signifier of the efficacy of Ukrainian attacks. But Russia’s gasoline production pales compared to its natural gas and crude oil production, both of which it produces at roughly ten times the rate. 95-octane gasoline is particularly vulnerable to shortages, because the the Russian petroleum industry produces roughly as much as is required for domestic consumption. In comparison, Russia produces more than double the amount of diesel and almost triple the crude oil required to meet its domestic needs. So even if gasoline shortages are as widespread and severe as is claimed (the evidence shows they’re not), it doesn’t signal an existential issue for the Russian petroleum industry or economy as a whole.

But are the effects of the drone campaign visible in Russian exports? In September, Russian crude oil exports hit a 16 month high. This may seem counterintuitive, but if the Ukrainians have disrupted refining capacity, Russian oil producers are incentivized to sell crude, which requires less processing. This shows that the Ukrainian attacks are having some effect.

But one other thing that can clearly be gleaned from this increase is that the Ukrainians have failed to significantly disrupt Russian pipeline infrastructure. The Ukrainians have targeted pumping stations and terminals with the same intensity as refineries, hitting sites transferring oil to the Black and Baltic Seas. But no decrease in Russian oil exports has occurred, suggesting quick repairs, redundancies, or spare capacity have made up for the difference.

Russian gas exports are similarly unaffected. Exports via Turkstream have increased 8% year over year, while gas revenues match general market trends. Europe remains Russia’s largest buyer of both LNG and pipeline gas. Revenues are down since the beginning of the year, but this is due to global oil prices and a strong ruble. Much has been made about Russia’s increasing budget deficit (1.7% of GDP), but even if it sees unprecedented overruns in 2026 it will remain lower than that of countries like the US (6%), China (6.5%), Brazil (8.5%), France (5.8%), India (4.8%), Turkey (4.9%), the UK (4.8%), or Ukraine (~20%). Similarly, Russia’s debt-to-GDP ratio is among the lowest in the world.

The bottom line is that the Ukrainians are simply not doing enough to achieve a strategic effect on the Russian economy. Some combination of low offensive capability, Russian air defenses, and the Russian oil industry’s quick response and excess capacity is preventing the drone campaign from severely disrupting oil production and export.

Too Little, Too Late

Low standoff weapon production is a likely culprit. Both the flagship FP-1 long range one-way attack drone and the much hyped FP-5 “Flamingo” cruise missile are manufactured by the Ukrainian firm Fire Point. FP is currently mired in a corruption scandal, as Ukrainian media outlets have fingered its enormous funding increases as an example of graft, and its weapon production figures as astronomical inflations. FP’s executive leadership has no experience in military industrial production, yet their government funded revenue has increased from $4 million annually to over $100 million in 2024, a staggering third of Ukraine’s budget for drones. Its leadership personnel are former entertainment industry veterans who are close to Andriy Yermak. Their funding is projected to reach $1 billion this year, primarily through EU grants.

AFU drone commander Yury Kasyanov has publicly identified previous Flamingo launches of being elaborate public relations stunts, with warheadless missiles being launched simultaneously with cheaper and more conventional one-way attack drones. Similarly, Fire Point’s claims that they’ve begun producing 50 FP-5 units a month and will reach a rate of 200 per month by the end of the year strain credulity, as the platform relies on complex jet engines (FP claimed to have “found” thousands of AI-25 engines in landfills across Ukraine). FP-1 production figures also defy belief. FP claims to be producing over 100 units daily, but this is the typical upper bound of how many drones Ukraine can fire into Russian territory in a day, and Ukraine’s drone arsenal includes dozens of other models.

Ukraine’s core problem in this regard has less to do with corruption than with the fundamental realities of its military-industrial complex. The vast majority of its weapons come from outside the country, being delivered from the surplus and obsolete stockpiles of its allies. Crucially, Ukraine’s allies do not possess vast quantities of one-way attack drones to donate, and Western military manufacturing is sclerotic and hampered by deindustrialization. Attempts to scale up domestic production have largely failed, with the key success story being the establishment of a cottage industry where Ukrainian civilians assemble commercial or 3D printed drones with surplus explosive warheads in their kitchens and basements, safe from Russian attacks.

Manufacturing large, complex drones and missiles of proprietary design in centralized workshops is another matter entirely. Just days after Ukrainian media posted photos of FP-1s under construction in an anonymous workshop somewhere in Ukraine, the same workshop was hit by a barrage of cruise missiles and destroyed, with unknown effects on Fire Point’s production rate. Even foreign manufacturers with deep pockets attempting to set up shop in Ukraine have found the prospect all but impossible – Baykar’s $100 million facility in Kiev was severely damaged by a Russian missile attack before it could come online, and Rheinmetall’s plans to construct armored vehicle and artillery shell factories in the country have never materialized despite years of headlines and planning.

Tit for Tat

After introducing the Geran platform in the form of transferred Iranian Shahed-136 models in late 2022, the Russian military industrial complex has made rapid progress in drone production rates. 3,000 attack variants and decoys were produced in total in 2023, but that rate has exploded to a peak of 4,000 units a month in 2025. Steady updates have been made to the platform: doubled payload, jet engines, lighter airframes, more complex and jamming resistant avionics, real-time data links, evasive maneuvering, reduced radar cross section, increased range, image recognition based targeting, and mission-specific warheads. Increased production is obvious – while a typical strike package might have contained a few dozen attack drones in early 2023, in 2025 as many as 800 drones and decoys are being launched in a single night of attacks. Static launchers are being greatly expanded at the Navlya Training Ground in Bryansk Oblast, signaling that even larger strike packages are planned, or larger drone models are soon to be introduced.

Russian missile production has ramped up similarly. Around 1,000 Iskander and Kinzhal missiles are being built annually, up to 40% higher than the Ukrainians estimated in 2024, and a 66% increase year over year. Kh-101 production has increased by 1,000% over the 56 units constructed in 2021. These numbers dwarf the rate of missile interceptor production of the entire combined Western military industrial complex, and only a small fraction of those interceptors are going to Ukraine. Even worse, air defense doctrine dictates firing at least two interceptors for every incoming target, and it’s an open question if Ukraine’s dwindling missile defense systems are capable of shooting down targets like the Iskander or Kinzhal with any consistency, or at all. The explosive payload of these missiles is typically five times or more that of a large one-way attack drone, and they’re significantly less likely to be shot down.

The Russian response to Ukraine’s drone campaign has become increasingly severe. We covered the attacks on Ukraine’s gas infrastructure last week, but this is only a small part of a comprehensive campaign targeting power plants, electrical transmission infrastructure, and rail logistics. Total blackouts have affected every corner of Ukraine over the past two weeks, as the Russian military fired a combined total of over 3,000 drones and a 100 missiles over the course of the single week ending October 12th, an all-time peak for the war so far.

Amerikanets

On Russian Strikes Targeting Ukrainian Gas Infrastructure

Over the past week, Russian forces have massively increased their missile campaign against Ukrainian energy infrastructure. A strike on October 3rd targeted gas production facilities in Poltava and Kharkov with 35 missiles and at least 60 long-range drones. Bloomberg…

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7 months ago · 30 likes · 3 comments · Amerikanets

Russia’s campaign against Ukrainian energy infrastructure has been ongoing since the early phases of the war, but has followed a clear progression of escalation. Smaller electrical transformers were targeted first, followed by larger ones. Power plants have mostly escaped direct targeting until now, with 13 plants being struck on October 9th alone. The systematic destruction of regional railroad infrastructure has progressed rapidly, with locomotives, depots, and electrical substations along rail lines receiving priority.

Balance of Power

A surface level reading of publicly available data suggests that the Russians are able to outpace Ukraine in standoff munition launches at strategic objects at a rate of around 3:1. All standoff munitions are not created equal, however. Russian missiles have vastly greater payloads than the average Ukrainian long range attack drone, and are more difficult to intercept. An enormous and growing asymmetry exists between the air defenses of the two combatants, meaning the Ukrainians must fire significantly more drones to achieve the same effect as a typical Russian strike package, due to losses. Ukraine operates a complex assortment of various drone platforms, but none of them are as technologically advanced as the Geran – especially not the latest variants – meaning they’re easier to jam and shoot down.

Just as importantly, all of Ukraine is within range of Russia’s triad of standoff platforms: cruise missiles, ballistic missiles, and drones. The distances Ukrainian drones have to cover to reach targets deep within Russia require design constraints and passage through layers of fully intact air defenses. Large swathes of Russian territory are inaccessible to drones launched from within Ukraine’s borders, forcing the Ukrainians to conduct risky and complex operations on Russian soil, or launch from the territory of Russia’s neighbors.

Precisely establishing the difference between Russian and Ukrainian standoff offensive potential in a long-term attrition war on strategic objects isn’t possible. The mixture of decoys and attack drones used by each side isn’t known, nor can the interception rates reported by the combatants be taken at face value. But respective military production rates and the geographic and technological realities at play suggest that it is within Russia’s ability to permanently collapse the Ukrainian energy grid, perhaps soon, while the Ukrainians do not have the ability to attrit the Russian grid outside of border areas like Belgorod, or deal a truly major blow to the Russian economy.

To close the gap, the Ukrainians will have to increase both the sophistication of their standoff arsenal and the rate of production by a factor of several times. They’ll need to procure large quantities of long range cruise and ballistic missiles with small radar signatures, maneuvering ability, and heavy payloads, and the platforms needed to fire them. There is no clear solution to this on the horizon. The Tomahawk platform is not a realistic option. Long range air-launched missiles like the AGM-158 JASSM-ER are not available in the quantities Ukraine needs, nor do Ukraine’s allies seem interested in providing them. And even if they were, Ukraine has a shortage of airframes, pilots, and uncontested airspace in which to launch them. Domestic design, implementation, and mass production of a cruise or ballistic missile platform typically takes over a decade, even for a much larger power in peacetime. The best the Ukrainians can hope for is scaling up production of a platform comparable to the Geran, but even if they manage to do so, the Russians have a years-long head start, and will likely have scaled their production even further in the meantime.

Strategic Considerations

Due to the overmatch at play, it may be surprising that the Ukrainians have chosen to escalate the energy attrition war. A deep analysis of Ukrainian strategy and victory conditions in this conflict will shed light on this subject. Given the progression of the front lines, Russian military production, inconsistent Western support, and demographic realities, the AFU is likely to suffer a full military defeat if the status quo is maintained. Given this, the best chance the Ukrainians have – and this has been true for most of the war – is to escalate the conflict to the point that additional military powers become involved.

The right balance of humanitarian concern, contrived provocations, public relations, and political maneuvering could potentially suck NATO or individual European states into the war. The likelihood of a stalemate or frozen conflict through this route is significantly higher than the AFU somehow regenerating its combat power, or the Ukrainian military industrial complex being able to procure from abroad or produce domestically some form of wonder weapon to turn the tide permanently in Ukraine’s favor.

With this assessment, any and all escalation becomes good escalation. Every indication shows the Ukrainians have no intention of slowing down their strikes on Russian energy infrastructure in response to the unprecedented Russian counterstrikes on theirs. Each new record-setting Russian attack has been followed more or less immediately by a renewed Ukrainian one. If the Russians do shut off the lights or heat in Ukraine, the resulting humanitarian crisis would be enormous, and it isn’t hard to picture the outcry that will be made to deploy “peacekeepers” or humanitarian workers from allied countries in response. Yes, a destroyed energy grid will affect AFU operations, but the greatest share of the suffering will fall on the Ukrainian civilian population.

Another key factor motivating the Ukrainian campaign is a simple asymmetry: Ukraine does not have the burden of maintaining a functional national economy. Ukrainian exports are a fraction of its neighbors in monetary terms, and near-unlimited access to loans, grants, and aid allows more than half of the Ukrainian government budget to be paid for by other countries. This is not the case with Russia, which must pay for repairs to its infrastructure itself, and maintain competitive prices for its exports.

Russian hesitancy to fully destroy the Ukrainian grid has caused confusion among observers. A common refrain is that they should have done this “on day one,” but Ukraine’s Soviet energy infrastructure is notoriously robust, and composed significantly of rock-solid hydroelectric plants and politically unassailable nuclear power plants. The vulnerable points of the system are scarce, expensive, and hard to transport electrical transformers, which the Russians have been attacking for years, while always holding back from dealing a killing blow.

As mentioned previously, the Russians attacked the least expensive and important transmission infrastructure first, which is the opposite of what one would do if the intention were to collapse the grid. The logical conclusion then is that the Russian strategy in the energy attrition war is to slowly escalate as a form of deterrence, taking care to avoid a true humanitarian crisis, which would redound to the benefit of the Ukrainians. Instead, the slow ratcheting up of pressure has given the Ukrainian population ample time to exit the country and prepare, reducing the impact of a crisis if one were to occur. Meanwhile the Ukrainian grid has been made more and more vulnerable over time, while the Ukrainians and their European sponsors have had to exert great expense and effort to keep it functioning.

The Russian strategy hasn’t worked, because the Ukrainians have begun to call their bluff in earnest. AFU planners are aware of Russian offensive potential, but have plowed forward with the energy war all the same. The state of the Ukrainian grid is now dire, with the Russians having the ability to impose blackouts in large cities like Kiev or Kharkov at will, or near-full blackouts of the entire country with exceptionally large attacks. Because the Ukrainians have shown no signs of being deterred, the only possible direction the situation can go is towards further escalation.

The key questions for Russian planners are: can the risk of plunging Ukraine into darkness during the winter be taken? Will the resulting catastrophe cause the conflict to spill over into something larger? Or should the Russian economy take the refinery strikes on the chin and keep marching forward as before towards a likely victory that could be a year or more away?

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Over the past week, Russian forces have massively increased their missile campaign against Ukrainian energy infrastructure. A strike on October 3rd targeted gas production facilities in Poltava and Kharkov with 35 missiles and at least 60 long-range drones. Bloomberg reported that the damage to these two sites has brought around 60% of the country’s gas production offline. The Ukrainians are planning to increase their gas imports over the winter by 30% to compensate, importing at least 4.4 billion cubic meters over the season, equivalent to $2.2 billion, or 20% of the country’s typical annual consumption. This figure is likely to rise.

So where does this leave Ukraine, especially if Russian strikes continue? Ukraine relies on gas principally for heating. The share of gas used for residential homes, larger district-level heating stations, and industrial/commercial use is roughly equal. 78% of Ukrainian households depend on gas as their primary heat source. Industrial concerns use between 1 bcm (billion cubic meters) and 6 bcm of gas a quarter depending on the season, and 11% of Ukraine’s electricity generation comes from gas power plants. Ukraine’s total gas consumption is around 20 bcm annually.

The Ukrainian government projects that it will import 5.8 bcm of pipeline gas this year, more than twice what it imported pre-war, despite massive reductions in population and falling consumption. Around half of this gas transits through Hungary, with another quarter of the total through Poland, an additional quarter through Slovakia, and insignificant amounts through Romania and Moldova. These pipelines once carried Russian gas through Ukraine to Europe, generating billions in transit fees for the Ukrainians, but this agreement fully terminated at the beginning of this year. Since then, these pipelines operate in “reverse flow," sending gas backwards through mostly Soviet-era infrastructure to Ukraine.

While the transit agreement was in effect, the Ukrainians were able to take advantage of a complex scheme whereby they imported Russian gas from Gazprom while simultaneously “buying” it from EU sellers without it ever physically moving gas through the seller’s infrastructure. This allowed them to save significantly on transportation fees. With the transit agreement now terminated, Ukraine is no longer strategically placed between Russia and its former customers in the EU, making Ukraine’s gas storage facilities (the largest in Europe) inconvenient to access. The only way to fill these facilities for EU countries is now an expensive round trip from central Europe to Ukraine and back again, with corresponding transit fees, making Ukraine an economically infeasible option for EU gas storage. With a restoration of Russian relations with the EU looking increasingly unlikely, and the Ukrainians refusing to allow the transit of Russian gas through their territory, the Ukrainian gas network has gone from a central node in a vast Eurasian web to a distant peripheral spur. Its infrastructure serves little purpose now besides meeting its own modest, domestic needs.

