Putin’s narrowing war aims, oil troubles, and French elections
Kyiv likely out of reach; land bridge to Crimea in Putin's sights
The Russian Defence Ministry said on Friday that it was shifting focus to the Donbas region after completing the first phase of its operation. On Saturday, according to Dmitri Alperovitch, Putin said that Russian troops were involved in a special operation “on the territory of Donbas.” This apparent narrowing of war aims to areas around the Donbas is notable, if not surprising: as The Report wrote on March 15th, Russia’s targeting and destruction of the Ukrainian military industrial complex suggested that Moscow had abandoned its aspirations for regime change and shifted to more realistic objectives centering on the Donbas and along the Black Sea.
While events in the past week further revealed the limits of Russian ambitions, it also may have exposed Putin’s bottom line. Due to the vulnerability of the Kerch Strait Bridge and Russia’s Black Sea fleet, the Russian dictator is unlikely to accept a peace agreement that does not secure a land bridge to Crimea and water supplies for the peninsula. While many Russia hands consistently dismissed a land bridge as one of Putin’s war aims, events from the past week suggest it may be one of Moscow’s critical objectives.
Crimea is central to Putin’s domestic political legitimation narrative, and he also he likely understands that Russia may not be able to resupply the peninsula via the status quo ante should military tensions with Ukraine erupt over the medium-term. As Ukrainian military and special operations capabilities improve, the 19 kilometer-long Russia-to-Crimea Kerch Strait Bridge will become more vulnerable to destruction and sabotage. Perhaps even more importantly, the Russian navy is already struggling to achieve its missions in the Black Sea; it may not be able to resupply Crimea or even operate safely in the Black Sea in a much more contested maritime environment.
Ukrainian forces sunk a Russian Alligator-class Landing Ship Tank (LST) warship at the Berdyansk dock and damaged two other amphibious vessels on Friday. These losses will markedly reduce the effectiveness of Russia’s Black Sea fleet, which, according to USNI, comprises only 22 warships. It is also not clear if Russian naval shipyards will be able to effectively repair the damaged vessels: the Admiral Kuznetsov has a checkered maintenance history and caught on fire in December 2019 while undergoing repairs at the Murmansk shipyard, while an under-construction corvette caught fire at a St. Petersburg shipyard in December 2021. The Russian navy is struggling to operate in the Black Sea despite facing only limited A2/AD challenges.
The Russia Navy’s A2/AD challenges in the Black Sea will very likely persist and deepen. As the Ukrainians demonstrated this week, they can already hold Russia’s Black Sea ships at risk in ports. Ukraine may be on the verge of enhancing its ability to hold Russia’s naval assets at risk throughout the entire Black Sea, however, as the AFP reports that the US and its allies are considering supplying anti-ship missiles to Kyiv. While it will take, perhaps even years, for Ukraine to overcome technical and integration challenges and construct an operational A2/AD “kill chain” capability, Russian naval forces may soon be unable to conduct wartime operations in the Black Sea without exposing themselves to missile barrages.
The centrality of Crimea to Putin’s domestic political standing; Ukraine’s emerging A2/AD capabilities; the peninsula’s water challenges; and the growing vulnerability of status quo ante supply routes incentivize Putin to secure a land bridge to Crimea. A land bridge would not be a panacea for Putin’s regime: while more reliable and secure than a maritime route, it could still be interdicted in a military crisis involving Ukraine and would prove enormously expensive to administer in peacetime. Still, achieving a land bridge to Crimea may be Putin’s least-worst alternative, from his perspective; is very likely one of Moscow’s chief war objectives; and may leave Putin with an off-ramp.
Ukraine reported that Russia seeks to split the nation, with Moscow planning to absorb territories along the land corridor to Crimea through “referendums.” Ukraine’s head of military intelligence General Kyrylo Budanov reacted furiously, calling the proposal an attempt to create “North and South Korea in Ukraine.” He also predicted a “total Ukrainian guerilla” campaign against any occupation.
Budanov’s emotional response to a potential partition is understandable: Putin’s war of choice against Ukraine is indeed outrageous and infuriating. Practically speaking, however, Ukraine may need to align its objectives with realities. It’s perhaps not too soon for Kyiv to begin considering what terms are tolerable, and what new equilibrium it seeks to establish.
