Tag: Business and competition

Zelenskyy digs in against calls to quit Bakhmut

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Doubts are growing about the wisdom of holding the shattered frontline city of Bakhmut against relentless Russian assaults, but Ukrainian President Volodymyr Zelenskyy is digging in and insists his top commanders are united in keeping up an attritional defense that has dragged on for months.
Fighting around Bakhmut in the eastern region of Donbas dramatically escalated late last year, with Zelenskyy slamming the Russians for hurling men — many of them convicts recruited by the Wagner mercenary group — forward to almost certain death in “meat waves.” Now the bloodiest battle of the war, Bakhmut offers a vision of conflict close to World War I, with flooded trenches and landscapes blasted by artillery fire.
In the past weeks, as Ukrainian forces have been almost encircled in a salient, lacking shells and facing spiking casualties, there has been increased speculation both in Ukraine and abroad that the time has come to pull back to another defensive line — a retrenchment that would not be widely seen as a massive military setback, although Russia would claim a symbolic victory.

In an address on Wednesday night, however, Zelenskyy explained he remained in favor of slogging it out in Bakhmut.
“There was a clear position of the entire general staff: Reinforce this sector and inflict maximum possible damage upon the occupier,” Zelenskyy said in a video address after meeting with Ukraine’s Commander-in-Chief Valeriy Zaluzhnyy and other senior generals to discuss a battle that’s prompting mounting anxiety among Ukraine’s allies and is drawing criticism from some Western military analysts.
“All members expressed a common position regarding the further holding and defense of the city,” Zelenskyy said.
This is the second time in as many weeks that Ukraine’s president has cited the backing of his top commanders. Ten days ago, Zelenskyy’s office issued a statement also emphasizing that Zaluzhnyy and Oleksandr Syrskyi, commander of Ukraine’s ground forces, agreed with his decision to hold fast at Bakhmut.
The long-running logic of the Ukrainian armed forces has been that Russia has suffered disproportionately high casualties, allowing Kyiv’s forces to grind down the invaders, ahead of a Ukrainian counter-offensive expected shortly, in the spring.
City of glass, brick and debris
Criticism has been growing among some in the Ukrainian ranks — and among Western allies — about continuing with the almost nine-month-long battle. The disquiet was muted at first and expressed behind the scenes, but is now spilling into the open.
On social media some Ukrainian soldiers have been expressing bitterness at their plight, although they say they will do their duty and hold on as ordered. “Bakhmut is a city of glass, bricks and debris, which crackle underfoot like the fates of people who fought here,” tweeted one.
A lieutenant on Facebook noted: “There is a catastrophic shortage of shells.” He said the Russians were well dug in and it was taking five to seven rounds to hit an enemy position. He complained of equipment challenges, saying “Improvements — improvements have already been promised, because everyone who has a mouth makes promises.” But he cautioned his remarks shouldn’t be taken as a plea for a retreat. “WE WILL FULFILL OUR DUTY UNTIL THE END, WHATEVER IT IS!” he concluded ruefully.
Iryna Rybakova, a press officer with Ukraine’s 93^rd brigade, also gave a flavor of the risks medics are facing in the town. “Those people who go back and forth to Bakhmut on business are taking an incredible risk. Everything is difficult,” she tweeted.
A Ukrainian serviceman gives food and water to a local elderly woman in the town of Bakhmut | Anatolii Stepanov/AFP via Getty Images
The key strategic question is whether Zelenskyy is being obdurate and whether the fight has become more a test of wills than a tactically necessary engagement that will bleed out Russian forces before Ukraine’s big counter-strike.
“Traveling around the front you hear a lot of grumblings where folks aren’t sure whether the reason they’re holding Bakhmut is because it’s politically important” as opposed to tactically significant, according to Michael Kofman, an American military analyst and director of the Russia Studies Program at the Center for Naval Analyses.
Kofman, who traveled to Bakhmut to observe the ferocious battle first-hand, said in the War on the Rocks podcast that while the battle paid dividends for the Ukrainians a few months ago, allowing it to maintain a high kill ratio, there are now diminishing returns from continuing to engage.
“Happening in the fight now is that the attrition exchange rate is favorable to Ukraine but it’s not nearly as favorable as it was before. The casualties on the Ukrainian side are rather significant and require a substantial amount of replacements on a regular basis,” he said.