Ukrainian gas storage facilities have a total capacity of 30 bcm, but only a third of this capacity is currently being utilized after European companies began to pull their stocks out of the country amidst increasing Russian attacks. The Ukrainians have approximately 11 bcm available, but 4.7 bcm of this gas is in strategic reserves which are more difficult and expensive to access. Altogether, this amount is 20% less than the government’s target for the winter, which the Ukrainian gas industry also failed to meet in 2024, despite imports and domestic production. This resulted in the country being brought to the brink of a “gas blackout,” with stocks just barely allowing the Ukrainians to scrape by.

The latest Russian strikes have brought this issue to a head, because those estimates assume typical domestic production. Unless the Ukrainians can bring the damaged infrastructure back online quickly – and this may not be possible – they may not be able to provide reliable heating through the season. The European Bank for Reconstruction and Development will be instrumental in providing funding for both imported gas and the equipment and materials needed to repair the damage. The EBRD has “invested” billions into Ukrainian energy infrastructure since the war began, handing money over to Ukrainian state enterprises like Naftogaz in the form of loans guaranteed by the EU under the Ukraine Investment Framework.

Yesterday the EBRD announced an emergency financing deal in response to the October 3rd attack, but this program will need to be put into place with unprecedented speed. It comes on the heels of another €500 million loan for gas purchases in August, also classified as an “emergency.” Attempting to fill Ukraine’s reserves now, as extraction season begins, will cost Ukraine (or, realistically, the EU) almost twice what it would in the summer. Repairing the damage caused by Russian strikes this year is an additional hurdle. At least $180 million in funding is required to repair the damage that has already been done earlier this year. Total needed repairs to the Ukrainian grid are estimated to cost at least $878 million. Gas infrastructure components are highly specialized and not mass produced.

Ukrainian gas reserves at the end of “withdrawal season,” which runs from November to April, have been declining since the war began, and fell to a third of their 2021 high last season. In January, reserves dropped dangerously to 3.4 bcm (less than 20 days of winter consumption). The 5.4 bcm remaining in April of 2025 cut things far too close for comfort, as an interruption of gas transit to strategic storage sites could leave parts of the country cut off, without enough local supply to keep the heat on. This amount represents significantly less than a single quarter of winter gas consumption, and there are hard limits on how much gas Ukraine can produce domestically and import from the EU during injection season. Presuming a maximum throughput of 60 mcm of gas a day and an infinite supply of money from EU loans, Ukraine can import less than 1 bcm a month for storage after accounting for consumption needs. This means the pipelines would need to be running at maximum capacity around the clock to refill the reserves enough to be ready for the withdrawal season next year, assuming domestic production were cut off.

The good news for Ukraine is that its domestic production has yet to be entirely destroyed. But with the termination of the transit deal, and increasing Ukrainian strikes on Russian oil infrastructure, the Russians have shifted their strategic focus, apparently feeling they no longer have any reason to hold back on striking Ukrainian gas infrastructure. In August, they destroyed a key pumping station servicing the Transbalkan route through Odessa, planned to provide Ukraine with US and Azerbaijani LNG.

The vast majority of Ukraine’s gas storage capacity is secured in underground gas storage (UGS) systems within depleted gas wells or underground aquifers that lie hundreds to thousands of meters underground. The gas in these reservoirs is as inherently safe from attack as any strategic resource could conceivably be. More than half of Ukraine’s gas storage capacity lies under the Bilche-Volytsko-Uherske site in Lvov oblast. While the gas deep beneath this site may be safe, the infrastructure on the surface needed to extract it is not. The Russians have struck BVU twice: once in 2024 – likely to dissuade EU providers from storing gas in Ukraine – and once in January this year, two weeks after the termination of the transit deal.

Massively increased Russian long range drone production rates mean that keeping sites like BVU offline permanently is now a possibility. And if the Ukrainians have to rely even more heavily on imported gas, a shortage of storage capacity will result in service interruptions as storage is still necessary to provide a buffer for demand volatility over the course of the day, or during cold snaps.

Potentially just as damaging would be strikes on the pipeline infrastructure Ukraine depends on to import gas from the EU. Russia has entirely refrained from targeting these pipelines, but in August, the Ukrainians broke the taboo on attacking EU connected pipelines (not counting Nord Stream) by striking pumping stations of the Druzhba oil pipeline in Bryansk, halting flows to Hungary and Slovakia. There is likely a complex game being played with the tenuous relationship between Hungary, Russia, and Ukraine. Ukraine depends on Hungary for half its gas, but Hungary has refused to divest itself of its dependence on Russian energy imports. If the situation continues to escalate, Ukraine can threaten to cut Hungary off from Russian oil transiting through Ukraine, but Hungary can in turn threaten to cut Ukraine off from its own gas exports. Similarly, Russia could target Ukrainian gas pipeline turbine stations, cutting Ukraine off from Hungary and devastating Ukrainian import ability, but only at the cost of cutting into the revenues of a “friendly country.”

If, however, the situation remains stable and Russian strikes on Ukrainian gas infrastructure cease, the Ukrainians are likely to make it through the winter, albeit with some rationing. The apparent key factor is Russian strategic thinking. Their missile campaign has reached unprecedented intensity over the last two weeks, but it’s not clear if this is a tit-for-tat response to Ukrainian attacks on Russian petroleum resources, or a permanent decision to destroy the Ukrainian energy system. If it’s the latter, there are several options on the table to impose a crisis on the Ukrainians.

Thanks to burrrson and Kinez on X for contributing to this piece

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Just as we’ve seen with the Russo-Ukrainian War, popular analysis of the state of the conflict between Israel and Iran has rapidly degraded into claims that one side or the other is “winning,” or “losing.” Rarely is this ever done, so let's zoom out and ask what it means to "be winning" or "be losing" in a conflict. The first step is to ask ourselves what the strategic goals of the parties involved are. Again, this is rarely done. Trying to use missile strikes, destroyed TELs, interceptions, or civilians killed as a proxy for "how well" a combatant is doing is fraught with issues, because it takes a series of increasingly speculative leaps to connect those metrics to the core question of whether that combatant is getting closer or further away from achieving its strategic goals, and we'll always be working with incomplete information.

Israel is claiming that its strategic goal is to eliminate Iranian nuclear capability. Everyone seems to accept that they haven't done this. They bombed some nuclear enrichment sites and assassinated a few scientists, but this will not stop the Iranians from developing a bomb if they so choose. No one seems to discuss Iran's strategic goal, or really care. It's very hard to talk in terms of winning or losing without determining this. Is it to develop nuclear weapons? No. The fatwa remains in place and they could easily have done it 100x over by now if they haven't already. They were signaling their openness to make a deal on this issue until Israel engaged in an unprovoked attack on them. Israel's only hope of achieving this goal at this point is to drag the US into the conflict.

Iran's strategic goal, at least in the short term, is to re-establish deterrence. If they can survive the US/Israeli onslaught and cause enough military, economic, or political attrition in Israel to force it to end its offensive against them, they will achieve their goal. Their main path to achieving this is depleting Israeli interceptor stocks, which I believe they can accomplish in a matter of one to two weeks. Israel does not have the same advantages Ukraine has, because the country is much smaller, and the Iranians have been building up their missile stockpiles for decades in preparation for this exact moment. Their stockpiles of BMs are likely nowhere close to exhaustion, and they haven't seriously dipped into their supply of drones yet. If they can deplete Israeli air defenses, they can begin deploying overwhelming swarms of attack drones that will quickly create an unsustainable situation for the Israelis.

But back to the Israelis, I don't believe that this conflict has anything to do with Iranian nuclear research, which is being used as a fig leaf to cover the actual strategic Israeli goal, which is destabilizing Iran by forcing it to fight a protracted air war with the United States. They'd like to solve the Iranian problem permanently, and with opposition to Israel rising, and American military power waning, there's no time like the present. The window is closing on this opportunity, and all the while their position is being eroded by regular drone, missile, and rocket attacks on Israel by Ansar Allah, Iranian backed forces in Iraq, Hezbollah, and Hamas. Although they've successfully put a subset of the forces arrayed against them on their collective back foot, they've failed to eliminate any of them as a threat.

All the signals we're receiving are that US involvement is becoming increasingly likely. This means that Israel is indeed "doing well," but not in the sense of military victories. Their air defenses are by all appearances slowly being degraded, and many of their claims about the number of TELs or Iranian AD systems they've destroyed seem dubious. We're working with imperfect information, so it isn't easy to draw conclusions here.

The issue with the Israeli strategic goal is that it's a serious gamble. They've clearly determined that they can weather whatever storm arises from future escalations, including the destruction of the region's oil infrastructure, but US intervention could be more limited than they need it to be, or the Iranian response to that intervention could be so devastating, that it causes a political crisis in Israel. Time will tell.

After posting the Pleiades images yesterday, multiple people reached out to me to send me evidence that some of the damage in those images predated the Oreshnik strike. I immediately placed an additional order for an earlier pass (October 22nd) that SkyWatch had available.

In the interest of dispelling the invalid analysis I put out yesterday, I will summarize the results of the second, earlier satellite pass I ordered before covering it in-depth in the rest of this article.

All of the damage seen in the November 22nd pass happened prior to the Oreshnik strike on the 21st, and was the result of attacks using conventional Russian standoff weapons. The November 22nd pass shows no new damage from Oreshnik.

The reasons for my faulty analysis, for which I take total responsibility, are as follows:

• I uncritically accepted the anaylsis of others, who said that the Sentinel-2 pass from November 24th showed new damage. It did not – this damage was the result of a strike in July.

• I failed to adequately search for resources in Russian (something I am capable of), which had thoroughly tracked previous strikes on the plant.

• I didn’t want to spend an additional $125 to order an earlier pass from Pleiades. Had I done this right off the bat, this could have been avoided.

• I instead relied on free and publicly available imagery from Google Maps, provided by Maxar. Someone at Maxar has engaged in a painstaking, but sloppy, coverup of the damage caused by previous strikes, patching a 2024 pass with multiple other ones, despite maintaining the 2024 date in the citation of the images. For this reason, I was much more inclined to accept the damage as new, and as having been caused by Oreshnik.

• I failed to consider that the Ukrainians might have not repaired any damage from the previous strikes.

I apologize to everyone who based their own analysis off of mine.

In the remainder of this article, I will elaborate on why I got it wrong, and dig in to the pass from October, which is a superior image to the one from November. From there, I will:

• Cover damage to Yuzhmash which was not visible in the November pass, due to the inferior angle and clarity.

• Conclusively prove that Maxar is editing their imagery by hand to conceal damage at Yuzhmash.

Finally, I’ll speculate on what I think might be going on here. There are three possible explanations:

1. Oreshnik completely missed Yuzhmash

2. Oreshnik hit the plant, but did no damage which is visible in the satellite imagery I ordered

3. Just like Maxar, Airbus is participating in a coverup of damage to Ukrainian military objects

Note: Images in this article will have an Airbus watermark, which I manually added, and as is required by the provider (SkyWatch) I purchased these images from. I’m still not sure if I’m violating their terms of service by sharing these images like this, but I plan on going back and watermarking the images in the previous article as well to ensure that I’m complaint.

October Pass

First, the full pass from October:

All damage seen in November can be seen here. The angle of this pass is much higher than the one from November, and the image was taken a full hour later, a month earlier in the year, reducing shadows. Here’s a legend to get your bearings as I cover each cluster of damage:

A, B, C, and D are all clearly visible in the November pass. E was not easy to make out because of distortion, but it’s much more clear here, and major damage to an additional (very large) building is visible for the first time because of the new angle. F and G were not possible to make out in the November pass.

First, close-ups of A, B, C, and D:

Because there’s less distortion on the right side of this pass, it’s possible to more clearly see how the smokestack in D appears to have fallen onto the roof of the building its base is attached to when it was destroyed (the smokestack is clearly visible in the Apple Maps images I used in the previous article).

Next, damage that was previously hard to make out, or not visible. In E we can clearly see that there was a total collapse of the roofs of some of the structures:

To the west of E, we can see severe damage to a building that was previously not visible because of the angle, along with a rubbish heap of debris:

This is a big building. Here’s what it looks like in Google Streetview in July of 2015:

Next, F:

And G:

At first I thought the buildings in G had simply been abandoned, and fallen into disrepair, but here’s what they look like on Maxar through Google Maps (copyright indicates 2024):

Establishing a Timeline

So if Oreshnik didn’t cause all this damage, what did? Sources I failed to locate before publishing the last article have documented multiple strikes on Yuzhmash. In some cases, we can use Sentinel-2 to identify which strikes damaged what. In other cases, that damage is simply invisible on Sentinel, but we can rely on local videos. I’m confident we can account for the damage in Clusters A, B, and D.

July 15th, 2022

There are at least two videos of this strike, but they’re from quite far out and don’t allow for the identification of which buildings in the plant were hit. The early period of the war was extremely chaotic, and it’s very difficult to find any reliable sources beyod reports saying targets “in Dnipro” were hit.

Using Sentinel-2, we can see that this is almost certainly the strike which did the damage seen in Cluster A.

LostArmour confirmed that this is the strike which did the damage seen in Clusters A and C with high resolution imagery of an unknown source:

November 17th, 2022

Given the proximity of this strike to a road, and using Google Streeview as a reference, this is the strike which did some of the damage seen in Cluster D. Video:

Streetview and location in Google Maps (the aerial is oriented east). Note the diagonal parking on the left side in both the video and in street view, and keep in mind that the streetview is a decade old at this point.

A later found a video of the aftermath which confirms the target was the large building in the north of Cluster D, or the other buildings in Cluster D.

LostArmour’s analysis (authors: Simo, magnetro1, Hazarescu, and Artem) from the next summer found that this damage occurred in the next strike, however:

August 15th, 2023

A cruise missile (reported to be 4x Kh-101s) strike hit the plant. It isn’t easy to tell what damage may have been caused by this strike. Good candidates are C, E, F, and G, because damage from A and possibly D may be visible.

A video of this strike:

Ukrainian and Western media completely failed to cover this strike, from what I can tell. Russian sources, however, did.[1][2]

July 8th, 2024

A combined cruise missile and drone strike on the territory of the plant. This is when the damage seen in section B occurred. Sentinel-2 may be a tiny fraction of the Pleiades, but it’s useful enough once you already know where the damage is.

These two impact craters, the same ones I used as proof of Oreshnik’s accuracy, were widely shared in the aftermath of the November strike as evidence of Oreshnik’s damage. To disprove this, all I would have had to do was go back to Sentinel Hub, which I had already spent hours in without noticing that this damage was present back in July. Instead, I accepted this analysis as true. No excuse there.

A video of the strike (Twitter source):

I can’t rule out that I’ve missed a strike here, but these are the events I can identify with confidence, using multiple sources for confirmation. Please let me know if you’re aware of one I missed.

A logical question is whether we can assume that the remaining clusters that are unaccounted for were caused by Oreshnik. The October pass rules this out. Multiple structures may have been hit in these strikes, and because Sentinel-2 is so low resolution, there’s no way to confirm the damage that is harder to see in all satellite imagery.

Coverup

LostArmour had already commented (in 2023) on the strange “patches” which are visible in the Maxar imagery that Google Maps uses. I had assumed that these were simply normal boundaries between satellite images. After cross-referencing the October and November passes with this imagery, I can now say conclusively that a manual cover-up has been performed. Every “patch” corresponds to damage we now have high resolution imagery of.

These patches are old archival images which have been superimposed over imagery from 2024 to conceal the damage caused since the beginning of the war. They’re easily identifiable by how a section of the imagery will bleed or blend into another with different coloration (different time of day or year) or a different angle.

Cluster C

Note that the perfectly parallel roof sections are no longer parallel in the Maxar image, along with being a different color, and the presence of “bleed.” This is a huge patch, running the length of the plant in Google Maps and well beyond its perimiter. But as we’ll see, it’s just one layer of many. It seems absurd to think that the boundary of this patch would precisely start a few meters from the edge of the damage in Cluster B by pure coincidence. Imagery on the left side of this patch must date from before the strike in July of 2022, because the damage from Cluster A isn’t visible, and doesn’t appear to have been individually patched.

Cluster D

This patch, or patches, are much more sloppy. Again, we see that the patch begins precisely where the northernmost damage from Cluster D occurs, hiding the large hole in the roof and the destruction of the smokestack attached to Main Assembly Shop 97. This appears to actually be one patch laid atop the boundaries of two larger images, as both a left and a right boundary are visible on the roof of the Main Assembly Shop. This may have been needed to cover up the damage to the smokestack and the hole in the roof, which might have been caused on different days.