As The Report went to press:
China, Russia, and energy markets
There’s some limited evidence that China reacted to Russia’s closure of Kazakhstan-to-Europe CPC crude oil flows by pausing an investment in Russia’s petrochemical complex. On March 22nd, Moscow claimed that a maintenance issue involving a marine terminal on the Caspian Sea would reduce CPC flows by 1 million barrels per day (~1% of total world production) for 1.5 – 2 months.
The maintenance issue was almost certainly a pretext, as Moscow is attempting to squeeze (non-Russian) crude oil supplies in order to raise prices, support its own exports, and inflict pain on Western economies. Moscow’s sanctioning of Europe-bound Kazakh crude also indirectly raises prices for all consumers and complicates its relationship with China, which is the world’s largest oil importer.
Moscow’s push for higher oil prices may have led Beijing to signal its displeasure. On March 25th, three days after the CPC terminal closure, Sinopec announced it had suspended talks over a petrochemical and natural gas investment in Russia. While sources told Reuters that the pause was taken out of caution over sanctions, it’s also possible that Beijing instructed Sinopec to limit negotiations until Moscow helps ease oil prices.
French elections and the timing of a peace agreement
Barring substantive pressure from Beijing, Putin’s decision on the timing of any peace agreement will be largely driven by events in the military campaign and Russian domestic politics. Putin may also be seeking to influence the outcome in the French presidential campaign, however, and hoping to to maintain elevated oil prices (and, more importantly, consumer fuel prices) until after the first and second rounds of the French election conclude on April 10th and 24th, respectively.
While Putin’s invasion of Ukraine was largely motivated by domestic political goals, the French elections were always a possible secondary target. Putin may have timed the invasion, in part, to raise consumer fuel prices for French voters; complicate the electoral and governance prospects of pro-constitutional democracy candidates, such as President Emmanuel Macron and Les Republicans nominee Valérie Pécresse; and elevate pro-Kremlin candidates.
Putin may therefore seek to push out the oil market implications of a peace agreement beyond April 24th (gasoline prices lag changes to oil prices due to the cost of existing inventories). It remains to be seen, however, if he will be able to hold out that long amid growing domestic and international pressure to deescalate the conflict.
Table of Contents:
PRC Foreign Ministry
People’s Daily
China and Russia in Oil Markets; Economic Ties
Performance of the Russian Force Structures
A Serious Gaffe
Worth Your Time
1. PRC Foreign Ministry
Bloomberg: Russia says Foreign Minister Sergei Lavrov is coming to Beijing for a meeting to discuss Afghanistan on March 31. During that meeting, will there be an opportunity to discuss the situation in Ukraine? And will that be an opportunity for China to push for a ceasefire and protection of civilians in Ukraine?
Wang Wenbin: We are speeding up preparations for the third Foreign Ministers’ Meeting among the Neighboring Countries of Afghanistan. China will continue to leverage its strength as a neighbor of Afghanistan and contribute to its lasting peace and stability. More information about the meeting will be released in due course.
TASS: The latest deterioration in the Russia-Ukraine situation will affect China’s import of grains from Ukraine. Is China looking at this issue and trying to find new ways to ensure its food security? If Ukraine is unable to export grains including wheat, will China form new supply chains and start buying more grains from other countries such as Russia?
Wang Wenbin: Please turn to the competent authorities for an answer to this question. I would like to say that the situation in Ukraine has had and will continue to have an enormous impact on the global economy and trade, finance, energy, food and the industrial and supply chains, severely affecting the normal life of people in all countries and debilitating the already struggling world economy. The momentum of global economic recovery should not be dampened and people around the world should not be made to pay the price for geopolitical conflict and major power rivalry. China will continue to play a constructive role in easing the situation in Ukraine and stands ready to strengthen communication and cooperation with all parties to provide more positive energy for the steady, sound and sustainable development of the world economy.
2. People’s Daily
US is reestablishing a new Inquisition using Russia-Ukraine crisis as excuse – People’s Daily
Yet, to the disappointment of the US and its attendants, although they have been clamoring that countries should take sides, they cannot cover the fact that they are still the minority in the international community. The US wishes that the whole world will follow it to condemn and sanction Russia, but more than 100 countries are not involved in imposing sanctions against Russia.