The Ukrainians have acknowledged they have also been suffering significant casualties at Bakhmut, which Russia is coming ever closer to encircling. They claim, though, the Russians are losing seven soldiers for each Ukrainian life lost, while NATO military officials put the kill ratio at more like five to one. But Kofman and other military analysts are skeptical, saying both sides are now suffering roughly the same rate of casualties.
“I hope the Ukrainian command really, really, really knows what it’s doing in Bakhmut,” tweeted Illia Ponomarenko, the Kyiv Independent’s defense reporter.
Shifting position
Last week, Zelenskyy received support for his decision to remain engaged at Bakhmut from retired U.S. generals David Petraeus and Mark Hertling on the grounds that the battle was causing a much higher Russian casualty rate. “I think at this moment using Bakhmut to allow the Russians to impale themselves on it is the right course of action, given the extraordinary casualties that the Russians are taking,” retired general and former CIA director Petraeus told POLITICO.
But in the last couple of weeks the situation has shifted, said Rob Lee, a former U.S. Marine officer and now at the Foreign Policy Research Institute, and the kill ratio is no longer a valid reason to remain engaged. “Bakhmut is no longer a good place to attrit Russian forces,” he tweeted. Lee says Ukrainian casualties have risen since Russian forces, comprising Wagner mercenaries as well as crack Russian airborne troops, pushed into the north of the town at the end of February.
The Russians have been determined to record a victory at Bakhmut, which is just six miles southwest of the salt-mining town of Soledar, which was overrun two months ago after the Wagner Group sacrificed thousands of its untrained fighters there too.
U.S. Defense Secretary Lloyd Austin has hinted several times that he sees no tactical military reason to defend Bakhmut, saying the eastern Ukrainian town was of more symbolic than operational importance, and its fall wouldn’t mean Moscow had regained the initiative in the war.
Ukrainian generals have pushed back at such remarks, saying there’s a tactical reason to defend the town. Zaluzhnyy said on his Telegram channel: “It is key in the stability of the defense of the entire front.”
Volodymyr Zelensky and Sanna Marin attend a memorial service for Dmytro Kotsiubailo, a Ukrainian serviceman killed in Bakhmut | Sergei Supinsky/AFP via Getty Images
Midweek, the Washington Post reported that U.S. officials have been urging the Ukrainians since the end of January to withdraw from Bakhmut, fearing the depletion of their own troops could impact Kyiv’s planned spring offensive. Ukrainian officials say there’s no risk of an impact on the offensive as the troops scheduled to be deployed are not fighting at Bakhmut.
That’s prompted some Ukrainian troops to complain that Kyiv is sacrificing ill-trained reservists at Bakhmut, using them as expendable in much the same way the Russians have been doing with Wagner conscripts. A commander of the 46th brigade — with the call sign Kupol — told the newspaper that inexperienced draftees are being used to plug the losses. He has now been removed from his post, infuriating his soldiers, who have praised him.
Kofman worries that the Ukrainians are not playing to their military strengths at Bakhmut. Located in a punch bowl, the town is not easy to defend, he noted. “Ukraine is a dynamic military” and is good when it is able “to conduct a mobile defense.” He added: “Fixed entrenches, trying to concentrate units there, putting people one after another into positions that have been hit by artillery before doesn’t really play to a lot of Ukraine’s advantages.”
“They’ve mounted a tenacious defense. I don’t think the battle is nearly as favorable as it’s somewhat publicly portrayed but more importantly, I think they somewhat run the risk of encirclement there,” he added.

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( With inputs from : www.politico.eu )

March 15, 2023
EU nears deal to restock Ukraine’s diminishing ammo supplies

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BRUSSELS — The EU is finalizing a €2 billion deal to jointly restock Ukraine’s dwindling ammunition supplies while refilling countries’ stocks, according to documents obtained by POLITICO.
The plan has two major elements.
First, the EU will spend €1 billion to partially reimburse countries that can immediately donate ammunition from their own stockpiles. Secondly, countries will work together to jointly purchase €1 billion in new ammunition — the idea being that together they can negotiate bigger contracts at a lower price-per-shell.