Cluster E

The double patching over Cluster D might have something to do with ensuring the damage in Cluster E was also hidden. We can see bleeding to the right of the Maxar image, which extends all the way up to Cluster D. There’s also some weirdness on the northern edge of the line of buildings in the center. The edge here seems perfectly placed to make sure that no damage to the building on the right can be seen.

Cluster F/G

This patch is the same as the one which runs through Cluster C.

Zooming out, we can see what’s been done:

Each color represents a different layer (edit: it’s possible that two of the colors which are not next to each other represent a single layer with a different layer in between them), taken at a different time. Combined, and overlaid on top of each other, they’ve allowed Maxar to hide any of the damage from the strikes since the beginning of the war. Each boundary between a layer runs precisely through the edge of damage from one of the strikes. As of the time of writing, this is plainly visible on Google Maps, and I invite you to check it out for yourself.

So What About Oreshnik?

As I said in the beginning of this article, there are three possible explanations:

1. Oreshnik completely missed Yuzhmash

2. Oreshnik hit the plant, but did no damage which is visible in the satellite imagery I ordered

3. Just like Maxar, Airbus is participating in a coverup of damage to Ukrainian military objects

Explanations 1 and 2 are possible, but somewhat hard to imagine. It would be very hard to cover up the damage if 36 projectiles traveling at Mach 11 (according to Ukrainian sources!) slammed into random buildings in Dnipro. Similarly, it doesn’t seem to make sense that those projectiles could have hit the plant and done so little damage as for it to be invisible. They were simply moving too fast, and if they were somehow “blanks” with little to no mass, they would have broken up in the atmosphere, as other commentators have pointed out.

I consider explanation 3 the most likely. Some have said that I may simply have been given older images, and offered up the greenery visible in the November pass as proof. I don’t buy this, because Sentinel-2 images from prior years look identical in late November. The November pass isn’t even particularly “green” when you zoom in closely, much of the foliage is clearly brown.

One mysterious detail is that there are not one but three passes from November 21st available from Pleiades. Someone tasked the satellite to make these passes as soon as possible after the strike. There have been none since then, and none in the weeks prior. Is it possible that Pleiades would have done a silent pass before the Oreshnik strike in order to get images of it that could be offered up at a later time as being taken after the strike? This would have required foreknowledge of the strike, which various government officials have confirmed they only had 30 minutes of, and those 30 minutes were in the middle of the night. The imagery can’t be from the previous year, because it includes damage which occurred in the Summer of 2024.

It’s hard to know what to make of all of this. Outside of carefully constructing a photoshopped version of the strike, it’s difficult to imagine how it could have been faked. If that was what happened, ordering the other two passes from that day would be a way to validate it, as it would be nearly impossible to edit three separate passes at different angles and have it all come out consistently.

However, given what we see with Maxar, it is indisputable that western satellite imagery providers are deliberately censoring their products in order to conceal the damage caused by Russian strikes. Someone ordered those patches made. If Maxar is doing it, Airbus is doing it too. The only question is whether they did it in this particular case.

What Now?

I’m done buying satellite imagery. The first post in this series triggered a firestorm, and I feel genuinely awful about being so off the mark. That being said, the opportunity to continue this process is available for anyone equally insane enough to spend their hard-earned money gambling on this.

An obvious next step would be to seek out sources from neutral countries, like China. There are Chinese satellite imagery brokers, but someone who speaks Chinese and can pay in Chinese currency will need to do this. I’ve also mentioned buying the other passes from the 22nd to cross-reference them with each other. This will cost $250 on SkyWatch. Another option is for someone to blow a truly huge amount of money by drawing a much larger boundary (even extending the peremiter of the order a few hundred meters beyond the boundary I drew brings the price to over $1000). This would make it possible to say whether Oreshnik missed the plant, or hit a section of it which wasn’t visible in my passes. Strikes have occurred in the southern section of the plant in the past.

The kitchen sink option would be to wait until there’s a clear day (or days) and task the satellite yourself. It would be hard to imagine Airbus somehow editing the image on the fly before they return it to you. If they reject the request, that’s interesting on its own.

But I’ve wasted enough money on this, and I’m calling it a day. Maybe a motivated person can start up a crowdfunding drive for this, but after performing this analysis, I simply don’t trust satellite providers enough to roll the dice.

Note: This post is gaining a lot of traction, so please draw your own conclusions and reach out in the comments or on Twitter with any corrections or mistakes. Metarch on Twitter provided an old report (2023) from LostArmour showing that a couple of these impacts may be from old strikes. I’ve placed an order for a Pleiades pass from October, which will hopefully settle things. Check out LostArmour’s post after reading this one. I’ll make an update post when the October images come in.

It’s been nearly a month since the first use of the Russian “Oreshnik” system took the world completely off guard. But despite multiple angles of the strike on Dnipro, to most, it likely feels like we’re no closer to a clear picture of its capabilities than we were the night it happened. Contradictory analyses have proliferated through social and mainstream media, and it’s unclear what to believe. Various analysts have described the system as a series of “blanks” from a jerry-rigged nuclear ICBM – intended only as a warning shot – or as a new type of cluster munition where each of the 36 kinetic submunitions is roughly equivalent in power to a 250kg bomb (read my thread on this here). Some eyewitness reports of unknown credibility said the plant (or parts of it?) had been “reduced to dust.” Other Ukrainian reports said minimal or even no damage had been done.

When the publicly available (and free) imagery from a pass of the ESA’s Sentinel-2 satellite was published a few days after the strike, it only muddied the waters. The Sentinel is free for a reason, it has a poor 10m resolution (each pixel roughly represents 10 meters). Here’s what it showed:

Commentators noted what appeared to be two large holes in the roof of a structure roughly in the center of the image:

But beyond that, it wasn’t possible to say if any real damage had been done. This was frustrating, and I embarked on a lengthy journey to attempt to purchase commercial satellite data myself to settle the issue once and for all.

The Hunt

Most commercial satellite providers focus on sales to corporations, governments, and institutions. Those companies aren’t interested in one-off sales to individuals (believe me, I tried). One option was accessing Planet Lab’s imagery through Sentinel Hub, and I subscribed ($$$) and purchased 25 sq km of quota for Planet’s SkySat after querying the area around Dnipro and seeing that SkySat (50cm resolution) had made multiple passes over Yuzhmash since the strike. I made a rookie mistake and ordered all the images taken between then and the first week of December, only to find that every one of them had nearly 100% cloud cover. Dnipro gets plenty of snow this time of year, and the forecast showed nothing but cloudy days ahead. Even the passes from the same day the Sentinel-2 did a flyby were from later in the day, when clouds had rolled in. That money had been wasted.

After giving up for a few weeks, I found another provider which offers images from Airbus’s Pleiades-Neo constellation. Pleiades offers even better (30cm) resolution than SkySat and amazingly, it had already taken three separate shots of Yuzhmash on November 22nd, the morning after the strike. I don’t think this is a coincidence. Someone likely requisitioned the constellation (something you can do with many satellites if you have the money) but, for whatever reason, chose to sit on the images rather than publish them. Luckily, the provider I found allows for selecting a very tight polygon for your order, with no minimum. I would be able to select just the territory of the plant, without the order running into the thousands of dollars. I suspected that some of the Oreshnik’s projectiles likely landed outside the territory of the plant itself, but I had no choice but to select a polygon matching the plant’s perimeter, due to the cost. I placed the order and waited around eight hours for it to complete. When done, I was given a 90MB PNG (13,000 x 9,000 pixels in resolution), a 1.1GB GeoTIFF (COG) file, and a JSON file of metadata for download.

Results

I spent the next several hours pouring over this massive image pixel by pixel. At this point, I feel reasonably confident that I’ve identified all damage caused by the Oreshnik on the territory of the plant that lies within the polygon I drew. I also believe we can make much more informed conclusions about the nature of this weapon and and its strategic potential.

But first, a few notes about this image. The satellite’s angle in relation to the plant is 43.7 degrees “off-nadir,” which is good because it allows us to see the height of buildings, but it adds some distortion and prevents us from seeing the north side of structures. The snapshot was taken at 10:18AM local time in Dnipro, in winter, which results in a significant amount of shadows because of the low angle of the sun (something like 20 degrees). I’ll be comparing the images from Pleiades with older, publicly available images from Google and Apple Maps. Ideally, I’d have an older shot from Pleiades from the same angle and at the same time of day to compare with, but that was cost-prohibitive. The publicly available images are at much closer to a 90 degree angle, with the sun high in the sky, so objects will appear flattened and will be more brightly lit.

Also important to note is that the buildings at Yuzhmash are big. Really big. Many are taller than three stories with over 500,000 square feet per floor. Others are over ten stories tall. Keep that in mind when viewing the images. This kind of analysis has a learning curve.

First, a zoomed out view of all the visible damage to the plant. Red circles are high confidence, and yellow are low. Each circle doesn’t necessarily represent one impact, but rather indicates damage of some kind. More on that in a moment.

Zooming out again, we can see what appear to be the paths traced by at least three of the six sets of submunitions. Remember, the Oreshnik releases six Maneuverable Reentry Vehicles (MARVs) of a completely new type, each of which carry six kinetic submunitions. By zooming out again, we can clearly see how the kinetic projectiles from separate MARVs fell:

I haven’t heard anyone suggest an “official” name for the MARVs, so we’ll call them “Cassettes” and refer to the clusters of impacts as Cassettes A, B, and C, from left to right.

Cassette A

First, the southernmost (lowest) building, with our image on the left and Google Maps on the right:

This building is either three or four stories tall and appears to have suffered some damage to its roof on the northernmost section. There may be an impact hole in the center of the image, but it isn’t clear enough to tell.

Moving northwards (up), we see that this next building has suffered total collapse in its central section. This looks like the kind of damage an Iskander or a 250-500kg bomb might do. As we move along, we’ll see that depending on the height of the building and where the kinetic projectile landed, the damage may appear as a small hole in a roof, or might cause a total collapse even in a 5+ story building like this one. Every floor has pancaked all the way to the ground.

Continuing northwards, this building has an impact in the roof but didn’t suffer a catastrophic collapse.

Moving laterally to the East, this roof has some light damage.

And to the south the superstructure of the corner of this building is exposed.

That’s it for Cassette A.

From the damage we see in this first cassette, it’s reasonable to draw the conclusion that the projectiles are moving fast enough to punch a hole straight through a roof and penetrate into the ground, leaving the upper floors of a building relatively intact. If the projectile happens to hit a key element of the building’s foundation, it may cause it to collapse, but this isn’t guaranteed. It is logical to assume that every projectile contains the same energy, and is capable of doing the same damage.

Cassette B

The damage to the southernmost building in Cassette B is extensive and complex. This is the damage that was visible even in the 10m resolution Sentinel-2 imagery. First, a high resolution image with its red circles still included:

Next, side by side with Google Maps:

The damage is severe. An entire section of the structure has collapsed west to east across its length, revealing its inner supports, and two large craters are visible in its center. The visibility of this damage is likely caused by two projectiles striking this three story building in close proximity, leading to a larger structural failure.

The building immediately to the north has a large chunk taken out of its southern edge, all the way to the ground, and some damage to its roof around the center of the image. The boundaries of two tiles in Google Maps overlap here, which is why the right image looks like two different images mashed together.

Lastly, there’s an impact hole and some structural failure in the northernmost building.

Cassette C

There’s much more distortion on this side of the image, but multiple hits are clearly visible.

The roofs of the buildings on the right seem to be damaged and covered in debris, and the center building on the right side seems to be missing its roof entirely.

Moving North, and starting from the left circle and going clockwise, we see a total collapse of the northern edge of the left most building all the way to the ground. Next, a smokestack and its supporting industrial structure has been destroyed, with damage to the exterior of the attached building. Finally, there’s a black section of the roof the southernmost building. This may simply be new asphalt applied to the roof, but I’ve circled it because it’s not visible in any other imagery I’ve seen.

Next, we see the same building with the smokestack and exterior damage has suffered severe collapse in its roof from an impact. This building is very tall – ten stories in places. Here’s what it looks like from Google Streetview:

Takeaways

I believe these images confirm Ted Postol’s assessment that the Oreshnik’s kinetic projectiles deliver the approximate energy of a 250kg bomb, though the nature of this energy is different. The projectiles are moving so quickly that they punch a hole through most anything until they hit the ground. When we see severe enough roof failure to get a good look at the damage, we see an impact crater 100ft in diameter and a lot of dirt. This implies that the projectile is penetrating into or through the foundation of the building. These structures were built by the Soviets and are extremely tough, so if the projectiles are capable of punching through them and reaching earth (or pulverizing the foundations enough that they look like earth), they’re delivering a lot of energy.

Additionally, both the MERVs and the kinetic submunitions are extremely accurate. The gap between their impacts is as small as 25 feet in places, and the >=3 lines of impacts are evenly spaced. This makes the absence of at least one or as many as three of the MERVs puzzling. Either we’re seeing overlapping impacts (“double taps”) from multiple MERVs, or some of them missed the plant entirely. Cassette B is potentially a double tap. It’s also possible there were other targets in Dnipro, outside the plant, or perhaps some of the MERVs malfunctioned and missed the mark. This lines up with the videos of the strike which show one set of projectiles landing well away from the others. It is a prototype weapon after all.

So what is the Oreshnik? Here are three different ways to think about it:

• It’s a way to deliver a strategic bomber’s worth of destruction without the strategic bomber.

• It gives the Russians the capability to deal the damage of 36x 250kg bombs to any target within several thousand miles in less than 20 minutes, and with no chance of interception.

• It can deliver the damage of a few dozen Iskanders with a single missile, and do it from 10 times as far away.

A lingering open question is how much damage, if any, occurred underground. Yuzhmash is infamous for its underground workshops, which the Soviets allegedly designed to withstand a nuclear blast. The Oreshnik’s projectiles certainly seem to have penetrative power, but how deep they go is beyond my pay grade. I’ll leave that problem to the amateur physicists, who hopefully catch wind of this post and use it to inform their calculations. If these projectiles are capable of penetrating as deeply as some analysts have speculated, that changes the picture quite a bit.

The Russians have solved the problem of how to cost-effectively attack dispersed targets with a ballistic missile. That doesn’t make it an all-powerful doomsday device, and it would likely take many Oreshniks to render a large facility like an air base (or Yuzhmash) completely inoperable. But the Russians do have the capability to mass produce them, and have openly stated their intent to do so, which makes the system a potential strategic game changer.

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An image of damage to a street outside of Yuzhmash has been removed because it is from an earlier strike. Thank you to @drakhl on Twitter for the correction.

We'll continue with the second piece of hardware in this series to receive its own full article. Just as the story of the Leopard 2 was intertwined with the story of the Ukrainian 2023 Summer Offensive, the Patriot's story is inseparable from the history of air defense in the war, Russia's standoff weapon arsenal, and General Sergey Surovikin's strategic missile campaign. The Patriot's saga is much more complex than the story of the Leopard 2 or any other system we've covered. Unlike the stories of other systems, which tended to follow a predictable cycle of hype followed by stark collision with reality, the Patriot's carefully manicured public perception has clung on for nearly two years after its introduction. Attempting to understand its performance requires penetrating the thickest web of propaganda and censorship to surround any weapon system used in the conflict. The layers of obfuscation shouldn't be surprising because, as we'll discuss below, the efficacy of air defense, as seen in the war in Ukraine, has far-reaching consequences on military strategy, politics, and the survival of entire nations.

If you haven't already read the previous entries in the series, you can start with part one below.