The attitude of non-Western major powers, including India, Brazil, and South Africa share a similar attitude with China - hoping to facilitate dialogue for peace and quell the conflict as soon as possible. Why? Because everyone with a sober mind can see that extreme sanctions will not help solve the crisis. On the contrary, they will only add fuel to the fire.
Washington has been clamoring that only sanctions against Russia are "correct" moves. It is humiliating the judgment and political experience of the entire international community. If the crisis can be resolved by simply condemning or sanctioning Russia, it is believed the international community will surely have done it.
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By mobilizing the international community to "condemn" Russia and join the US sanctions team, Washington has no sincerity or idea of solving the Russia-Ukraine crisis. The "united front" it is advocating is only to satisfy US interests.
Now it wants to pressure China to "condemn" Russia to create a rift in China-Russia relations. If China resists the pressure and does not do it, the US will have an excuse to blame China. For the US, it would be ideal if China were to participate in sanctions against Russia which would result in the breakup of China-Russia relations, making the US easily break through. In other words, the US has dug a hole and imagines that China will have to jump into it.
Comment: No mention of the EU, and no direct criticism of Brussels or European powers (except for the UK).
China going own way on Ukraine issue: scholar – People’s Daily
While dealing with the Ukraine crisis, China will neither follow the West nor Russia, said Zheng Yongnian, a scholar with the Chinese University of Hong Kong (Shenzhen), in a recent interview with German weekly newspaper Die Zeit.
China is going its own way, said Zheng, director of the Advanced Institute of Global and Contemporary China Studies of the university. He noted that the Russia-Ukraine conflict is damaging the entire global economy and thus also China, and China definitely wants the conflict to end as soon as possible.
China needs a stable world order for its further modernization and is genuinely concerned about the conflict, but understands Russia's security concerns, Zheng said.
The North Atlantic Treaty Organization (NATO), a product of the Cold War, was created as a bulwark against the Soviet Union, Zheng said, adding that the U.S.-led military alliance continues to exist after the Soviet Union's disintegration, and that is the reason why Russia regards NATO's eastward expansion as a threat.
Why is the EU wary of cutting off Russian energy? – People’s Daily
The European Union is under mounting pressure from Washington to ban Russian energy imports as European leaders and U.S. President Joe Biden are set to meet and discuss deterrence measures against Russia at a summit here on Thursday.
However, member states of the bloc have not reached an agreement yet on whether a ban would be slapped on Russian energy in the EU.
"Europe's supply of energy for heating, mobility, electricity and industry currently cannot be secured in any other way," German Chancellor Olaf Scholz said at an EU leaders' summit in France earlier this month.
Comment: Note that the PD is trying to help Moscow, again, by searching for potential fissures in the Western alliance.
Commentary: EU needs stronger strategic autonomy for more secure future – People’s Daily
Prior to U.S. President Joe Biden's visit to Europe, a display of "unity," the European Union rolled out a "Strategic Compass" as a guide to strengthen the bloc's security and defense policy.
The plan of action, ratified on Monday, is widely seen as a move for the EU to cut dependence on Washington for defense, and realize strategic autonomy amid a deteriorating security environment, as a conflict has been flaring up between Ukraine and Russia.
"Today I think everybody is convinced that Europe is in danger," Josep Borrell, the EU's high representative for foreign affairs and security policy, addressed a recent press conference.
In fact, it is Washington that has dragged Europe into this dangerous quagmire.
The United States, in utter disregard of Russia's legitimate concerns, drove five waves of NATO expansion eastward all the way to Russia's doorstep, incessantly squeezed Russia's security space and challenged the country's strategic bottom line until a military conflict broke out between Russia and Ukraine. [Comment: Why did Eastern and Central European states choose to join NATO?]
Following the outbreak of the Russia-Ukraine conflict, Washington has rushed to fan the flames, pushing other Western countries to join it in providing Ukraine with money and weapons, and pound Russia with all-round and indiscriminate sanctions.
Analysts say that for Washington, the fallout of an escalating Russia-Ukraine conflict is well foreseeable, but nearly painless, because it does not bear the brunt.
Europe does. Now the pain has become increasingly acute -- soaring food and energy prices, mounting security concerns and a sudden influx of refugees, among others -- a heavy price to pay.