EU ambassadors will discuss the proposal — prepared by the EU’s diplomatic wing, the European External Action Service — during a meeting on Wednesday.
The scheme — which POLITICO first reported on earlier this month — has come together rapidly in recent weeks in response to Ukraine’s pleas for more ammunition, specifically the 155-millimeter artillery shells it desperately needs to both hold territory and launch a spring counteroffensive.
And the figures, one of the documents notes, respond “to a specific request made by the Ukrainian minister of defense.”
The numbers are stark.
Estonia, which helped start the conversation in February about how the EU could jointly help fill a looming munitions shortage, has estimated that Russia is burning through 20,000-60,000 shells per day while Ukraine is trying to judiciously only use between 2,000 and 7,000.
Covering that figure will not come easy — or cheap.
Thus far, EU countries have only provided Ukraine with 350,000 155-millimeter shells in total, with the EU spending €450 million on partial reimbursements, said one EU official, speaking on the condition of anonymity to discuss the sensitive topic. But the official pegged the cost for each new shell at €4,000, meaning costs are growing.
To cover both the losses of countries dipping into their stockpiles and funding new ammunition buys, the EU is tapping the so-called European Peace Facility. The little-known fund sits outside of the EU’s normal budget, giving officials the flexibility to use it to cover weapons purchases — once a verboten concept within the EU, a self-proclaimed peace project.
Thus far, the facility has been used solely to partially reimburse countries for their weapons donations to Ukraine. Now, documents show countries are willing to funnel an additional €2 billion into the facility — €1 billion to cover some ammunition donations and €1 billion to support joint purchases of replacement shells.
Ukrainian artillerymen in the vicinity of Bakhmut, Donetsk | Ihor Tkachov/AFP via Getty Images
The documents foresee the European Defense Agency, an EU agency meant to better coordinate members’ security efforts, possibly playing a role in coordinating the joint procurement efforts. But individual countries could also help spearhead these negotiations, as long as the country is working with at least two other EU members and not creating competing bids for the shells that drive up prices.
The joint procurement plan covers not just EU countries but Norway as well — as POLITICO first reported — potentially opening the door to some of the money going to non-EU-based companies. Norway, however, which produces ammunition, is already relatively integrated into the EU market.
EU officials are now aiming to get a consensus agreement on the plan during a meeting on Monday of foreign and defense ministers, before getting final sign-off from the 27 EU leaders at a summit in Brussels.

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( With inputs from : www.politico.eu )

March 14, 2023
Biden rebuffs UK bid for closer cooperation on tech

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LONDON — Britain was rebuffed by the Biden administration after multiple requests to develop an advanced trade and technology dialogue similar to structures the U.S. set up with the European Union.
On visits to Washington as a Cabinet minister over the past two years, Liz Truss urged U.S. Commerce Secretary Gina Raimondo and senior Biden administration officials to intensify talks with the U.K. to build clean technology supply chains and boost collaboration on artificial intelligence (AI) and semiconductors.
After Truss became prime minister in fall 2022, the idea was floated again when Raimondo visited London last October, people familiar with the conversations told POLITICO. But fear of angering the U.S.’s European partners and the U.K.’s diminished status outside the EU post-Brexit have posed barriers to influencing Washington.