Raytheon MIM-104 Patriot

• First referred to as a game changer: July 2022

• Appearance in Ukraine: April 2023

• Country of origin: USA

• Unit Cost: $1B-2.5B per battery, $2M-10M per interceptor

• Number sent: 3 batteries, 4 additional launchers

• Manufacturer market cap: $161B

The Air Defense Gap

On February 8th, 2022, sixteen days before the Russian invasion of Ukraine, the British defense think tank Royal United Services Institute (RUSI), released a paper titled Ukrainian Air Defense Options in the Event of a Russian Attack. In the paper, RUSI describes the "disparity of forces in the air domain" facing the AFU if conflict – at that point looking increasingly like a possibility – were to occur. The Russians would have at least a 3:1 advantage in fixed-wing aircraft with the assets they had immediately available in the theater, and the differences in air defense assets were even more concerning. At the time, the Ukrainians exclusively operated modernized Soviet systems, including the long-range S-300 missile system, the medium-range Buk M-1, and the short-range 9K33 Osa. Their interceptor missiles and radars were a generation behind the Russian air defense systems at least, and spare parts for maintenance were unavailable due to restrictions from the eight years of conflict in the Donbass. Their age also precluded them from being joined together in a modern, integrated, and networked air defense system. Despite these limitations, the sheer number of systems in the country gave Ukraine the densest air defense network in Europe at the start of the war, in terms of launchers per area.

While the RUSI paper focused on the threat posed by Russia's Air Force (VKS), an initial wave of losses of air assets on both sides during the early stages of the war would result in planners scaling back their use. The Ukrainian Air Force (PS ZSU) lost a staggering 44 fixed-wing aircraft (1/3rd of their MiG-29s and 1/8th of their Su-27s) from shootdowns and Russian missile strikes on airbases in the first 48 hours of the war. The VKS got off relatively easy in comparison – and established a limited degree of air superiority – but suffered over a dozen losses of fighter aircraft over the next month, with most losses of medium and high altitude aircraft likely caused by Ukraine's 100 S-300 systems. The VKS responded to these losses by reducing medium and high altitude incursions into Ukrainian airspace, leaving the exceptionally durable Su-25 to operate at low altitude in a close air support role, where its principal threat would be MANPADS.

Simultaneously, Russian forces in Ukraine prioritized the destruction of the AFU's S-300s. Six weeks into the war, 21 launchers were confirmed as destroyed, roughly 7% of the AFU's stock. With the actual number of destroyed systems likely being many multiples of that number higher, Ukrainian air defense forces were suffering an unsustainable attrition rate and were unlikely to make it through the year with significant capability remaining.

Zelensky reached out to the Americans specifically for assistance in replacing their S-300 losses, but delivering air defense systems wouldn't be as easy as other types of military hardware. Israel blocked the transfer of American-owned Iron Dome batteries to the Ukrainians to avoid provoking the Russians, and the Iron Dome couldn't serve as a stand-in for the S-300 anyway due to its short range. Similarly to what would later be done with main battle tank transfers, the Americans attempted to arrange swap deals with allies to transfer their S-300s to the Ukrainians in exchange for Patriot systems. However, only three NATO member states operated the system: Bulgaria, Slovakia, and Greece.

Turkey publicly balked at the proposal they swap a Patriot for their Russian S-400 system. Their rejection of the plan was part of an inter-NATO feud in which the Americans attempted to strong-arm them into switching over to the Patriot in exchange for reversing their suspension from the F-35 program due to their purchase of the S-400 (there were serious concerns that the Russians were using it to gather data on NATO aircraft). They said they would accept Patriots and F-35s only "without precondition." At the end of March, Slovakia agreed to swap their single S-300 battery for a German Patriot battery, with Prime Minister Eduard Heger saying it was "the equipment that Ukraine needs the most." The transfer was completed in early April.

A week later, the Russian MoD reported it had destroyed multiple S-300s, including launchers provided by "a European country."

Sending the Ukrainians their own Patriot batteries was completely off the table, and the Biden administration said so explicitly in early March. Echoing statements US officials would later make to explain why it wouldn't be possible to send the Ukrainians the M1 Abrams main battle tank, the complexity and difficulty of operating the system were cited as key factors. The Patriot is so complex, they said, that only American troops would be capable of operating it.

“There's no discussion about putting a Patriot battery in Ukraine. In order to do that you have to put U.S. troops with it to operate it. It is not a system that the Ukrainians are familiar with and as we have made very clear, there will be no U.S. troops fighting in Ukraine.” - US official, March 2022 (Defense One)

Whether this statement is true is something we'll discuss later. Another explanation may have been cost. Modern air defense batteries are among the most expensive and sophisticated systems fielded by modern militaries. The export cost of a full Patriot battery exceeds $2.5B – a fifth the cost of a Gerald R. Ford-class supercarrier – while a single interceptor costs from $6-10M. Delivering even one Patriot battery to Ukraine would have represented an unprecedented escalation in aid over the low-cost, surplus, and obsolete systems that had been transferred up to that point.

"Alternative options are working with other allies and partner nations around the world who may have additional air defense capabilities and systems at their disposal who might be willing to provide them to Ukraine. And so we're having discussions with many countries right now about some of those capabilities, surface-to-air missiles for instance, that the Ukrainians are more trained and more equipped [on].” - John Kirby, Pentagon Spokesman, March 2022 (Defense One)

Even transferring the S-300 wasn't an easy task. Just like the Patriot, a "battery" includes multiple launchers, a command post, target acquisition radar, fire control radar, support vehicles, and the interceptor missiles themselves. Into the 2010s, the S-300 was described as "one of the world's most advanced" air defense systems, though the difference in performance between Soviet-era models and modernized variants is significant.

Missile Crisis

While the Ukrainians attempted to hash out deals with the Bulgarians and Greeks for their S-300s, their remaining air defense systems were left to cope with a bigger threat than VKS incursions into their airspace: Russia's strategic missile campaign. The Russians had made advanced standoff weapon capability a cornerstone of their military planning since the collapse of the USSR, and the investment had paid dividends. In the first 48 hours of the invasion, the US Department of Defense estimated the Russians had conducted 160 missile strikes on Ukrainian territory. By the first week of March, that number had grown to 775. The next week, the Western media reported that the Russian Iskander-M short-range ballistic missile (SRBM) is capable of dropping decoys to prevent its interception.

"The devices are each about a foot long, shaped like a dart and white with an orange tail. Each is packed with electronics and produces radio signals to jam or spoof enemy radars attempting to locate the Iskander-M, and contains a heat source to attract incoming missiles. The use of the decoys may help explain why Ukrainian air-defense weapons have had difficulty intercepting Russia’s Iskander missiles." - New York Times, March 2022

The Iskander is a system, not a specific missile. It includes a highly mobile launch carrier vehicle that is capable of firing a variety of missiles, including cruise missiles and quasi-ballistic maneuvering missiles with high-explosive, fragmentation, submunition, bunker-busting, fuel-air explosive, EMP, or nuclear warheads. The maximum missile payload exceeds 1,500lbs, and its burn-out velocity is Mach 5.9 – low hypersonic. Its inertial guidance system makes it largely immune to jamming.

The Pentagon claimed the majority of the missile strikes in the first 48 hours of the invasion were Iskanders. The missiles were primarily used against logistics nodes and command and control infrastructure within its 300-500mi range to disrupt AFU communications. For longer-range targets, the Russians typically utilized the Kalibr family of land-attack cruise missiles (LACM), which travel much more slowly than ballistic missiles like the Iskander-M and take a flat trajectory. Typically launched either from naval assets in the Black Sea or from strategic bombers, the >1000mi range of the Kalibr places the entirety of the territory of Ukraine within its targeting area. Once the war began, dozens of videos of Kalibrs – easy to film because of their slow speed – crisscrossing the country were posted.

On the 13th of March, a large barrage (30, according to the Ukrainians) of Kalibrs struck an AFU base outside Lvov in Western Ukraine that was being used as a training area for over 1,000 Ukrainian Foreign Legion volunteers. Hundreds of foreign fighters, including British ex-special forces, were killed or wounded, and large quantities of recently delivered aid were destroyed. The attack sent shockwaves through the foreign volunteer community due to the scale of the losses and the proximity of the strike to the Polish border – a mere 10 miles. The Russians had demonstrated they had the capability to conduct precision strikes anywhere in Ukraine.

On the 18th of March, the Russian Ministry of Defense announced the first combat use of a hypersonic missile when their Kh-47M2 "Kinzhal" (literally "Dagger") struck an ammunition depot bunker in Western Ukraine. The next day, they used it again on a fuel depot in Konstantinovka. The performance of the Kinzhal would become a hotly debated topic in the Western press. Compared to the more advanced scramjet-powered Zircon, the Kinzhal is relatively primitive, being essentially a souped-up, air-launched Iskander – itself already hypersonic in some stages of flight – with slightly less than double the top speed. But military analysts recognized that the prospect of any air defense system intercepting a missile traveling in excess of Mach 8 was dim.

"[The Kinzhal] is a consequential weapon, but with the same warhead on it as any other launched missile. It doesn't make that much difference except it's almost impossible to stop it. There's a reason they're using it." - Joe Biden, March 2022

Opsec

As early as May, a pattern that would soon become familiar emerged in the media coverage of the Russian missile campaign. On the 16th, a salvo of Kalibrs targeted infrastructure and military aid deliveries in the Yavoriv region near Lvov and the Polish border. While initial Ukrainian reports indicated that a key railway from Poland had been hit - aligning with the statements of the Russian MoD - subsequent statements by local officials and online commentators said that every one of the eight Kalibrs launched had been successfully intercepted. Any damage, they said, was caused by falling debris.

Blurred videos taken by local residents were inconclusive (air defense interceptors like the S-300's 48N6 are supposed to self-destruct if they fail to find their target, resulting in an explosion in the sky, whether the interception happens or not). Local officials urged residents not to film or post videos of air defense operations.

In late March, President Zelensky signed into law a Rada bill criminalizing video dissemination of AFU movements and air defense operations. A week before, a Ukrainian citizen was detained for posting a video to TikTok in February of a Ukrainian MLRS and rocket ammunition being hidden beneath the parking garage of the Retroville shopping center in Kiev. In the middle of the night on the 20th of March, the Russians struck the parking garage with an Iskander, destroying much of the mall.

While the incident would be used to garner sympathy in the Western press, the message to everyday Ukrainians differed. Despite the Russians having publicly posted a video of UAVs following the MLRS from its firing position all the way back to the mall, the blogger was made an example of, and a video of his apology was posted by the SBU.

In the same period, Chinese national and Odessa resident Wang Jixian drew headlines and glowing profiles for his war reporting and vocal defense of Ukraine. Wang faced immense backlash from the Chinese language internet, and Western media outlets underscored that he had courageously chosen to take a stand by offering a rare pro-Ukrainian perspective to his countrymen.

In a video posted to Youtube in March of 2022, Wang covered his mouth with black tape to protest his censorship on Chinese social media

I want to (provide) some voice for the people in Ukraine, for the heroes, for my neighbors. Because in my eyes they are all heroes. I see people being calm, I see people brave … I want to remind you to see who is dying, who has been killed... I have no interest or desire to leave Ukraine until the war is ended and Ukraine has won. - Wang Jixian

But in October of 2023, Wang's daily posts suddenly stopped. Two months later, Ukrainian media reported that he had been sentenced to five years in prison for posting videos of air defense operations in Odessa. Luckily for Wang, the sentence was suspended, and he would be allowed to serve a year of probation instead. He had, however, received the SBU's message loud and clear:

"The old Wang Jixian is dead, I'm a 'new person' now. I hope for peace and no more wars. I will not talk about wars or politics anymore. I just want to be an ordinary good husband and spend all the time with my wife. - Wang in a post on 12/01/23

Many more examples of prosecutions of Ukrainians who posted videos of air defense operations, including in Odessa, cropped up as the war progressed. Accordingly, once-plentiful videos of Russian strikes on Ukrainian targets became rarer, and the interception rate claimed by the Ukrainian Air Force crept upward towards 100%. Videos posted of strikes within Ukraine had an ever-increasing area of the frame blurred out. In this environment, it was often impossible to reconcile the contradictory claims of Ukrainian and Russian reports on the results of strikes.

Supply and Demand

Predictions in the Western media that Russia had run out or would run out of standoff weapons in the initial weeks or months of the war were revealed to be wrong. While the Financial Times proclaimed that the Russians were "short" of missiles in late April, the Russians fired 48 Kalibrs in a single night at the end of June. The invasion wave of strikes – especially of Iskanders – had put a serious dent into the Russian missile stockpile. But either that stockpile was much larger than what Western analysts had estimated, or Russian military production had ramped up much faster than anyone expected. Fallen debris from shot-down Kalibrs revealed that Western electronics were still finding their way into Russian missiles, meaning that sanctions on their export were being subverted.

A report by Reuters and RUSI suggested that Russian imports of microelectronics had even increased since sanctions were applied. Assertions that Kh-101 production rates were as low as three a month were revised upwards to one every four days. The Russian government had taken missile production seriously, and factories that once operated on a four-day workweek switched to round-the-clock production in three shifts a day.

Weeks-long lulls in strikes – during which comments that perhaps the Russians had finally run out of missiles after all would return – would be followed by massive barrages featuring dozens of cruise missiles, with Iskanders and Kinzhals used for high-priority targets. Ukrainian air defenses stood little chance of repelling these saturation attacks. As the war progressed into the summer, Russian strikes crippled Ukrainian fuel infrastructure, destroying the country's two largest oil refineries.

By the fifth month of the war, Ukrainian authorities estimated that the total number of missiles fired at the territory of the country exceeded 3,500. However large the AFU's stockpile of interceptor missiles was, the standard air defense doctrine that two or more interceptors must be fired to have a decent chance of intercepting any given projectile meant that it was only a matter of time before the AFU ran out. Rationing interceptors could only be done by leaving many important military and infrastructural targets undefended. If the strategic missile campaign was going to turn into a war of attrition, the Ukrainians were destined to lose, especially as Russian military production ramped up. It would be crucial that the West provide some solution to the AFU's dwindling supply of interceptors. Luckily, Russian missile production appeared likely to remain low enough for the foreseeable future that they would remain incapable of dealing a knockout blow. The Ukrainians took steps to decentralize their logistics to limit the effect of any single strike.

Geraniums Bloom

In early October of 2022, Russian sources reported that General Sergey Surovikin had been promoted from commander of the Southern Grouping to commander of all Russian forces in Ukraine. Surovikin was instrumental in turning the Syrian Civil War in favor of the Syrian government and was the first combined arms commander in Russian or Soviet history to take command of the Air Force. Surovikin would also be the first member of the Russian military to be explicitly labeled the overall commander of their forces in the war. Western insight into the structure of the Russian Armed Forces is notoriously myopic, and while the appointment came as a surprise, it quickly became apparent that Surovikin's promotion had been in the works for months, and he developed a dramatic plan for forcing the war into a new phase.

The first pillar of Surovikin's plan was to consolidate Russian lines with painful withdrawals and dig in for a Ukrainian offensive in the spring of 2023 (read more about this in my article on the Leopard 2). The second was to unleash a massive strategic missile campaign to cripple both Ukrainian logistics and the country's energy infrastructure. Degrading energy production – which is inherently centralized and impossible to conceal or move – would be vastly easier than attempting to destroy hundreds of dispersed and hidden AFU targets. Sources in the Russian military said Surovikin was "not sentimental" and had earned the nickname "General Armageddon."

Surovikin's missile campaign would hinge on the introduction of a new type of weapon – one of the few that would truly earn the right to be dubbed a "game changer" in the conflict: the Iranian HESA Shahed 136, or as the Russians would call both the models procured from Iran and those domestically produced under license, the Geran (literally "Geranium"). In August of 2022, rumors began to circulate that a batch of Shahed 136s (or the similar 131/Geran-1 model) had been sent to Russia for military trials in exchange for a crop of Iranian pilots beginning training on the Russian Su-35 4th generation multirole fighter. Such a deal represented a win/win for the two countries, as the Iranians had failed to procure new fighter aircraft for decades due to sanctions, and the Russians did not have an equivalent to the Shahed 136 in their arsenal.

The Shahed (literally "Witness" in Persian) 136 was an example of the kind of military engineering ingenuity that is bred under resource constraints. Iranian planners recognized early that investment in air defense and standoff weapon systems could potentially make up for a lack of aircraft capability and had – like the Russians – prioritized those systems. Without modern fighter aircraft, fighter-based suppression of enemy air defenses (SEAD) – the process through which specialized fighters like the US EA-18G Growler and anti-radiation missiles like the AGM-88 HARM destroy air defenses through detection of radar – as practiced by powers like the US would be impossible. It would be necessary to instead rely on saturation attacks where enemy air defenses would be confronted with more targets than they could engage.