A weaker Europe also serves U.S. interest. In the wake of America's botched withdrawal from Afghanistan, many Western political pundits predicted that "the American era is ending."
The Russia-Ukraine conflict has offered the United States an opportunity to reinforce its dominant role in the European security order, and possibly revive the so-called "American Era."
And it seems that Washington's fear-mongering has worked. Some Europeans countries, despite having no strong will for Ukraine's NATO accession, have beefed up their national defense since the conflict, convinced that the Ukrainian crisis is a security crisis for Europe as a whole and NATO is what they can count on….
Perhaps the Europeans need to seriously rethink whether a wantonly expanding NATO is truly conducive to peace and stability in Europe in the long run. The newly approved "Strategic Compass" offers a clue that the EU is well aware of its need of stronger strategic autonomy, not weaker.
After all, Europe is Europe, not America. A failure to peacefully coexist with neighbouring Russia may spell ages of challenges and woes.
…
The time has come for European policymakers to sober up to the high-stake reality. They need to reposition the EU in terms of defense, and truly obtain strategic autonomy so that they can steer the bloc towards a more secure future.
From leading NATO's eastward expansion to hem in Russia's territorial space, to launching color revolutions; from imposing sanctions on "disobedient countries," to coercing other nations to pick sides… the US has acted like a "Cold War schemer," or an "vampire" who creates "enemies" and make fortunes from pyres of war. The Global Times is publishing a series of stories and cartoons to unveil how the US, in its superpower status, has been creating trouble in the world one crisis after another.
…
Russia once held high hopes for the West after the disintegration of the Soviet Union. Early Russian leaders, such as former Russian president Boris Yeltsin, believed that the West would embrace Russia after the country abandoned its previous ideology.
Russia seemed to have turned itself from "The Evil Red Empire" in the eyes of the West to a Western power on par with the US, the UK, France, Germany, Italy, Canada, and Japan, when it was invited to join the Group of Seven (G7) summit in 1991. And the G7 was expanded to the G8.
At that time, there was an illusion among Russians from the leadership to the general public that a happy, fairytale-like life was to soon follow. Russia still held on to these illusions about the West even after the latter was indifferent to its economic woes in the 1990s, people recalled.
Comment: While the level of Western economic assistance to Russia in the 1990s was admittedly woefully insufficient and disastrously shortsighted, what does the Global Times/PD think about compressing Poland’s “space to the extreme.” Or the Baltic states? Or, for that matter, any of the post-Communist states? According to Beijing’s regional narrative, only Russia has – or deserves – agency or legitimate security interests.
U.S. takes the front seat in smearing China over Ukraine. It's not helpful – People’s Daily
America's sanctions stick and bellicose rhetoric are only worsening the situation, narrowing the window for a possible clawback from escalation, and steering Ukraine and Russia away from the negotiating table.
To turn around the deteriorating situation and prevent further needless suffering, the US should use its leverage and work with other nations to bring Ukraine and Russia, among other stakeholders, back to the negotiating table, instead of incessantly throwing dirt on another country.
… [T]he US has decided instead to shift blame onto other parties, spreading blatant falsehoods and disinformation targeting China, while insinuating that China hasn't done enough to address the crisis.
And yet, such blame games won't do anything to help with the situation either.
Comment: Beijing is likely sincerely worried that the conflict will drag on for many more months, but it seems unwilling to take a more active role in negotiations. Also notice that this rhetoric aims to shift responsibility for ending the crisis over to Washington.
A major exporter of some of the world's most essential commodities as Russia is, massive U.S. economic sanctions would undoubtedly shock the trade in commodities, disrupt global supply chains and thus weigh heavily on the fragile post-pandemic recovery of the global economy.
Ira Kalish, the chief global economist at Deloitte Touche Tohmatsu Limited, said the sanctions "create a risk that trade in commodities could become disrupted, especially exports of oil and gas commodities to Europe."
"This risk is manifested in a sizable increase in the prices of key commodities, potentially leading to even higher global inflation and weaker global growth," said Kalish.
Comment: Is Beijing trying to use economic pressure against Washington and Brussels to resolve the conflict on terms favorable to itself and Moscow?