Businesses, lawmakers and experts worry the U.K. is being left on the sidelines.
“We tried many times,” said a former senior Downing Street official, of the British government’s efforts to set up a U.K. equivalent to the U.S.-E.U. Trade and Technology Council (TTC), noting Truss’ overtures began as trade chief in July 2021. They requested anonymity to speak on sensitive issues.
“We did speak to Gina Raimondo about that, saying ‘we think it would be a good opportunity,’” said the former official — not necessarily to join the EU-U.S. talks directly, “but to increase trilateral cooperation.”
Set up in June 2021, the TTC forum co-chaired by Raimondo, Secretary of State Antony Blinken and U.S. trade chief Katherine Tai gives their EU counterparts, Margrethe Vestager and Valdis Dombrovskis, a direct line to shape tech and trade policy.
The U.S. is pushing forward with export controls on advanced semiconductors to China; forging new secure tech supply chains away from Beijing; and spurring innovation through subsidies for cutting-edge green technology and microprocessors.
The TTC’s 10 working groups with the EU, Raimondo said in an interview late last year, “set the standards,” though Brussels has rebuffed Washington’s efforts to use the transatlantic body to go directly after Beijing.
But the U.K. “is missing the boat on not being completely engaged in that dialogue,” said a U.S.-based representative of a major business group. “There has been some discussion about the U.K. perhaps joining the TTC,” they confirmed, and “it was kind of mooted, at least in private” with Raimondo by the Truss administration on her visit to London last October.
The response from the U.S. had been ‘’let’s work with what we’ve got at the moment,’” said the former Downing Street official.
Even if the U.S. does want to talk, “they don’t want to irritate the Europeans,” the same former official added. Right now the U.K.’s conversations with the U.S. on these issues are “ad hoc” under the new Atlantic Charter Boris Johnson and Joe Biden signed around the G7 summit in 2021, they said, and “nothing institutional.”
Last October, Washington and London held the first meeting of the data and tech forum Johnson and Biden set up | Pool photo by Olivier Matthys/AFP via Getty Images
Securing British access to the U.S.-EU tech forum or an equivalent was also discussed when CBI chief Tony Danker was in Washington last July, said people familiar with conversations during his visit.
The U.K.’s science and tech secretary, Michelle Donelan, confirmed the British government had discussed establishing a more regular channel for tech and trade discussions with the U.S., both last October and more recently. “My officials have just been out [to the U.S.],” she told POLITICO. “They’ve had very productive conversations.”
A U.K. government spokesperson said: “The U.K. remains committed to working closely with the U.S. and EU to further our shared trade and technology objectives, through the EU-UK Trade and Cooperation Agreement, the U.S.-U.K. Future of Atlantic Trade dialogues, and the U.K.-U.S. technology partnership.
“We will continue to advance U.K. interests in trade and technology and explore further areas of cooperation with partners where it is mutually beneficial.”
Britain the rule-taker?
Last October, Washington and London held the first meeting of the data and tech forum Johnson and Biden set up. Senior officials hoped to get a deal securing the free flow of data between the U.S. and U.K. across the line and addressed similar issues as the TTC.
They couldn’t secure the data deal. The U.K. is expected to join a U.S.-led effort to expand data transfer rules baked into the Asia-Pacific Economic Cooperation trading agreement as soon as this year, according to a former and a current British official, who spoke on the condition of anonymity to discuss internal deliberations. The next formal meeting between the U.K. and U.S. is penciled in for January 2024.
Ongoing dialogue “is vital to secure an overarching agreement on U.K.-U.S. data flows, without which modern day business cannot function,” said William Bain, head of trade policy at the British Chambers of Commerce (BCC). “It would also provide an opportunity to set the ground rules around a host of other technological developments.”
In contrast, the U.S. and EU are always at work, with TTC officials in constant contact with the operation — though questions have been raised about how long-term the transatlantic cooperation is likely to prove, ahead of next year’s U.S. presidential election.
“Unless you have a structured system or setup, often overseen by ministers, you don’t really get the drive to actually get things done,” said the former Downing Street official.
Right now cooperation with the U.S. on tech issues is not as intense or structured as desired, the same former official said, and is “not really brought together” in one central forum.
Britain has yet to publish a formal semiconductor strategy | Thomas Coex/AFP via Getty Images
“This initiative [the TTC] between the world’s two regulatory powerhouses risks sidelining the U.K.,” warned lawmakers on the UK parliament’s foreign affairs committee in a report last October. Britain may become “a rule-taker rather than a rule-maker,” MPs noted, citing the government’s “ambiguous” position on technology standards. Britain has yet to publish a formal semiconductor strategy, and others on critical minerals — like those used in EV batteries — or AI are also missing.
Over the last two years, U.S. trade chief Tai has “spoken regularly to her three successive U.K. counterparts to identify and tackle shared economic and trade priorities,” said a spokesperson for the U.S. Trade Representative, adding “we intend to continue strengthening this partnership in the years to come.”
All eyes on Europe
For its part, the EU has to date shown little interest in closer cooperation with the U.K.
Three European Commission officials disregarded the likelihood of Britain joining the club, though one of those officials said that London may be asked to join — alongside other like-minded countries — for specific discussions related to ongoing export bans against Russia.
Even with last week’s breakthrough over the Northern Ireland protocol calming friction between London and Brussels, the U.K. was not a priority country for involvement in the TTC, added another of the EU officials.
“The U.K. was extremely keen to be part of a dialogue of some sort of equivalent of TTC,” said a senior business representative in London, who requested anonymity to speak about sensitive issues.
U.K. firms see “the Holy Grail” as Britain, the U.S. and EU working together on this, they said. “We’re very keen to see a triangular dialogue at some point.”
The U.K.’s haggling with the EU over the details of the Northern Ireland protocol governing trade in the region has posed “a political obstacle” to realizing that vision, they suggested.
Yet with a solution to the dispute announced in late February, the same business figure said, “there will be a more prominent push to work together with the U.K.”
TTC+
Some trade experts think the U.K. would increase its chances of accession to the TTC if it submitted a joint request with other nations.
But prior to that happening, “I think the EU-U.S. TTC will need to first deliver bilaterally,” said Sabina Ciofu, an international tech policy expert at the trade body techUK.
Representatives speak to the media following the Trade and Technology Council Meeting in Maryland | Saul Loeb/AFP via Getty Images
When there is momentum, Ciofu said, the U.K. should join forces with Japan, South Korea and other advanced economies to ask for a TTC+ that could include the G7 or other partners. At the last TTC meeting in December, U.S. and EU officials said they were open to such an expansion around specific topics that had global significance.
But not all trade experts think this is essential. Andy Burwell, director of international trade at the CBI, said he doesn’t “think it necessarily matters” whether the U.K. has a structured conversation with the U.S. like the TTC forum.
Off the back of a soon-to-be-published refresh of the Integrated Review — the U.K.’s national security and foreign policy strategy — Prime Minister Rishi Sunak should instead seize the opportunity, Burwell said, to pinpoint where Britain is “going to own, collaborate and have access to various aspects of the supply chains.”
The G7, Burwell said, “could be the right platform for having some of those conversations.”
Yet the “danger with the ad hoc approach with lots of different people is incoherence,” said the former Downing Street official quoted above.
Too many countries involved in setting the standards can, the former official said, “create difficulty in leveraging what you want — which is all of the countries agreeing together on a certain way forward … especially when you’re dealing with issues that relate to, for example, China.”
Mark Scott, Annabelle Dickson and Tom Bristow contributed reporting.