But such attacks – as the Russians had learned – are expensive and difficult to maintain in a protracted conflict. Cheap ballistic missiles have limited utility against military targets due to their inaccuracy, and more expensive missiles can only be produced in limited numbers due to their complex guidance systems, control surfaces, and jet engines in the case of cruise missiles. The Russians had already run into this problem in Ukraine. Even large salvos had no more than 50 missiles, and while production was increasing, it would take years before new targets could be met.

Enter the Shahed series. The Shahed's origins were described as "obscure." It had been developed years before the conflict in Ukraine, but the Iranian military kept the program under a veil of secrecy. There were rumors that it was the "unknown delta wing UAV" used by Ansar Allah in a 2019 attack on Saudi oil installations and in a strike on an Israeli oil tanker in the summer of 2021. In September of that year, Israeli Prime Minister Naftali Bennet announced the name of the system for the first time, saying the 136 "can attack any place any time."

No particular technological aspect of the system was new or even unique. The Americans, Israelis, and the Iranians themselves had produced platforms with similar capabilities since the late 1980s. The initial strategic thinking behind early concepts, like the American AGM-136 "Tacit Rainbow," was that anti-radiation sensors could be placed in slow-moving, loitering cruise missile platforms. These weapons could eliminate the enormous risk of fighter-based "Wild Weasel" SEAD tactics as Soviet air defenses became increasingly sophisticated. The AGM-136 program ended in failure, but like many doomed experimental US weapon programs, it predicted the future of warfare decades in advance.

What was new about the Shahed was that the Iranians had optimized the drone for cost, produced them in large numbers, and created a new role for it in standoff strategy. While its maximum warhead mass is around 90kg, roughly a fifth that of the Kalibr, estimates of domestic production cost for the Geran-2 are as low as $10,000 per unit, meaning as many as 100 Gerans could be produced for the cost of a single cruise missile, with no difference in precision. It would be possible to launch drone "swarms" with strategic-level effects for the first time.

The Shahed 136 is ingenious in its simplicity. This, combined with its almost uncanny accuracy, long range and low cost, makes it unique among strategic standoff weapons. Its airframe, made from carbon fibre cloth and honeycomb, can effectively be manufactured by any DIY handyman. Its piston engines are Iranian copies of civilian engines developed for air enthusiasts and the modelmaking market, and as such can be traded free of any export restrictions. The Shahed 136 avionics systems are largely based on commercial-grade products that are traded freely around the world. It navigates using a combination of a commercial-grade inertial navigation system together with GPS and GLONASS satellite navigation systems. It also carries a commercial-grade digital communication device that allows it to receive updates on its target’s location or even change targets. - RUSI

The strategy would work like this: first, a large salvo of Gerans is launched. With a top speed of only 115mph, it might take them hours to reach their targets. Meanwhile, strategic bombers loaded with cruise missiles take off from distant airfields. As the drones approach their targets, the much faster cruise missiles are launched so that their arrival coincides with the arrival of the drones. The Gerans may maneuver continuously throughout the attack, doubling back or circling over an area to maximally distract air defenses. And if the Ukrainians choose to ignore them, they present a serious threat in their own right because their warhead contains as much explosive as eight 155mm artillery shells. Smaller preliminary salvos of Gerans also allow for SEAD, as air defenses engaging them can then be targeted by ballistic missiles before they have a chance to pack up and move.

The Shahed 131/136 epitomises the democratisation of battlefield precision. By exploiting low-cost commercial and dual-use technologies and components, it has achieved a breakthrough in combining precision with affordability. Its range of about 1,300 to 1,500 km is adequate for theatre operations. Its small warhead is about one tenth of that of legacy cruise missiles – but this is compensated by its spectacular precision and even more so by its cheapness, which makes it widely available. No matter how many of them the Ukrainians shoot down, the few that penetrate their defences cause immense damage, and there are always more of them buzzing in for the next attack. Their prevalence, derived as it is from their low cost, makes defending against them an almost Sisyphean labour. The Shahed 131/136 is a truly revolutionary precision weapon, which challenges the West's defensive technologies and systems. - RUSI

Opening Salvo

On October 10th, the Russians conducted a massive strike across the territory of Ukraine. 84 cruise missiles paired with 24 Geran-2s struck across 14 regions, damaging 30% of the country's energy infrastructure and plunging much of the country into a blackout. It was the largest single missile attack since the beginning of the conflict. While the AFU claimed 56 projectiles had been shot down, their air defenses had been overwhelmed. Over the course of the next week, similar strike packages of missiles and drones continued. By October 17th, over 400 projectiles had been launched in the new campaign. In visually censored videos posted by Ukrainians to Telegram, the now infamous "lawnmower" sound of the Geran-2's two-stroke piston engine was ever-present.

The following days and weeks would see steady waves of missile and drone attacks of an intensity not seen since the conflict’s opening days. According to reports from the UAF, Russia fired over 600 air- and sealaunched cruise missiles between October 10 and the end of 2022, with an average salvo size of around 50 missiles. Interspersed with these cruise missile attacks have been waves of one-way attack drones, primarily Shahed-136s, of which Ukraine says Russia launched nearly 700 between September 2022 and early January 2023. In mid-December, the United Nations assessed that Russia’s bombardment had damaged around 50 percent of Ukraine’s power grid. - CSIS

The Russians appeared to have stockpiled several hundred cruise missiles for the initial wave of attacks, and Western analysts hoped that they would soon exhaust their reserves. Instead, the attacks continued at a pace which – while reduced from the first week – demonstrated greater production capability than was thought to be possible. The Russian military-industrial complex had ramped up faster than expected, and the addition of the Geran meant that each missile launched was much more likely to find its target.

It was typical for the AFU to claim interception rates between 40-80%. Disregarding Russian MoD reports, Western analysts recognized that the censorship regime in place in Ukraine made verifying these reports "impossible" but tended to take them at face value. Some noticed that – contrary to common sense – the AFU was claiming that their interception rate was increasing as the Russians launched larger and more frequent attacks. While they claimed a roughly 10% interception rate for cruise missiles from February to July, by December, they were claiming to have shot down 80% on average. Was this the result of increased operator skill? Strategic changes in coverage? Perhaps the small number of NASAMS, IRIS-T, and Gepard systems delivered by the West were simply so effective they could be responsible. In November, US Defense Secretary Lloyd Austin claimed the NASAMS had intercepted 100% of the cruise missiles it had attempted to hit.

Blackout

It seemed implausible to some that interception rates could increase by 800% at the same time that the Russians had begun firing much larger salvos, with a frequency that would allow them to quickly gather the deployment locations of the Ukrainian air defense network. It was also hard to reconcile with the constant and very public admissions by the Ukrainians of the damage the strikes were doing. With the exodus of civilians from the country and the loss of territory, the country's energy consumption was down 35%, and Ukraine's largely Soviet built grid provided overcapacity prior to the war and allowed the country to export significant amounts of electricity. But by January, Surovikin's campaign had left Ukrenergo and DTEK unable to meet a third of Ukraine's electrical needs. The key component that needed replacing was high-power transformers.

What went largely unstated in the media was that the Russian missile campaign had mostly targeted transformers and transmission lines rather than actual energy generation infrastructure like power plants. In the first months of strikes, hundreds of smaller 110 and 330 kV substations were targeted. In December, 750 kV stations – of which Ukraine had approximately ten – began to be targeted. This is the reverse order of what one would expect if permanently destroying the grid was the goal, so it seemed that the Russians were deliberately ratcheting up the pressure over time.

Earlier, nuclear energy specialist Aleksey Anpilogov drew attention to the fact that the Ukrainian substations with the highest voltage – 750 kV – were becoming the target of Russian missile strikes. “Until now, Ukraine has boasted that these substations were not disabled, saying that missiles did not strike their targets. But the fact is that the previous missile strikes were sparing; they disabled 110 kV and 330 kV substations,” the analyst explained.

There are less than ten substations with a voltage of 750 kV in Ukraine. “But the failure of each of them is actually the loss of several regions at once, because it is these substations that are responsible for the transfer of electricity between regions.” - New Cold War, November 24 2022

The destruction of transformers was a serious issue that, left unresolved, would turn Ukraine's energy districts into "islands" disconnected from each other, making balancing the grid impossible. These critical pieces of equipment are necessary to step down high voltage transmission to substations, cost millions of dollars, and weigh hundreds of tons. The loss of coal from mines in the Donbass meant the Ukrainians had shut down some coal power plants prior to the war, giving them a reserve of spare parts, but that reserve was running out.

European transformers were built to step down 400 kV and 200 kV transmissions, so adapting their hardware to the Ukrainian grid was only theoretically possible. A global shortage of transformers had been a reality for a decade at least, resulting in energy companies hoarding them for their own needs. In the US, companies often waited in excess of two years to receive a new unit after ordering one. In the EU, the timeframe exceeded three years. Production of large transformers was consolidated in only a few countries, none of which were in the West. And even if the West could find the high voltage transformers Ukrenergo wanted – in early January, they said they needed at least 59 – they would have to be delivered by ship because of their incredible size and weight. In November and January, the US and EU dispersed hundreds of millions of dollars meant to help the Ukrainians acquire more transformers, but this was significantly less than the Ukrainians would need, and just because they had cash didn't mean they could buy the equipment.

Ukraine's domestic transformer manufacturer, Zaporozhtransformator (ZTR) – once the largest in Europe – had been failing for years prior to the war. Industry experts said that the Ukrainian government had preferred to buy transformers from foreign countries using Western loan programs, resulting in ZTR consistently losing out in bidding processes. Its employee count dwindled steadily over the years, and it entered bankruptcy proceedings in 2019. The concern was partially owned by Russian oligarch Konstantin Grigorshin, so the Ukrainian government shut it down in March of 2022 and then attempted to nationalize it in November. A few weeks later, in early December, the company's production lines and warehouses in Zaporozhye were destroyed in a Russian missile strike.

Ironically, the country most capable of supplying transformers compatible with the Ukrainian grid was Russia itself, and this may have been the implicit threat of the missile campaign. The Russians had mostly refrained from destroying power plants, so the Ukrainian grid could conceivably be repaired in a matter of weeks if only replacement parts were available. If the Ukrainians failed to negotiate with the Russians, it could be years before their grid would be capable of meeting the country's energy demand, even if the missile strikes stopped entirely. Electricity imports from neighboring countries still depended on these transformers, so there wasn't much that Ukraine's partners could do.

Ukrenergo was forced to implement rolling blackouts throughout the country. A massive strike in the last week of November plunged the entire country into an hours-long blackout, demonstrating that a total system collapse was theoretically possible.

In March of 2023, the Ukrainian Air Force admitted it was not capable of shooting down the Iskander-M.

"We don’t shoot down ballistic missiles, for example Iskander-M. All these missiles fly fast, along a ballistic trajectory and essentially swoop down on a target with a huge speed. It takes specialized air defense missile systems to shoot down something that’s already falling." - PS ZSU spokesman Yury Ignat, March 2023 (TASS)

The Ukrainians desperately needed a game changer.

The Hype

Calls for the West to deliver Patriot batteries to Ukraine increased in proportion to the Russian strategic missile campaign against Ukraine's energy infrastructure. In mid-December, the Western media reported that the Biden administration was "considering" the delivery of at least one battery. Zelensky personally called President Biden on the 19th of December to urge him to send the system immediately. The next day, the decision had been made: Ukraine would be receiving a Patriot system. 100 Ukrainian soldiers – enough to operate a single battery – flew to Fort Sill, Oklahoma to start training.

Reacting to the news that the U.S. is likely to supply Patriot air defense missile systems to Ukraine, a senior Ukrainian Defense official told ABC News that they will be "a game changer," describing them as "one of the best systems in the world". The official added that Ukraine's access to the missiles will "drastically increase our capacity to defend our skies from Russian strikes." - ABC News, December 14 2022

The Patriot (a backronym for "Phased Array Tracking Radar for Intercept on Target") was developed as a replacement for the Nike Hercules missile system and was first deployed in the closing phase of the Cold War. It proved its efficacy during the Gulf War, during which the American military claimed an astonishing nearly 100% interception rate against Soviet SCUD ballistic missiles – the Iskander's predecessor's predecessor – launched by Iraq. Its performance was so noteworthy that President George H.W. Bush specifically mentioned the interception rate, saying "Patriot is 41 for 42: 42 Scuds engaged, 41 intercepted!" during a public statement at a visit to the Raytheon plant in Massachusetts in February of 1991. Prior to the Gulf War, it was thought that ballistic missile interception was so difficult that shooting down even a sizeable minority of projectiles would prove impossible. Small-scale combat use of ballistic missiles had been limited to exchanges between minor powers without access to missile-based air defense systems, and the Patriot's success – the first real test of modern missile defense – marked a major shift in the history of warfare.

By 2022, various iterations of the Patriot were in service with 17 countries, and the US alone fielded over 1,000 launchers. The Saudis used them to shoot down "hundreds" of projectiles fired at the country during its conflict in Yemen. "Everybody wants them," wrote analyst David B. Des Roches in August of 2022.

Concerns about the lengthy training process – up to a year for more technical roles in a Patriot battalion – were mitigated by some commenters. The Ukrainians would need some months of practice, but American training was excessive anyway:

“The complexity of training Ukrainians to use Patriot is overblown. Western training is massively over-engineered for health and safety purposes. It’s not uncommon to have to achieve a thousand hits in a simulator before you’re allowed to fire a live system. Russia can train a tank driver in four hours, while we spend four weeks." - Express

The Patriot, unlike Ukraine's aging S-300s, was "sophisticated" and among the most advanced air defense systems in the world, analysts said. It offered "increased accuracy" and "increased kill rate," and "does exactly what you want it to do." Its systems were "nearly autonomous," requiring only a final launch decision from operators. It could "intercept any aerial threat" under "any weather conditions." The Economist suggested that the Patriot may even be capable of shooting down Russian missiles like the Kh-22/32, which travel in excess of Mach 4.

White House, Pentagon and State Department officials declined to comment on details of the transfer of a Patriot battery, which, if approved, would amount to one of the most sophisticated weapons the United States has provided Ukraine. The Patriot system can knock down Russia’s ballistic missiles, unlike other systems the West has provided, and can hit targets much farther away - New York Times, December 13, 2022

In March, the New York Times reported that the Ukrainians at Fort Sill were nearly done with their 10-week crash course on the Patriot. Despite this period being a tiny fraction of the year required to typically train a Patriot battalion, the Ukrainians had already "mastered" the sophisticated system and were "essentially running their own training." They were even offering pointers to their American instructors, drawing from their – at this point – much more extensive combat experience. The Americans were impressed by how the Ukrainians had "breezed through" the training and called them "quick studies." The first battery was due to be deployed as early as April. Germany soon offered to provide one of their batteries as well.

On May 4th, 2023, Ukrainian social media reported that the newly deployed Patriot battery had done the impossible by shooting down a hypersonic Kh-47 Kinzhal. While Ukrainian Air Force spokesman Yuri Ignat initially denied that a Kinzhal had even been fired on the 4th, the branch's commander, Mykola Oleschuk, officially confirmed the shootdown two days later. His claim was validated by the Pentagon, and photographic proof of the missile – with a sizable interceptor fragment hole blasted through its nosecone – appeared shortly later. The Patriot had proved itself again.

The Reality

Two weeks later, on May 16th, a large Russian missile barrage struck the Kiev region. The next day, the Ukrainian Air Force claimed they had shot down a staggering 6 Kinzhals during the attack. If one Kinzhal had been perceived as impossible, six strained credulity. The Russians hadn't launched such a large number of them at once previously in the conflict. Shortly afterward, a webcam video recorded close to the Zhulyany airport in Kiev emerged on social media:

The AD launches seen in the video were universally accepted as belonging to a Patriot system because of their trademark 38 degree launch angle (other systems like the Iris-T and S-300 fire straight up into the air). Interceptor debris posted to social media showed that the missiles used were PAC-3 CRI, which are fired from the 16-missile variant of the Patriot launcher. With the 32 launches caught in the video, this meant that two launchers had likely fired their entire magazines. At $3 million per interceptor, a jaw-dropping $96 million of munitions had been expended in the span of a few minutes. Also, as shown in the video, multiple interceptor launches appear to have failed, with two falling to the ground and others suffering malfunctions that caused them to go off course.