The Russian Defense Ministry spokesman reported on the 24th that Russian experts have found new evidence that the U.S. Department of Defense is directly involved in the development of biological weapons components in Ukraine.
Comment: The PRC continues to amplify the Kremlin’s disinformation around biological weapons.
Documentary on the successful evacuation of Chinese compatriots in Ukraine by the Ministry of Foreign Affairs
There are about 6,000 Chinese citizens in Ukraine, including personnel from Chinese-funded enterprises, overseas Chinese, individual practitioners and more than 2,700 international students, scattered all over Ukraine. [Comment: Are there 6,000 Chinese citizens remaining in Ukraine, or were there 6,000 at the start of the invasion? Not sure if this is a typo or not. Also, if Chinese civilians sustain casualties during Putin’s invasion, it’s extremely unlikely that Chinese state media will discuss it.]
在乌中国公民约有6000人，包括中资企业人员、华侨、个体从业人员以及2700多名留学生，分散在乌克兰各地。
…
In just a few days, more than 5,200 compatriots were safely evacuated to many neighboring countries. Except for one person who was shot and injured while driving, and has been treated without fear, all the others are safe, and the evacuation from the war has achieved "no deaths and no group injuries". Comment: [(“无死亡、无群伤”) I think the “no group injuries” implies that no one was injured while traveling in a convoy.]
As of March 22, 19 flights have brought back more than 4,400 Chinese citizens, and follow-up temporary flight arrangements are still progressing in an orderly manner. At the same time, relevant domestic departments and local governments acted quickly to overcome difficulties and do their best to ensure entry quarantine and isolation of compatriots entering the country, so that every returning compatriot can feel the warmth of home.
Comment: Remember from the early days of the conflict, when PRC diplomats told Chinese citizens to display the Chinese flag on their cars, likely in anticipation of a quick and easy Russian victory? That wasn’t mentioned in the PD.
3. China and Russia in Oil Markets; Economic Ties
Russia warns of sharp Caspian pipeline oil export drop after storm – Reuters [March 22nd]
Russian and Kazakhstan oil exports via the Caspian Pipeline Consortium (CPC) from the Black Sea may fall by up to 1 million barrels per day (bpd), or 1% of global oil production, due to storm-damaged berths, a Russian official said on Tuesday.
China deepens economic ties with Russia as Western sanctions bite – Joe Webster for Sup China
On Monday, Russia announced that damages to the marine terminal of the Kazakhstan-based Caspian Pipeline Consortium (CPC) would take up to two months to repair. The action is removing about 1 million barrels per day from the market. Russia almost certainly closed the terminal to constrict supply, and, unsurprisingly, oil prices jumped by about 5% on Tuesday.
CPC terminal repair may lead to export drop by 1 mln barrels of oil per day — Ministry – TASS
The repair of facilities at the marine terminal of the Caspian Pipeline Consortium near the Black Sea port of Novorossiysk may take 1.5-2 months and result in oil export drop by about 1 mln barrels per day, Russian Deputy Energy Minister Pavel Sorokin said, cited by the Ministry’s press service.
"If damages are confirmed - it will take about 1.5-2 months. This is a rather serious timeframe and we see the risk of about 1 mln barrels per day may go out. Certainly, we would like that the recovery takes place as soon as possible and consequences are closed out, because this affects Russian companies, this affects in particular on production of Russian companies in the region. Therefore, we will endeavor to rectify these potentially serious consequences," the official said.
Experts on at what point oil prices can trigger U.S. recession – People’s Daily
The United States could see a recession if rapidly rising oil prices hit a crucial tipping point, economists have warned.
Oil prices are surging worldwide, and the conflict in Ukraine has exacerbated numerous factors that have already caused record price hikes, according to experts.
Comment: China, the world’s largest crude importer, is more affected by oil price increases than the United States, although US GDP growth is lower and more likely to tip into recession due to higher crude prices. Note that the PD published this article two days after Moscow imposed its de facto embargo on Kazakh crude.
Exclusive: China's Sinopec pauses Russia projects, Beijing wary of sanctions – Reuters [March 25th]
China's state-run Sinopec Group has suspended talks for a major petrochemical investment and a gas marketing venture in Russia, sources told Reuters, heeding a government call for caution as sanctions mount over the invasion of Ukraine.