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( With inputs from : www.politico.eu )

March 2, 2023
Baltics and Poland push to make sanctioning oligarchs’ associates easier

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The Baltic states and Poland want to make it easier to sanction the family members and entourage of Russia’s richest men and women but are facing resistance from Hungary, several EU diplomats told POLITICO.
Under its current rules, the EU can freeze the assets and impose visa bans on “leading businesspersons operating in Russia.” Lithuania, Latvia, Estonia and Poland now want to expand this definition, according to their proposal seen by POLITICO, to include “their immediate family members, or other natural persons, benefitting from them.”
The EU has sanctioned more than 1,400 people in relation to Russia’s activities in Ukraine, many of who are Russian oligarchs. An additional 96 people could be added to the EU’s next sanctions package, draft documents seen by POLITICO indicate. Including oligarchs’ family members and other associates of oligarchs would make it possible to sanctions thousands more people without having to prove that they are directly involved in the war in Ukraine or acting in the economic interest of the Russian state.
This could, for example, apply to the ex-wife of Russian President Vladimir Putin, Lyudmila Ocheretnaya, whose daughters have been sanctioned but has not been herself, and other members of the oligarchs’ entourage.
While some countries had doubts, legal experts are on board, said one of the diplomats.
Yet, in a meeting on Tuesday, at which EU ambassadors discussed the bloc’s next round of sanctions, Hungary resisted such plans, the diplomats said. Budapest argued that this is not part of the 10th sanctions package, said one of the diplomats. Hungary has long been skeptical of including too many names on the list.
Hungary also pushed to strike four people out the already existing sanctions list, two of the diplomats said.
It was not immediately possible to learn the identity of the four individuals.

That request is igniting tensions, and will be likely subject to another heated debate during a meeting of EU ambassadors on Wednesday. During that meeting, they will not only discuss the new package of sanctions against Russia, but also the so-called rollover of the 1,400-plus names already on the list to keep them sanctioned.
That’s because the regime is subject to a six-month review, which has hitherto been more or less a formality. Now, Hungary is using this extension review as leverage by insisting that four specific people have to be struck from the EU’s existing sanctions list before it will agree to the rollover. If Hungary blocks the rollover and refuses to compromise, all 1,400 people would be de-listed, the two diplomats warned.
One of the diplomats didn’t hide his frustration: “It shows Hungary’s disregard for unity and European values that they are willing to risk this in the week where we commemorate one year since the Russian invasion,” he said.
And those aren’t the only measure that Hungary takes issue with. It also is chiefly against sanctioning personnel working in the nuclear sector.
But a Hungarian official poured water on this last point, saying that “the only open issue for Hungary is with the length of the rollover and not with the listings.”
On the oligarchs issue and the proposal of the Baltics and Poland, the same Hungarian official said that this is not part of the 10th package.
As all EU countries have to agree to the proposal, any country could veto the move even if all other 26 EU countries were in favor. Time is running out, with the EU wanting to adopt the 10th sanctions package before the one-year anniversary of Russia’s invasion of Ukraine on Friday.