Even worse, video from the same feed taken minutes later showed two large explosions in the vicinity of the launch locations (0:33 and 0:42 seconds in the video above) and possible secondary explosions shortly afterward, followed by large plumes of smoke. The Russian Ministry of Defense quickly reported that the Ukrainian claim of six Kinzhal shootdowns was impossible, as they hadn't even fired that many, and that they had destroyed five Patriot launchers and the radar station of the battery. Russian sources on Telegram said the Russians had baited the Patriot operators into turning on their radars with a wave of Geran-2s, then targeted those radars with Kh-31P anti-radiation missiles before finally targeting the launchers themselves with Kinzhals.

American media confirmed that one Patriot battery had been damaged on the 16th but denied the damage had been catastrophic. Rumors swirled on Telegram that the US military had proactively placed a moratorium on the Patriot's use in Ukraine until an investigation could be completed. Simultaneously, the SBU began a wave of arrests of Ukrainian citizens who had disseminated videos of the Patriot's operation and began taking street camera feeds offline.

"Such cameras work all over the world, broadcast online on Youtube channels. But in our situation, when there is martial law in the country, I think that certain adjustments will be made with the military administrations. When there is an air defense operation, when there is a threat of information leakage, I think that the bodies of military administrations will adjust in order to somehow prevent the enemy from being able to observe the combat operation of our air defense systems online." - Ukrainian Air Force spokesman Yuri Ignat

Additionally, with the photos of fallen interceptors having already been shared on social media, the idea that the Patriot had shot down a Kinzhal two weeks earlier became suspect. The nosecone of the missile in the photos appeared to have been hit by a fragmentation-type interceptor rather than a "hit to kill" type interceptor like the Pac-3 CSI the Ukrainians had clearly been given. Moreover, the "Kinzhal" in the photos the AFU provided was dramatically smaller than the actual missile and appeared to better match the dimensions of a BETAB-500 or P-800 Oniks. Some commentators posted speculative diagrams of the internals of the Kinzhal, and suggested perhaps the debris was from the missile's warhead or "penetrator," or even that a BETAB-500 had been embedded in the Kinzhal. In the ensuing online debate, it was hard to know what to believe.

The Hidden History

What wasn't surprising was that the Patriot in Kiev had failed to protect itself. Despite sometimes glowing reports about the system in the Western press, some commentators had issued warnings that the Patriot had serious limitations. Its last-generation radar, which the Ukrainians had received, does not provide 360-degree coverage like some other AD systems. In a battle space in which the Russians routinely sent missiles in weaving, looping patterns through the country to strike targets from behind, this meant the Patriot needed to be deployed along with significant quantities of other AD assets in a "layered" network. But with stockpiles of S-300, NASAM, and short-range interceptors being close to exhaustion, the Patriot couldn't depend on Western-grade supporting defenses.

The possible malfunctions seen in the May 16th video were similar to those seen in videos of the Patriot's operations in Saudi Arabia. Its interceptors had a proclivity for suddenly veering wildly off course before crashing into the ground. With Ukraine's batteries deployed in densely populated Kiev, this was dangerous.

Contrary to the statements of some analysts, the Patriot's history of "battlefield successes" was not undeniable and had been publicly and repeatedly challenged by both academics and analysts. The first Patriot interception claimed by US military officials – widely celebrated in the Western press – on January 18th, 1991, was later revealed to be "a computer glitch." No missiles had been fired at all. A Scud penetrated Patriot-guarded airspace in Dhahran, Saudi Arabia in late February of that year, killing 28 American soldiers in their barracks. Again, this was blamed on a computer glitch.

MIT professor and Pentagon consultant Theodore Postol became a particularly troubling thorn in the side of Raytheon, as he released analytical papers and gave congressional testimony that the Patriot may have shot down a total of zero Scuds during the Gulf War. Basing his analysis on debris photographs and videotapes taken by the US Army, Postol placed an upper bound on interception rates at 10%. He unwittingly stumbled into a complex political game. The Saudis, like the Ukrainians, had imposed a strict censorship regime over public reporting on failed Patriot interceptions in cooperation with the US military. The Israelis, who also depended on the Patriots to protect their territory from Iraqi Scuds, had no such restriction and openly validated Postol's analysis. While the IDF would acquire several Patriots over the following years, they expressed "dissatisfaction" with the system and prioritized the development of domestic alternatives. They have plans to mothball all of their Patriot batteries, and have rejected the idea of acquiring more.

Meanwhile, Peter Zimmerman of the Center for Strategic and International Studies, or CSIS, testified that Postol's analysis contained numerous methodological flaws. The CSIS is funded by both Raytheon, the Patriot's manufacturer, and the US government, and is cited extensively in earlier sections of this article. Congress did not find Zimmerman's testimony convincing, and released a summary of a report which contained the following passage:

"The Patriot missile system was not the spectacular success in the Persian Gulf War that the American public was led to believe. There is little evidence to prove that the Patriot hit more than a few Scud missiles launched by Iraq during the Gulf War, and there are some doubts about even these engagements. The public and the United States Congress were misled by definitive statements of success issued by administration and Raytheon representatives during and after the war."

Lobbying by the US Army and Raytheon ensured the full report was never released to the public.

Just as in the Gulf War, official US military reports on the Patriot's performance in the 2003 invasion of Iraq were highly positive. Several troubling incidents occurred, however. Two British pilots were killed when their Tornado was shot down by a Patriot in March of 2003, and an American F-18 pilot was killed similarly in April. Also in March, a USAF F-16CJ conducting SEAD detected a lock on from a friendly Patriot radar and mistook it for an Iraqi SAM. The pilot fired a HARM anti-radiation missile at the battery, which failed to defend itself, resulting in the destruction of its radar array.

Even with the Saudis and Raytheon continuing to run interference for the Patriot's shortcomings, Saudi reliance on the system and participation in regional conflicts meant that hiding its performance record was a losing battle. After the Riyadh attack in March of 2018, Foreign Policy published a scathing article titled "Patriot Missiles Are Made in America and Fail Everywhere." In the piece, FP described the Patriot as "a lemon," and publicly challenged Saudi/US reports on Patriot interceptions:

On March 25, Houthi forces in Yemen fired seven missiles at Riyadh. Saudi Arabia confirmed the launches and asserted that it successfully intercepted all seven. This wasn’t true. It’s not just that falling debris in Riyadh killed at least one person and sent two more to the hospital. There’s no evidence that Saudi Arabia intercepted any missiles at all. And that raises uncomfortable questions not just about the Saudis, but about the United States, which seems to have sold them — and its own public — a lemon of a missile defense system.

The author, Jeffrey Lewis, and other analysts at the Middlebury Institute of International Studies conducted detailed reviews of prior attacks in 2017. In each case, they saw no evidence that Saudi claims of shootdowns were true. They accused the Saudis of using discarded missile airframes, which often separate from a missile's warhead in flight, as evidence of a shootdown. Meanwhile, photographs of damage caused by the warheads hundreds of meters away from the debris had slipped through to the public. Lewis said there was no reason to think that that interception had even been attempted in the first 2017 attack, or that the Saudi Patriots had intercepted a single Houthi missile over the course of their conflict with the Houthis. After examining now-declassified Gulf War documents, he said there was no evidence that the Patriot had ever intercepted a ballistic missile.

In 2019, at least one KSA Patriot battalion failed during a large attack on Saudi oil processing facilities by Ansar Allah. The attack was devastating, temporarily cutting Saudi oil production in half and reducing global oil production by 5%. The Houthis claimed only ten drones had been used in the attack, but the Saudis contradicted this by saying Iranian cruise missiles had been used as well. The incident ignited a media firestorm, with various countries variously naming the Iranians the Houthis, or both as the responsible party. A rift formed between the Saudis and Americans as a result. The economic results were severe, triggering huge surges and declines in various global markets, delaying the long-planned IPO of Saudi Aramco, and causing the Americans to conduct an emergency release of the US Strategic Petroleum Reserve to stabilize prices. During talks in Ankara, Vladimir Putin offered to sell the Saudis the Russian S-400 system as a replacement for the Patriot while Iranian President Hassan Rouhani chuckled beside him.

Foreshadowing the Patriot's failures in Ukraine, conflicting reports made it difficult to make sense of the incident. Had cruise missiles been used? Which direction had they come from? The Patriot battery stationed at Abqaiq-Khurais was backed up, as designed, by other layers of air defense, including Skyguard AA guns and French Shahine short-range missile systems. Yet, neither the Patriot nor the Shahines had detected a single drone on radar or launched a single interceptor. Just as would happen in Ukraine a few years later, the installation's guards were left to fire wildly at the incoming projectiles with small arms. If one of the poorest political forces in the world – regardless of whether they had Iranian help or not – could penetrate a layered, modern air defense system, the implications were massive.

Jeffrey Lewis understood these implications in 2018. In his FP piece, he offered an explanation for how the Patriot – one of the most expensive military systems ever made – could sell so well while being so ineffective. It's worth quoting this passage in full:

If the Patriot system doesn’t work, why would the United States or the Saudi government claim otherwise? At some level, we should be sympathetic. The basic function of a government is to provide security for its citizens. There is enormous pressure on the Saudi government to show that it is taking steps to defend its citizens. By asserting successful intercepts — assertions that are uncritically spread in headlines — the Saudi government is able to present itself as fulfilling its obligations to protect its population. And, like in 1991, the perception that a defense is working helps keep a lid on regional tensions. Just as false claims about missile defenses helped keep Israel from retaliating against Iraq during the 1991 Gulf War, perhaps the fable that Riyadh is defended makes it easier to ignore the fact that Iranian proxies are firing Iranian missiles into Saudi Arabia’s capital.

But my colleagues and I are independent analysts, not government functionaries. Our obligation is to the truth — and in this case, the truth seems to be that these systems are not working. The danger here is that leaders in Saudi Arabia and the United States will come to believe their own nonsense. Consider this: Despite that the fact that anonymous U.S. officials have confirmed that there was no successful intercept in November 2017, President Donald Trump had a very different impression: “Our system knocked the missile out of the air,” Trump told reporters the following day. “That’s how good we are. Nobody makes what we make, and now we’re selling it all over the world.” This is a theme Trump has returned to again and again. When asked about the threat from North Korea’s nuclear-armed missiles, Trump said, “We have missiles that can knock out a missile in the air 97 percent of the time, and if you send two of them, it’s going to get knocked down.” Trump has repeatedly given every indication that he believes missile defenses will protect the United States.

It is no surprise, then, that the long history of obfuscation and deception related to the Patriot's capabilities would continue during the war in Ukraine. Two weeks after claiming their seventh Kinzhal shootdown, President Zelensky claimed that the Patriot would ensure a "100% interception rate" of "any" Russian missile after a daylight attack on May 29th. The Ukrainian Air Force said that this attack had included Iskander-M quasi-ballistic missiles and implied Ukraine's Patriots – presumably some components of which were out of action for repairs – had shot them down. But given what we know about the Patriot's track record, is this plausible? The Iskander-M is significantly more advanced than Houthi missiles or Soviet-era Scuds the Patriot had previously failed to intercept, as it maneuvers dramatically during flight, and drops decoys. How could Ukraine's two Patriot batteries, and not even full batteries at that, do what Saudi and American systems couldn't, given the AFU's truncated training time and lack of other modern layers of air defense?

In a series of admissions across late 2023 and 2024, the AFU gradually disclosed the realities on the ground and in the air over Ukraine, sometimes contradicting previous claims. They had failed to intercept a single Kh-22 or Kh-32 cruise missile since the beginning of the war. Their S-300s were completely incapable of intercepting the Kinzhal, Iskander, or Oniks. In August of 2024, AFU commander Syrsky published a list of interception rates for various Russian projectiles. Whether the report told the whole story or not, it made some surprising admissions. Over the course of the war, the Ukrainians had only intercepted 25% of incoming missiles. Ballistic missiles like the Iskander had been intercepted at a 4.5% rate, and the Oniks at 5%. Implausibly, the report still claimed that 25% of Kinzhals had been intercepted, and two of six rare Zircon hypersonics had been shot down. Why the slower Iskander-M was harder to shoot down than the much faster Kinzhal was not explained, and in January of 2024, the AFU claimed to have downed 10 Kinzhals in a single day – a 100% interception rate.

As the need for more air defense systems and larger deliveries of interceptors became increasingly dire, the Ukrainians revised their once-high interception rates lower and lower. By March of 2024, their monthly claimed interception rate dropped below 50% for the first time since they received Patriots.

Even if the Patriot was as effective as initially claimed, the introduction of the Geran platform dramatically tilted the balance of the missile attrition war even further toward the Russian side. The Russians quickly began to manufacture them domestically and set production targets in the thousands annually. While the drone could be engaged with anti-aircraft guns, the short range of those systems and the quantity of Gerans used in strikes meant that interceptor missiles would need to be expended to combat them. Interceptors are sophisticated – their task could be compared to needing to shoot a bullet out of the air with another bullet – and range from ten to over one hundred times the cost of a Geran-2. Even worse, the Geran's tiny heat and radar signatures make it a very difficult target to hit, potentially requiring multiple interceptors. Successful shootdowns with AA guns became much harder to achieve as daytime attacks dwindled, night attacks increased, and videos of failed missile interceptions were posted. On a long enough timeline, even if Ukraine's Western partners ramped up interceptor production, the procurement math simply didn't work out. With global production of Patriot interceptors unlikely to break more than a few hundred a year, there was no way out of the problem.

Meanwhile, Russian missile production had kicked into full gear, and two years of strikes had given them a chance to master tactics. Mixed strike packages of drones and cruise missiles increasingly contained Iskander-Ms. Maps of missile flight paths became complex. Initial waves of projectiles probed for gaps in air defense, ensuring subsequent projectiles would make it through. The Ukrainian Air Force said that some Russian missiles were inexplicably capable of suddenly "becoming invisible" during parts of their flight path. The Ukrainians were forced to severely ration interceptors and began to report running out of them midway through Russian strikes. Russian reconnaissance UAVs began operating behind Ukrainian lines, unthreatened by air defense. A clear video of a Kinzhal strike finally emerged, showing the missile body glowing red hot, which suggested it was perhaps just as fast in its burnout phase as the Russians claimed, and likely impossible to intercept after all.

Russian attacks on the Ukrainian energy grid have continued. By the fall of 2024, more than half of Ukrainian electrical production capacity has been destroyed. Increased Russian ISR capability has allowed devastating strikes on concentrations of foreign fighters and key weapons systems – including a second Patriot battery at least partially destroyed by an Iskander during transport in the spring of 2024. Russian reports said that Iskander production rates had reached a level where the platform could be transferred to the control of lower level commanders closer to the front line – rather than in centralized missile units – shortening response times. Rumors of secret truces between the Russians and Ukrainians to reduce attacks on each other's energy infrastructure have circulated, but on the 16th of November, the Russian military launched the largest strike of the war. It isn't clear if – or how long – Ukraine's grid can survive.

While Ukraine's Patriots have occasionally succeeded in downing Russian aircraft, the system's impact has been limited by its technical shortcomings, interceptor shortages, and its vulnerability to an adversary with superior strike capabilities.

Patriot Games

In October of 2024, Iran unleashed a massive ballistic missile strike on Israeli military targets. The results of this strike have been just as muddled and confused as every previous high-profile air defense engagement in modern war. What was not muddled, however, was the enormous quantity of crystal clear videos of dozens of ballistic missiles penetrating Israeli air defenses. The Israelis had long considered the Patriot insufficient for their needs, and their domestic systems enjoyed a sterling reputation after years of successfully shooting down garage-made unguided rockets fired by Hamas. But these defenses had failed, and done so indisputably. Subsequent attacks from Hezbollah featuring much smaller salvos of less than 10 ballistic missiles – and less sophisticated ones than the Iranians had used – also penetrated the Israeli missile shield. Even the Russians – perhaps the other contender for the country with the most advanced air defense systems besides Israel – had suffered several major penetrations through the course of the Ukraine war. Sure, the Russians had a much larger area to cover than the Israelis did, but by the end of 2024, the public at large had incomparably more evidence than it had ever had before that the entire concept of missile defense was just as suspect as analysts believed it was prior to the Gulf War. The games of public relations and propaganda surrounding not just the Patriot but air defense in general, could end.