Comment: Noteworthy. Did Beijing pause the project on the 25th, or 3 days after Russia embargoed the CPC pipeline, to signal its displeasure to Moscow regarding the CPC incident or its implications? Potentially, but it’s also possible that the pause is chiefly related to other factors.
Oil exports via the Caspian Pipeline Consortium (CPC) pipeline will partially resume oil loadings from its Black Sea terminal on Thursday after successful inspection of the single port mooring (SPM-1), four sources familiar with the matter said.
Comment: Curious how long these repairs (or, perhaps more accurately, “repairs”) will take, and if the partial loadings were in response to Chinese pressure.
Production curbs at the so-called teapot plants that account for a fifth of China's crude oil imports will reduce purchases by the world's top oil importer. In a sign of less buying, Beijing has already urged state refiners to halt gasoline and diesel exports in April to ensure domestic supplies.
Kazakhstan's TCO oil venture cuts output due to Russian port work – Reuters
Kazakhstan's largest oil venture Tengizchevroil (TCO) is lowering output following unscheduled repair works at an export terminal at the Russian port of Novorossisk on the Black Sea coast, TCO operator Chevron (CVX.N) said on Friday.
Heilongjiang province says cooperation with neighbouring Russia should be accelerated to serve ‘China-Russia strategic coordination’
4. Performance of the Russian Force Structures
Inside Ukraine’s online defence: the battle against Moscow’s cyber attacks - FT
Kyiv was well prepared to counter early digital skirmishes but officials fear a bigger Russian offensive
Comment: Somewhat surprisingly, Ukraine’s energy and telecom companies have withstood the initial phases of Russian cyberattacks.
Exclusive: U.S. assesses up to 60% failure rate for some Russian missiles, officials say – Reuters
The United States assesses that Russia is suffering failure rates as high as 60% for some of the precision-guided missiles it is using to attack Ukraine, three U.S. officials with knowledge of the intelligence told Reuters.
300 people were killed in Russian airstrike on Mariupol theater, Ukrainian authorities say – CNN
The March 16 bombing of Mariupol's Drama Theater, where Ukrainian officials say up to 1,300 had sought refuge, was among the most brazen of Russia's attacks on civilians since its invasion began in late February…
Russia has denied its forces hit the theater, claiming instead that the Azov battalion, the Ukrainian army's main presence in Mariupol, blew it up.
Comment: Given the astonishingly poor accuracy of Russian weapons systems, and the woeful quality of Russian conventional military forces, it’s not clear if Russian forces committed these atrocities intentionally or merely incidentally.
5. A Serious Gaffe
'This Man Cannot Remain in Power,' Biden Says of Putin – VOA News
President Joe Biden aimed squarely at Vladimir Putin in an impassioned address in Warsaw directed at Ukrainians, Europeans and the global community, blaming the Russian president for the monthlong siege on Ukraine and saying, “for God’s sake, this man cannot remain in power.”
…
But just minutes later, Biden’s administration walked back some of his rhetoric, with a senior administration telling reporters: “The president’s point was that Putin cannot be allowed to exercise power over his neighbors or the region. He was not discussing Putin’s power in Russia, or regime change.”
The Dangers of Putin’s Paranoia - Dmitri Alperovitch for Foreign Affairs
The United States and its allies are in uncharted territory as they attempt to force Putin to back down. Further economic sanctions and even retaliatory cyber-strikes may be necessary if Russia launches cyberattacks against U.S. critical infrastructure, but Washington must not forget that a paranoid and increasingly isolated man rules Russia—one who has already made a series of costly miscalculations.
6. Worth Your Time
China Takes a Back Seat in International Diplomacy Over Ukraine – NYT
Uzbekistan calls for an end to aggression in Ukraine – Eurasianet
Uzbekistan has broken ranks among its Central Asian peers, who have pointedly refrained from adopting explicit positions on Russia’s war, by stating that it recognizes Ukraine’s territorial integrity and that it will not recognize the independence of the breakaway self-styled republics of Donetsk and Luhansk.
v/r,
Joe Webster
The China-Russia Report is an independent, nonpartisan newsletter covering political, economic, and security affairs within and between China and Russia. All articles, comments, op-eds, etc represent only the personal opinion of the author(s) and do not necessarily represent the position(s) of The China-Russia Report.