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( With inputs from : www.politico.eu )

February 21, 2023
Western firms say they’re quitting Russia. Where’s the proof?

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BERLIN — In an earlier life as a reporter in Moscow, I once knocked on the door of an apartment listed as the home address of the boss of company that, our year-long investigation showed, was involved in an elaborate scheme to siphon billions of dollars out of Russia’s state railways through rigged tenders.
To my surprise, the man who opened the door wore only his underwear. He confirmed that his identity had been used to register the shell company. But he wasn’t a businessman; he was a chauffeur. The real owner, he told us, was his boss, one of the bankers we suspected of masterminding the scam. “Mr. Underpants,” as we called him, was amazed that it had taken so long for anyone to take an interest.
Mr. Underpants leapt immediately to mind when, nearly a decade on, I learned that a sulfurous academic dispute had erupted over whether foreign companies really are bailing out of Russia in response to President Vladimir Putin’s invasion of Ukraine and subsequent international sanctions.

Attempting to verify corporate activity in Russia — a land that would give the murkiest offshore haven a run for its money — struck me as a fool’s errand. Company operations are habitually hidden in clouds of lies, false paperwork and bureaucratic errors. What a company says it does in Russia can bear precious little resemblance to reality.
So, who are the rival university camps trying to determine whether there really is a corporate exodus from Russia?
In the green corner (under the olive banner of the University of St. Gallen in Switzerland) we have economist Simon Evenett and Niccolò Pisani of the IMD business school in Lausanne. On January 13, they released a working paper which found that less than 9 percent of Western companies (only 120 firms all told) had divested from Russia. Styling themselves as cutting through the hype of corporate self-congratulation, the Swiss-based duo said their “findings challenge the narrative that there is a vast exodus of Western firms leaving the market.”
Nearly 4,000 miles away in New Haven, Connecticut, the Swiss statement triggered uproar in Yale (the blue corner). Jeffrey A. Sonnenfeld, from the university’s school of management, took the St. Gallen/IMD findings as an affront to his team’s efforts. After all, the headline figure from a list compiled by Yale of corporate retreat from Russia is that 1,300 multinationals have either quit or are doing so. In a series of attacks, most of which can’t be repeated here, Sonnenfeld accused Evenett and Pisani of misrepresenting and fabricating data.
Responding, the deans of IMD and St. Gallen issued a statement on January 20 saying they were “appalled” at the way Sonnenfeld had called the rigor and veracity of their colleagues’ work into question. “We reject this unfounded and slanderous allegation in the strongest possible terms,” they wrote.
Sonnenfeld doubled down, saying the Swiss team was dangerously fueling “Putin’s false narrative” that companies had never left and Russia’s economy was resilient.
That led the Swiss universities again to protest against Sonnenfeld’s criticism and deny political bias, saying that Evenett and Pisani have “had to defend themselves against unsubstantiated attacks and intimidation attempts by Jeff Sonnenfeld following the publication of their recent study.”
How the hell did it all get so acrimonious?
Let’s go back a year.
The good fight
Within weeks of the February 24 invasion, Sonnenfeld was attracting fulsome coverage in the U.S. press over a campaign he had launched to urge big business to pull out of Russia. His team at Yale had, by mid-March, compiled a list of 300 firms saying they would leave that, the Washington Post reported, had gone “viral.”
Making the case for ethical business leadership has been Sonnenfeld’s stock in trade for over 40 years. To give his full job titles, he’s the Senior Associate Dean for Leadership Studies & Lester Crown Professor in the Practice of Management at the Yale School of Management, as well as founder and president of the Chief Executive Leadership Institute, a nonprofit focused on CEO leadership and corporate governance.
And, judging by his own comments, Sonnenfeld is convinced of the importance of his campaign in persuading international business leaders to leave Russia: “So many CEOs wanted to be seen as doing the right thing,” Sonnenfeld told the Post. “It was a rare unity of patriotic mission, personal values, genuine concern for world peace, and corporate self-interest.”
Fast forward to November, and Sonnenfeld is basking in the glow of being declared an enemy of the Russian state, having been added to a list of 25 U.S. policymakers and academics barred from the country. First Lady Jill Biden topped the list, but Sonnenfeld was named in sixth place which, as he told Bloomberg, put him “higher than [Senate minority leader] Mitch McConnell.”