It is likely the case that Patriot is inferior to its counterparts in service with the IDF and the Russian Armed Forces. But regardless of the variance in efficacy, the Russians, Iranians, and Houthis have conclusively demonstrated in the span of a few years that a massive asymmetry exists in modern warfare. Forces with few resources can attack much more powerful forces at will. Nations that have prioritized developing deep stockpiles of advanced missiles and simple drones are at a massive advantage. An objective observer has no choice but to acknowledge that strategic thinking – at least as portrayed to the public – is deeply flawed. The populations of major military powers have been manipulated for decades to believe that their safety can be assured, but this is not the case. It is not an exaggeration to say that the only thing that prevents precision strikes on nearly any target in the world is the collective cool heads of the commanders and politicians who choose daily not to press the button. It could also be said that the best defense is, as always, a good offense. Regardless, it's past time to admit the truth. Returning to Lewis:

Missile defense systems do not represent a solution to the challenge posed by growing missile capabilities or an escape from vulnerability in the nuclear age. There is no magic wand that can “knock down” all the missiles aimed at the United States or its allies. The only solution is to persuade countries not to build these weapons in the first place. If we fail, defenses won’t save us.

Game Changer Rating: 2/10

Thank you to @_Kinez_ for assistance in researching Ukrainian energy infrastructure

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With only a few possible exceptions, no Western systems experienced a more bombastic and sustained hype cycle than the three modern Main Battle Tanks sent to Ukraine: the German Leopard 2, the British Challenger 2, and the American Abrams. Each of these vehicles has its own distinct story. Still, observers of the war will know that the Leopard's history in Ukraine is the most interesting and had the largest ramifications for both that war and modern peer war in general – because it is inseparable from the story of the 2023 Ukrainian Summer Offensive. I'll cover the Leopard 2 and the offensive in this article before providing a supplement that tells the story of the Challenger 2 and Abrams. Buckle up because this is a long one.

If you haven't seen the previous articles in this series, you can start with part one below.

Krauss-Maffei Leopard 2 Kampfpanzer

• First referred to as a game changer: September 2022

• Appearance in Ukraine: June 2023

• Country of origin: Germany

• Unit Cost: $6M-11M

• Number sent: >84 delivered, 158 pledged

• Manufacturer market cap: Joint holding company, KMW annual revenue >$1.6B

The Hype

In a relative sense, Germany's posture in the initial stages of the conflict in Ukraine was one of moderation. Chancellor Olaf Scholz had shocked the country in a speech shortly after the war's inception by announcing a special $100B fund for the Bundeswher and that Germany would play a leading role in supporting Ukraine. However, compared to the Americans and British, Scholz's government hesitated to provide even heavy defensive weaponry like AA guns (like the Gepard) or MLRS systems (like the Mars). While these systems were eventually pledged to Ukraine in the summer of 2022, Scholz had already acquired a reputation as a waffler and foot-dragger by then.

There are countries from which we are awaiting deliveries, and other countries for which we have grown tired of waiting. Germany belongs to the second group. Dmytro Kuleba, MFA Ukraine, May 2022

Scholz and his party, the SPD, had been subjected to enormous domestic pressure from their opposition, the center-right CDU, and the other members of NATO. Member states were beginning to pledge weapons from their stocks, but many were made in Germany. Procurement agreements stipulated that the Germans had to sign off on transfers of those weapons, so the perception was that not only was Germany dragging its own feet, it was holding back much of Europe's ability to provide aid to Ukraine.

Scholz was adhering to a longstanding tradition in Germany – once called "The State with No Enemies" – and in much of Europe to err on the side of diplomacy over war. Economic matters played a role, too. German energy policy planning conceived under former Chancellor Angela Merkel had counted on a steady supply of cheap Russian natural gas to feed the country's vital manufacturing industry. With Germany's foreign intelligence service, the BND, predicting that the AFU defense was likely to collapse, there were hopes within the German government that those economic links might one day be restored. Without Russian energy, it wasn't clear how the German manufacturing colossus would thrive as it had in preceding decades.

Supplying heavy weapons, especially ones that could be used in offensive operations, might escalate the war, alienate the Russians, and result in a permanent rift between East and West. From Scholz's perspective, doing this might not be in Germany's strategic interest. A response from the Russians was also a concern. Even if a direct attack on Germany was unlikely, cyber-attacks, industrial sabotage, and assassinations were possibilities. The Germans were well aware they were within Moscow's reach.

The Russian attack on Ukraine has led Germany to reverse decades of foreign and security policy. Suddenly, Europe's pacifist giant has been forced to adopt a more military posture - Der Spiegel, September 2022

But with more eager partners like the Netherlands waiting for their approval, Scholz's government was caught between a rock and a hard place. When the Americans began applying pressure, it became too much for Scholz to bear. The Germans were forced to break the longstanding taboo, and started allowing countries like the Netherlands to transfer German-made howitzers and missiles to Ukraine at the same time they announced they'd start sending their own.

Western-made tanks and IFVs, however, remained off-limits. This "tank embargo" was universal among Ukraine's Western partners. The German, American, French, and British governments issued similar statements saying MBTs wouldn't be sent. This was an especially hard line for the Germans, who knew they didn't have the same political influence over the Ukrainians that the Americans and British had. If German tanks somehow found their way onto Russian territory for the first time since the 1940s, the specter of Germany's past could be conjured up again in a way it hadn't in decades. The Ukrainians requested them all the same, calling out Leopard 2A7s specifically in a wishlist they sent the Germans in early May.

As a compromise, the Germans offered "swap deals" in which partner countries with old Soviet tanks could send them to Ukraine in return for replacement Leopards from the Germans. But these countries also wanted the latest 2A7 Leopards, and the Germans had only a few dozen of the model themselves.

To make matters worse, the aid the Germans had pledged to Ukraine seemed to take months longer than it needed to arrive. Each new pledge began to mean less and less, and Scholz's reputation for dragging his feet failed to improve. Pressure mounted steadily in the media, from his political opposition, and even within his own party. The Greens – who before the war had rejected aid to conflict zones on principle – and the FDP adopted full-throated rhetorical postures on Ukraine and began publicly criticizing Scholz. Economics Minister Robert Habeck said they were ready to deliver weapons before the summer's end, and his fellow Green Party members had no issue with weakening the Bundeswehr to do it. The Greens publicly stated they believed Germany's geopolitical interests were being defended at the cost of Ukrainian lives.

This may have been true for the Greens – who oppose fossil fuels as a core policy position and at the cost of most else. But for Scholz, who felt responsible for securing Germany's economic future, it wasn't. The pressure campaign would need to be ratcheted up to force his hand.

Murmurs in the Western press said that Scholz's leadership was under question and that he was damaging Germany's reputation as a NATO partner permanently. Oddly, despite having a significant military-industrial complex of their own, the French weren't being subjected to the same pressure. In mid-June, Spain pledged 40 mothballed Leopard 2A4s which had been sitting in storage for a decade. The German government blocked the transfer. The optics were not good – all that was standing between Ukraine and its first modern Main Battle Tanks was Olaf Scholz.

Protesters outside the chancellery in Berlin, January 2023

“Free the Leopards now!” the crowd chanted outside Olaf Scholz’s office on Friday evening. It is a demand that is being made with increasing urgency across Europe, as pressure mounts on Germany to send its prized tanks to Ukraine. - FT, Jan 2023

As NATO planners hashed out the details of Ukraine's still then-secret 2023 counter-offensive, the need for deliveries of MBTs became undeniable. With the UK having pledged their Challenger 2s in early January, criticism of Scholz's obstinance towards sending Leopards reached a fever pitch. His stance was described as "cowardice." Germany had become "a basket case" that was "out of line with the centre of gravity in the EU," and was beginning to look "increasingly lonely." Scholz's leadership was a "catastrophe."

2,000 Leopards were sitting in storage in Europe – much greater numbers than the UK's stock of Challengers – and multiple countries were willing to send them. The clock was running out, too, as Ukraine's supply of ammunition which was compatible with their Soviet tanks would eventually be exhausted. With the embargo on IFVs having been broken already, and the Germans having pledged their Marders, few excuses remained.

Opinion in Germany was split on the matter, but the hawkish minority in the public piled into the pressure campaign against Scholz. The media began to publish photos of crowds holding signs that implored him to "free the Leopards." They said they had invented a new term: "Scholzing," which meant “communicating good intentions, only to use/find/invent any reason imaginable to delay these and/or prevent them from happening." A Twitter account dedicated to posting scantily clad women in leopard print counted the ways to "love your leopard."

With the consistently belligerent UK having already pledged their Challengers, Scholz entered into a game of chicken with the US – who had been reluctant to pledge their Abrams – by demanding the Americans commit first. Scholz didn't want to thumb his nose at Moscow without the US taking some of the heat. The Americans stonewalled, saying that the Abrams was far too complex for the Ukrainians to be trained on. Tensions between Washington and Berlin began to escalate as the Germans applied a pressure campaign of their own to the Americans. Scholz's game of chicken was leaked to the press. Pentagon insiders said they thought Scholz was just looking for another excuse to delay. Voices were raised between the two parties in a watershed meeting at Ramstein Air Base.

In late January of 2023, Scholz finally broke.

Scholz announced that 14 Leopard 2A6 – the most widely available variant made after the turn of the millennium – would be arriving in Ukraine in a few months. He had, at least, managed to get the Americans to commit to delivering a batch of Abrams. He also authorized the Poles to send their Leopards to the front. Modern Western MBTs were headed to Ukraine, though the Abrams might not make it there until the end of the year due to their exceptionally grueling training requirements.

Western support for Ukraine has thus reached yet another new level, both militarily and politically. Pressure on Russian President Vladimir Putin will rise, but so too, perhaps, will the chance of pushing Russia completely out of Ukraine.

[Leopard 2s] are widely considered to be top-of-the-line battle tanks. They could, people in several Western capitals believed, then as now, be enough to turn the tide. - Der Spiegel, January 2023

Spain and Sweden joined in, and Ukrainian tankers were dispatched to locations across Europe to train on the platform. The European Council on Foreign Relations eased the discomfort with the idea of German tanks rolling through Ukraine once more by dubbing the effort a sign of European unity and the "Leopard Plan." The excitement in the press was palpable. The Leopard 2's presence in Ukraine didn't just represent an opportunity to demonstrate the superiority of Western armor, it was a chance to show the world the efficacy of NATO combined-arms tactics. The Leopard would be joining Germany's Marder IFV, American M2A2 Bradley IFVs, and French AMX-10 RC tank destroyers. Ukrainian commanders underwent multi-week training programs to learn how to orchestrate offensive operations with their new equipment.

Widely considered to be one of the best MBTs in service today, the Leopard 2 tank could be the game changer Ukraine is hoping for at this point in the invasion. Since the Leopard was initially designed to counter some of the most formidable armored vehicles the Soviet Union produced, the influx of these variants to Ukraine will be paramount to the country’s success. - 1945

The Leopard 2 alone was a game changer, but the sum of all the other vehicles and the tactical training had the potential to not just turn the tide but win the war.

The world had watched in the previous year as Russian tanks were destroyed in droves. Even their most advanced model, the T-90M, had fallen victim to Ukrainian anti-tank weapons and drones. OSINT analysts documented enormous losses of Russian tanks, some counting well into the thousands by mid-2023. The West now saw what would have happened had the unthinkable occurred during the Cold War: the Russian tanks didn't stack up.

The Western armor was different, commenters said. While the Leopard 2A6 wasn't battle-tested to the same degree as the Russian tanks, they put the Russian vehicles to shame. The 2A6 didn't have the latest version of the secret "Chobam" armor (rumored to be nigh-invincible) the Challenger 2 and Abrams did, but its own armor was something of a secret, and there were rumors it could go toe-to-toe with the Chobam in terms of durability. It also had blow-out panels on its ammunition storage to ensure its turret wouldn't be launched into the air in the event of an ammo cookoff, like T-72's turret tended to do because of its carousel loader.

Ukrainians training on the platform told the Western press that the Leopard 2A6's significant weight (62.5 tons, 15 tons more than a T-72B) didn't affect the handling, which was "Mercedes-like." Its reverse speed was excellent compared to the T-72's creeping 5 km/h. The automatic gearbox of the Leopard was more like a car's than a huge piece of military machinery's, and the engine started right up like a car's did too. Many older Russian tanks used in the conflict lacked thermal sights, but the 2A6 had 3rd-generation cooled thermals with excellent range and resolution. The Ukrainians said the vehicle was "a sniper rifle." Popular Mechanics called it "badass."

The Leopard's main gun – a Rheinmetall Rh-120 120mm smoothbore was served by "one of the most advanced fire-control systems in the world." The stabilization system of the gun platform was impressive, and videos showing it off were shared widely.

“Imagine a boxer who cannot move freely in the ring, but only in one direction,” he said. “The other boxer, who can move in all directions, has a big advantage and that it is the case with the Leopards.” (Ralf Raths, Pazner Museum)

The Leopard series boasts advantages not just over Russian tanks but Western armor options as well. Its engine runs on diesel, unlike the exceptionally thirsty turbine engine of the Abrams, which prefers jet fuel. Its smoothbore gun has a broader range of ammunition compatibility than the Challengers 2's rifled barrel. And it was available in more significant numbers than the French LeClerc or the Challenger 2.

if you were the enemy, the impressive deep grumble of the tank would have made you aware that something terrifying was headed your way - R.W. Zimmerman

The Ukrainians said they needed 300 modern MBTs to push the Russians out of the country. The International Institute for Strategic Studies said a mere 100 could have a "significant effect" on the war. "In small numbers or large, the Leopard 2 would be a much better tank than anything fielded by the mighty Russian Armed Forces," said Popular Mechanics.

With similar numbers of tanks on both sides, Leopards 2 and similar tanks could give Ukraine the upper hand, especially given the poor tactical performance of Russian troops during the war, [Raths] said. "The Ukrainians shine through creative, dynamic and often very clean warfare," Raths said. "So it could well be that if Ukraine's operational offensive were to begin, the Russians would have real problems countering it."

Now that MBTs were on their way, rumors began to appear that the Ukrainians were preparing for a significant counter-offensive for the spring, which would beat the Russians back and retake Crimea. But the Ukrainians would ideally need months to train on their Leopard 2s and Bradleys. The spring start date came and went, and American officials predicted an early summer kickoff.

The situation was strange. Everyone seemed to know that the counter-offensive was coming, and even Zelensky himself made public statements explaining the delay, saying they hadn't yet amassed enough Western arms deliveries to appropriately guarantee they would take minimal casualties. On the battlefield, modern ISR ensured nothing went unnoticed, so perhaps we were simply seeing how modern warfare looked for the first time. Commentators compared the anticipation to a video game release delayed at the last moment

It was logical, then, that the Russians were preparing. But ISR indicated that they were doing so "using the same type of trench warfare tactics used in World War I." (PBS). Putin's best troops had mostly been wiped out in the previous year of brutal attrition warfare, and the ones holding the WWI-style trenches were poorly trained.

The Russian soldiers had to make do without body armor, shoes, or even, in some cases, food, said The Telegraph (note: this article is a fascinating time capsule). Their commanders had few reservations about throwing away their lives in unsupported mass infantry charges straight into Ukrainian machine gun fire, gruesomely called "meat wave attacks." They went weeks without a bath, and their shabby, Chinese-made clothing typically disintegrated while they were still wearing it. Reports said there weren't enough uniforms to go around, and secondhand outfits still painted red with their previous owner's blood were presented to the next wave of "meat."

Even Russian troops who survived the human wave charges didn't stand much of a chance of doing much damage to the Ukrainians because they were often armed with WWI bolt-action Mosin-Nagant rifles. It was no surprise, then, that the Ukrainians reported the Russians were suffering a staggering 3:1 casualty rate to their Ukrainian counterparts, who were equipped with the latest Western kit. By May of 2023, the Russians had taken a shocking 170,000 casualties, said the Ukrainian MoD. 4,000 Russian tanks had already been destroyed – nearly as many as the United States had in its entire inventory.

