What has Happened:

• Earlier today, Russian President Vladimir Putin announced a partial mobilization of 300,000 additional Russian troops that could be deployed to fight in Ukraine.
• Putin used strong rhetoric framing the Ukraine conflict as the West’s attack on Russia and that the high-tech weaponry and support provided to Ukraine “crossed all lines” making Putin’s mobilization “necessary and urgent.”
• Putin threatened to utilize “various means of destruction (where) some components are more modern than those of the NATO countries” – alluding to Russia’s nuclear capabilities.
• Putin reiterated that his top priority is “liberating” Ukraine’s eastern Donbas region and voiced his support for the upcoming referendums that will likely result in occupied Ukrainian territory becoming part of Russia.
• This speech is timed to coincide with the UN General Assembly, which is meeting in NYC this week.

Why it Matters:

“This speech comes as no surprise – we saw this coming. Ukraine’s military gains are increasing western support. Putin’s military is on the defensive and losing ground while the nationalists in Russia are demanding mobilization. The Russian people are divided and the nationalists have a louder voice and are more loyal to Putin. He took the logical next step with a partial mobilization. The nuclear weapons continue to be a veiled card that he plays to deter further U.S. and European support. He’s not backing down and we can expect more economic warfare by Putin. Ukraine is not backing down either and the West will continue to provide support. I expect that this conflict will go on well into next year.” – General Robert Walsh

“Bob is spot on. There’s an “ends and means” disconnect. Zelensky has maximalist objectives to take back all Ukrainian territory seized by Russia to include the Donbas and Crimea. However, while the Biden administration claims that all weapons systems are on the table, the reality is that they are not (i.e., Abrams tanks and ATACMS) and those that are being supplied have restraints. The conflict will remain frozen.” – General Spider Marks

“I agree with Bob and Spider. I would add that the timing is intended to coincide with the UN meetings and other world discussions. It is also intended to send a signal to China that Russia is not backing down.  There is some uncollaborated information coming from places like Georgia that China is signaling their interest to Russia in expanding some of their territory as well. Some of this expansion “could” include territory where Russia has an interest. Lots of posturing at present and I concur that this conflict will likely extend well into 2023.” – General Mastin Robeson

“I concur with all so far. One thought: I suspect that Xi may have said to Putin something to the effect of “finish this so we can move forward.” The longer this goes on, the deeper the economic impact. China (in my view) is about economic power first and is supported or complemented by military power. Putin is losing the information war globally and at home. This impacts markets for China as well as Russia.” – General Frank Kearney

Thoughts from Peter Tchir – Academy’s Head of Macro Strategy

Putin’s Speech and Partial Mobilization

It is likely not a coincidence that Putin is moving into a new phase (referendums, highlighting that an attack on certain regions is an attack on Russia itself, increased mobilization, and nuclear threats) shortly after he met with Xi. One can only assume that China signed off (or even encouraged) this new posture.

For the short-term, this seems to fit with the perspective of Academy’s GIG (see recent SITREP) that the recent Ukrainian advance, while a tactical victory, doesn’t count as a full strategic victory.

For me, the speech increases the likelihood of some “outlier” events:

• It is probable that we could see China selling weapons to Russia over time. The views on this within the GIG remain mixed, but there is a compelling case for both sides to take this next step (more thoughts on this later in the week). That would make it even more difficult for the U.S. to “normalize” relations with China (which have been deteriorating of late).
• While the use of nuclear weapons remains extremely unlikely (and many members of the GIG seem to take that stance), we have “war gamed” what Russia could do with nuclear weapons. The scenario that seems most plausible to me (though still highly unlikely) is one where:
  • China has signed off in advance (again, the timing of the in-person meeting).
  • The targets are in sparsely populated and resource rich areas. Limiting casualties would make it easier to avoid escalation, while likely increasing the value of Russia’s natural resources and turning the nuclear threat from a “bluff” into “omg he actually did it.”
  • Immediate court martial of the General who “ordered” the strike as a way to de-escalate and pretend Putin wasn’t in control.
  • Our possible response, in this scenario, might be to demonstrate that we have the capability to take out a silo or even a Russian nuclear submarine.
  • This scenario seems to be one way Russia could “win” without triggering an overwhelming reaction from the U.S.

• One question that has come up is what if the Russian nuclear weapons are as unreliable as their traditional weapons? Launching a tactical nuke that failed to work would seriously impair Putin’s credibility and may change NATO’s calculus. This also seems unlikely, but it is a thought.

Bottom Line from a Macro Perspective:

1. Things are not “returning” to normal for Europe (and Germany in particular) any time soon. Russia has found new and “friendlier” buyers for their resources and will solidify those relationships at the expense of doing business with Europe going forward.
2. China. Not just about China and Russia, but the further dislocation of China from the U.S. and the West. Please re-read The Beijing Olympics as Cultural Bookends.