Apparently less impressed, the Swiss team had by then drafted a first working paper, dated October 18, challenging Sonnenfeld’s claims of a “corporate exodus” from Russia. This paper, which was not published, was circulated by the authors for review. After receiving a copy (which was uploaded to a Yale server), Sonnenfeld went on the attack.
Apples and oranges
Before we dive in, let’s take a step back and look at what the Yale and Swiss teams are trying to do.
Sonnenfeld is working with the Kyiv School of Economics (KSE), which launched a collaborative effort to track whether companies are leaving Russia by monitoring open sources, such as regulatory filings and news reports, supported where possible through independent confirmation.
Kyiv keeps score on its Leave Russia site, which at the time of writing said that, of 3,096 companies reviewed, 196 had already exited and a further 1,163 had suspended operations.
Evenett and Pisani are setting a far higher bar, seeking an answer to the binary question of whether a company has actually ditched its equity. It’s not enough to announce you are suspending operations, you have to fully divest your subsidiary and assets such as factories or stores. This is, of course, tough. Can you find a buyer? Will the Russians block your sale?
The duo focuses only on companies based in the G7 or the European Union that own subsidiaries in Russia. Just doing business in Russia doesn’t count; control is necessary. To verify this, they used a business database called ORBIS, which contains records of 400 million companies worldwide.
The first thought to hold onto here, then, is that the scope and methodology of the Yale and Swiss projects are quite different — arguably they are talking about apples and oranges. Yale’s apple cart comprises foreign companies doing business in Russia, regardless of whether they have a subsidiary there. The Swiss orange tree is made up of fewer than half as many foreign companies that own Russian subsidiaries, and are themselves headquartered in countries that have imposed sanctions against the Kremlin.
So, while IKEA gets an ‘A’ grade on the Yale list for shutting its furniture stores and letting 10,000 Russian staff go, it hasn’t made the clean equity break needed to get on the St. Gallen/IMD leavers’ list. The company says “the process of scaling down the business is ongoing.” If you simply have to have those self-assembly bookshelves, they and other IKEA furnishings are available online.
The second thing to keep in mind is that ORBIS aggregates records in Russia, a country where people are willing to serve as nominee directors in return for a cash handout — even a bottle of vodka. Names are often mistranslated when local companies are established — transliteration from Russian to English is very much a matter of opinion — but this can also be a deliberate ruse to throw due diligence sleuths off the trail.
Which takes us back to the top of this story: I’ve done in-depth Russian corporate investigations and still have the indelible memory of those underpants (they were navy blue briefs) to show for it.
Stacking up the evidence
The most obvious issue with the Yale method is that it places a lot of emphasis on what foreign companies say about whether they are pulling out of Russia.
There is an important moral suasion element at play here. Yale’s list is an effective way to name and shame those companies like Unilever and Mondelez — all that Milka chocolate — that admit they are staying in Russia.
But what the supposed good kids — who say they are pulling out — are really up to is a murkier business. Even if a company is an A-grade performer on the Yale list, that does not mean that Russia’s economy is starved of those goods during wartime. There can be many reasons for this. Some companies will rush out a pledge to leave, then dawdle. Others will redirect goods to Russia through middlemen in, say, Turkey, Dubai or China. Some goods will be illegally smuggled. Some companies will have stocks that last a long time. Others might hire my old friend Mr. Underpants to create an invisible corporate structure.
A stroll through downtown Moscow reveals the challenges. Many luxury brands have conspicuously shut up shop but goods from several companies on the Yale A list and B list (companies that have suspended activities in Russia) were still easy to find on one, totally random, shopping trip. The latest Samsung laptops, TVs and phones were readily available, and the shop reported no supply problems. Swatch watches, Jägermeister liquor and Dr. Oetker foods were all also on sale in downtown Moscow, including at the historic GUM emporium across Red Square from the Kremlin.
Swatch watches, Jägermeister liquor and Dr. Oetker foods can all be bought in downtown Moscow, including at the historic GUM emporium across Red Square from the Kremlin | POLITICO