“They just charge straight at us, with no infantry discipline at all, and no sense of fear either,” says one US volunteer fighting alongside Ukrainian forces. “Quite often they keep going even after being shot a few times, which makes you wonder if they’re on drugs.”

Russians outside the infantry didn't fare much better than the grunts in the trenches. Corruption was so extensive in the Russian armed forces that the Explosive Reactive Armor meant to protect their tanks had long been stripped off and sold on the black market. The Russian soldiers were stealing from the Ukrainian civilians, too, packing up their washing machines, an appliance many of them had never seen before, and shipping them back to their families. Their rations tasted "like dog meat," said the Ukrainians. Desperate Russian troops ransacked Ukrainian grocery stores, which were "well stocked" with food the Russian soldiers had no chance of getting in their meager rations.

Morale was in the gutter. The Telegraph suggested that a Russian soldier's best hope of escaping the slaughter was for the inevitable collapse of his army to happen as soon as possible. The Russians deployed blocking detachments as they had in WWII to gun down anyone who dared to retreat. The British Ministry of Defense said in May that the Russian army was so degraded that it was no longer capable of conducting major operations at all.

Western tanks — such as the US M1 Abrams, Britain’s Challenger 2 or the German-built Leopard 2 — would give the Ukrainian army additional firepower to smash through Russian defensive lines and seize the military initiative before Moscow can. Moreover, western tanks would give Ukraine an advantage over Russian ones because they have superior armour, more accurate cannon and better control and navigation systems — enabling night-time operations, for example. - FT, Jan 2023

So while the Russians had some warning that a counter-offensive may be coming, the odds were good that Putin's conscripts would simply flee when confronted with a Ukrainian spearhead composed of modern Western MBTs and IFVs using NATO combined-arms maneuver warfare tactics, commentators said. And if they didn't, or their barrier troops forced them back into the fight at gunpoint, their fate was sealed. The Russian defensive lines would be "pulverized" by Ukraine's armored fist, and "Putin's conscripts" would be "swept aside."

The media said that months of training in NATO countries had deprogrammed Ukrainian commanders and overwritten their robotic Soviet training. While the Soviets and their modern Russian counterparts planned operations from the top, ignoring the assessments of their commanders on the ground, NATO training preferred autonomy and adaptability. Soviet doctrine was inflexible, and if things started to go wrong, their units had no choice but to stick to their orders, even if the plan was doomed. This explained their embarrassing failures so far in Ukraine, but with the introduction of Western military vehicles, those failures could prove fatal and end the war permanently. It was clear to the Western commentariat from dispatches from the front lines that the Russians and Ukrainians couldn't be more different. The Ukrainians had the intelligence, morale, and freedom-loving nature to implement NATO doctrine.

The Challenger and Leopard tanks leading the spearhead vastly outmatch what’s left of Russia’s heavy armour, while sophisticated precision artillery is providing withering fire for the advance. Conversely, Russian recruits appear to be given a few days of training, a little ammunition and are then thrown into the meat-grinder with a life expectancy surely measured in days. They might as well be gunning them down on the training fields; it would be faster, cheaper and about as combat effective. - Hamish De Bretton-Gordon, The Telegraph, June 2023

A key element of NATO doctrine was missing: air superiority. But the Russians didn't have it either – their pilots were "hiding in the officers' mess" to avoid certain death from Ukrainian Stingers.

An attacking force of around 60,000 AFU troops, organized into twelve brigades, started to move towards the Zaporozhye direction. Nine of these brigades received extensive deliveries of Western equipment and training from NATO countries. In early June, the Ukrainian government released what was described as the very first "trailer" for a military operation. The video asked the world to join the Ukrainians in operational silence in preparation for their attack, with now-famous images of AFU soldiers putting their fingers to their lips and emitting a shush. The Leopards – several dozen of them were in the hands of the AFU by this time – were about to be let loose.

The Reality

On the 8th of June, 2023, a series of photos and images taken from Russian reconnaissance drones spread across Telegram, and then social media at large. Just as observers had been shocked to see Russian units helplessly struck by TB2 drones a year earlier, they were now confronted with something they'd never seen: massive pileups of disabled and destroyed Western armor, which was left smoking in crater-pocked fields in Zaporozhye oblast.

The reaction to these images was explosive, and the media and commenters online weren't sure how to make sense of it. Perhaps the video was fake, or the tanks were some of the Leopard 2A4s the Ukrainians also had, they said. That variant had been introduced way back in 1984, so it could theoretically be possible that even the Russians could destroy one. As clearer images from the battlefield emerged, tank enthusiasts quickly determined that no, one of the tanks in the pileup was the Leopard 2A6. Could it be that this destroyed grouping was simply armored reconnaissance rather than the actual attack? Ukrainian officials claimed the true counter-offensive had yet to begin. Even into July, Ukrainian Defense Minister Aleksy Reznikov said that the first month was merely "some kind of preparatory operation." But after more evidence of Ukrainian armor losses appeared, the AFU had no choice but to acknowledge that this was the much-anticipated 2023 Counteroffensive. What had gone wrong?

The Ukrainians had been playing a delicate public relations game with the West from the beginning of the war. It was vital to manage Western expectations – due to their dependence on military aid – and this meant painting a picture gloomy enough that their partners would feel the pressure to deliver aid as soon as possible but hopeful enough of eventual victory that the Ukrainians wouldn't be given up on. To achieve this objective, they had fed intelligence to NATO decision-makers that the Russian army was on the verge of collapse. Leaked documents revealed that those same NATO commanders were relying on so-called "Open Source Intelligence" sources to validate the Ukrainian reports. But the OSINT analysts were themselves relying on battlefield images and reports from the Ukrainians. Many of those analysts had also been criticized for double or even triple counting Russian vehicular losses or counting Ukrainian losses as Russian ones (they mostly used the same equipment, after all).

Hawks in NATO and their partners in the defense industry were incentivized to exaggerate the capabilities of their hardware, as they were in an intra-organizational competition to determine who – the Germans, the French, or the Americans – would be providing the bulk of NATO's next-generation tank fleet. The result was an ouroboros of white lies, self-deception, and wishful thinking. And while the West and Ukrainians were convincing themselves that victory was within their grasp, the Russians had been preparing.

Russian planners formalized a medium-term strategy in the autumn of 2022: they would dig in and wait for the Ukrainians to attack them. The direction of attack wasn't difficult to predict. The distance from the front line in Zaporozhye to the Sea of Azov was relatively short – only 55 miles in places – and if the Ukrainians could break through Russian defenses and make it to the water, they'd cut the Russian grouping in two and leave Crimea isolated. If the Kerch Bridge, long a target of Ukrainian sabotage operations, could also be taken out, the Russian position in Crimea could become dire.

To prepare, the Russians made a series of painful withdrawals to consolidate their lines, pulling out of a precarious logistical situation in Kherson city. The media portrayed this as a Ukrainian victory, but AFU troops on the ground were confused by the sudden retreat and thought it may have been some kind of trap. Simultaneously, the Russians built the so-called "Surovikin Line," named after the overall commander of their forces in the war, Sergey Surovikin.

The line which protected the Zaporozhye direction was incredibly dense. Over nine months, the Russians steadily mined the open agricultural fields, using remote mining systems to avoid detection. They hid fixed ATGM systems, like the formidable 9M133 Kornet, in the treelines surrounding the fields. While the delays in the start of the offensive ran past the spring of 2023, the fertile Ukrainian soil produced overgrowth that reached over the average soldier's head. Beneath the flora, hundreds of thousands of mines were invisible.

When Ukrainian armored groupings ran headlong into the Russian lines, the results were disastrous. Russian tank ditches and obstacles, which were thought to compose the first line of defense, actually laid behind an additional hidden forward line, which caught the Ukrainians by surprise. While the AFU was attempting to implement combined-arms doctrine offensively, the Russians were implementing it defensively. Ka-52 Alligator attack helicopters, lightly used because they had been proven vulnerable to MANPADS shoulder-fired anti-air missiles like the Stinger, suddenly reappeared in droves. While the Ukrainian armor entered a "fire bag" on the ground, they lurked just over the treetops, miles behind the front and out of reach of Ukrainian AA, engaging the AFU armor with ATGMs. Russian drone teams joined in – sometimes striking the Western equipment half a dozen times to ensure it was indeed destroyed – and producing videos of the mayhem which were shared widely online.

Instead of finding starving, demoralized conscripts manning the Southern Front, the AFU encountered units of the 8th Guards, 49th, and 58th Guards Combined Arms armies, Spetsnaz operators, a brigade of Russian marines, and significant numbers of VDV paratroopers. These units were deployed in a series of interlocking defensive lines designed to follow the local terrain and direct the Ukrainian offensive into kill zones. The operation quickly became bogged down. Instead of big arrow maneuvers pulverizing the Russian lines, the most successful Ukrainian units penetrated only a few kilometers before getting stuck in the same "meat grinders" seen along other parts of the front. The Institute for the Study of War said the troops of the Russian Southern Military District demonstrated an "uncharacteristic degree of coherency." US military officials described the Russians as "more competent" than they had anticipated.

The main thing is this is a completely obvious overestimation of the potential [Leopard 2s] would add to the armed forces of Ukraine. It is yet another fallacy, a rather profound one. These tanks will burn down just like all the other ones. -Dmitry Peskov, Kremlin spokesman

The AFU lost six of their approximately 20 Leopard 2A6s in the first eight weeks of the counteroffensive. Kills were claimed by drones, Krasnopol guided artillery shells, and ATGMs. By late August, Russian Defense Minister Sergey Shoigu said every Leopard 2A4 delivered by Poland and Portugal had suffered at least minor damage.

The results of [NATO] training were mixed. Early on, less experienced units got lost, delayed attacks, in cases lost advantages like the element of surprise, and struggled to make the most of advanced US weapons. Just weeks after the counteroffensive began, Ukrainian forces set aside elements of its Western training, reverting back to its own tactics of using overwhelming firepower and infantry on foot as it struggled to blaze a path through Russian minefields, a necessity for actually retaking ground. - Business Insider

Analysts were hesitant to say the Leopards had underperformed, and they were probably right. While the platform had its shortcomings, it wasn't clear that any tank could have driven over dozens of mines while being struck by ATGMs and drones without suffering the same fate. The Ukrainians hadn't received a complete training course, either. The most die-hard of the believers in Western technological superiority said perhaps the Ukrainians were simply too Soviet in nature to properly execute NATO tactics and use NATO weapons, no matter how long they had been trained.

It was more common to see recent variants of the Leopard disabled rather than destroyed, indicating that its survivability was good, as advertised. A more severe and common failure mode of the platform was for it to "burn down" after being struck, especially from above by FPV drones, making it undriveable. Due to its size, only specialized recovery equipment was capable of retrieving the tanks after the fire damage. But when disabled tanks were left sitting out in the open in the gray zone between Russian and Ukrainian lines, the Ukrainians stood little chance of recovering them.

The Leopard's (and the Bradley's) primary opponent in the Southern Direction was the humble landmine. The Russians had created the most extensive and densest system of minefields seen anywhere since WW2. Anti-tank mines overlapped with anti-personnel mines. Brutal videos of stranded AFU soldiers, unable to move a foot in any direction without risking lost limbs after abandoning their vehicles, were posted by Russian Telegram channels.

While analysts had highlighted the Leopard's advantages over Russian tanks in optics, accuracy, and mobility, observers of the war knew that tank duels were exceptionally rare – to the point of being major news when they were caught on video. The Leopard's slight technological edge was irrelevant when confronting one of the oldest weapons in the world. Mine clearers, including models based on the Leopard, had little luck cutting a path through the Russian minefields. Rollers that had been designed to withstand half a dozen mine detonations were destroyed after only one, because the Russians were stacking mines "on top of each other," the Ukrainians said.

We saw in Normandy in the Second World War that it took seven, eight, nine weeks for the allies to actually break through the defensive lines of the Germans. And so, it is not a surprise that it is not going fast. - Rob Bauer, NATO Military Committee Chair, July 3rd, 2023

Western officials began to publicly acknowledge the reality on the ground by August. The ISW published a rebuttal to their assessments on the 19th, saying that Ukraine still had "many options" for strategic success and that any declaration of failure was "premature." After the end of August, however, mappers found that it had been the most static month in terms of territorial changes of the entire conflict.

The counteroffensive culminated sometime in the late summer or early fall, and the Ukrainian government wound up admitting failure six months after it began. The small gains they had achieved were eventually mostly rolled back by the Russians through the rest of 2023 and 2024. AFU chief Valery Zaluzhny angrily said that NATO calculations had shown that the AFU would be able to advance by 30km a day. A video interview of an incredulous Ukrainian who had undergone NATO training appeared:

We had drills together and we asked the Germans: 'How do you pass through a minefield?' They answered: 'We go around it.' On their maps minefields are 200m by 100m. Here it is nothing like that. We're talking about hectare after hectare after hectare.

There was perhaps some degree of truth to the idea that the Ukrainians had imperfectly implemented NATO tactics. The non-hierarchical organizational structure of the AFU allowed for even less inter-unit cooperation than the famously autonomous NATO militaries planned for. Orchestrating an offensive featuring tens of thousands of soldiers and thousands of armored vehicles is one of the most challenging tasks imaginable, and most of the coordination fell to the Ukrainian High Command rather than mid-level commanders. The result was small groups attacking the defensive lines one at a time, never enough to overwhelm the Russians.

The German Leopard 2 battle tanks, projected to be the palpable presence on the western frontline, are virtually invisible. It was widely envisaged that these tanks, boasting of superior armor, precision firepower, and remarkable mobility, would spearhead the breakthrough in Russian defenses in Southern Ukraine. Yet, the Leopard 2s, which were dubbed a ‘game-changer’, have unexpectedly retreated from their intended role on the frontline. - Die Welt

Even if the Ukrainians hadn't been perfect modern NATO tacticians, their task may have been an impossible one. No army had attempted to do what they had, ever. The modern battlefield was a complete departure from the Cold War or the World Wars before it. The game had changed, but the Main Battle Tank mostly had not. Their role in this war was fundamentally different than the one that had been envisioned by Cold War planners. The Russians and Ukrainians had found them most useful for engaging infantry. As the counteroffensive receded into history, the AFU's remaining Leopards began to run low on High Explosive shells, and anti-tank sabot munitions remained mostly untouched.

Not counting very recent (in the past two months) deliveries of 2A4 models to the front, Ukraine has by now lost the majority of its Leopard 2 fleet. Lost Armour documents the total losses as follows:

• 19 out of 30 Leopard 2A4

• 10 out of 21 Leopard 2A6

The American Abrams had avoided the counteroffensive entirely, as US trainers said it needed much more instruction for Ukrainian crews to stand a chance of operating it properly. The British Challenger 2 was spotted from time to time behind the front lines, but it didn't appear to have participated. The Germans had wound up sticking their necks out after all, but this "red line" would be rendered quaint by the escalations that were to follow. The Americans had taken advantage of the situation, selling Abrams to the Poles in the interim.

As ammunition began to run low and losses mounted, the Leopard 2 mostly disappeared from the front in Ukraine. It was an enormous burden on Ukrainian logistics to recover disabled systems and send them back to Poland or Germany for repair. More savvy analysts in the West had predicted the Leopard stood little chance of fundamentally changing the reality on the ground. 100 tanks, or even 300 – as the Ukrainians had requested – had little chance of exceeding Russian military production. But the average "low-information" observer had been swept up by the media narrative. The Russians recovered multiple Leopard 2s and put one on display in Moscow to demonstrate the reality of the situation.

Some commentators postulated that the results of the 2023 counteroffensive proved that the Main Battle Tank had become obsolete. It isn't clear that this is the case, as both sides continue to make use of them. What was more likely to have been proven out of date was NATO's conception of modern warfare. The Ukrainians seemed to realize this, and it's easy to understand their frustration. At this point in the conflict, they had more peer war combat experience than all of NATO combined. Decades of counter-insurgency operations and the memory of the first Gulf War had locked the West into a deceptive picture. The Ukrainians began to revert to their old "Soviet" military doctrine, but it was too late to undo the consequences of 2023.

Above all, the Western planners and the AFU had made one crucial mistake, which led to all the others, and one as old as human conflict: they had underestimated their opponent.

Game Changer Rating: 1/10

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