All the companies involved insisted they had ended business in Russia, but acknowledged the difficulties of continued sales. Swatch said the watches available would have to be from old stocks or “a retailer over which the company has no control.” Dr. Oetker said: “To what extent individual trading companies are still selling stocks of our products there is beyond our knowledge.” Jägermeister said: “Unfortunately we cannot prevent our products being purchased by third parties and sold on in Russia without our consent or permission.” Samsung Electronics said it had suspended Russia sales but continued “to actively monitor this complex situation to determine our next steps.”
The larger problem emerging is that sanctions are turning neighboring countries into “trading hubs” that allow key foreign goods to continue to reach the Russian market, cushioning the economic impact.
Full departure can also be ultra slow for Yale’s A-listers. Heineken announced in March 2022 it was leaving Russia but it is still running while it is “working hard to transfer our business to a viable buyer in very challenging circumstances.” It was also easy to find a Black & Decker power drill for sale online from a Russian site. The U.S. company said: “We plan to cease commerce by the end of Q2 of this year following the liquidation of our excess and obsolete inventory in Russia. We will maintain a legal entity to conduct any remaining administrative activities associated with the wind down.”
And those are just consumer goods that are easy to find! Western and Ukrainian security services are naturally more preoccupied about engineering components for Putin’s war machine still being available through tight-lipped foreign companies. Good luck trying to track their continued sales …
Who’s for real?
Faced with this gray zone, St. Gallen/IMD sought to draw up a more black-and-white methodology.
To reach their conclusions, Evenett and Pisani downloaded a list of 36,000 Russian companies from ORBIS that reported at least $1 million in sales in one of the last five years. Filtering out locally owned businesses and duplicate entries whittled down the number of owners of the Russian companies that are themselves headquartered in the G7 or EU to a master list of 1,404 entities. As of the end of November, the authors conclude, 120 companies — or 8.5 percent of the total — had left.
The Swiss team was slow, however, to release its list of 1,404 companies and, once Sonnenfeld gained access to it, he had a field day. He immediately pointed out that it was peppered with names of Russian businesses and businessmen, whom ORBIS identified as being formally domiciled in an EU or G7 country. Sonnenfeld fulminated that St. Gallen/IMD were producing a list of how few Russian companies were quitting Russia, rather than how few Western companies were doing so.
“That hundreds of Russian oligarchs and Russian companies constitute THEIR dataset of ‘1,404 western companies’ is egregious data misrepresentation,” Sonnenfeld wrote in one of several emails to POLITICO challenging the Swiss findings.
Fair criticism? Well, Sonnenfeld’s example of Yandex, the Russian Google, on the list of 1,404 is a good one. Naturally, that’s a big Russian company that isn’t going to leave Russia.
On the other hand, its presence on the list is explicable as it is based in the Netherlands, and is reported to be seeking Putin’s approval to sell its Russian units. “Of course, a large share of Yandex customers and staff are Russian or based in Russia. However, the company has offices in seven countries, including Switzerland, Israel, the U.S., China, and others. What criteria should we use to decide if it is Russian or not for the purpose of our analysis?” St. Gallen/IMD said in a statement.
Answering Sonnenfeld’s specific criticism that its list was skewed by the inclusion of Russian-owned companies, the Swiss team noted that it had modified its criteria to exclude companies based in Cyprus, a favored location for Russian entrepreneurs thanks to its status as an EU member country and its business-friendly tax and legal environment. Yet even after doing so, its conclusions remained similar.
Double knockout
Sonnenfeld, in his campaign to discredit the Swiss findings, has demanded that media, including POLITICO, retract their coverage of Evenett and Pisani’s work. He took to Fortune magazine to call their publication “a fake pro-Putin list of Western companies still doing business in Russia.”
Although he believes Evenett and Pisani’s “less than 9 percent” figure for corporates divesting equity is not credible, he bluntly declined, when asked, to provide a figure of his own.
Instead, he has concentrated on marshaling an old boys’ network — including the odd ex-ambassador — to bolster his cause. Richard Edelman, head of the eponymous public relations outfit, weighed in with an email to POLITICO: “This is pretty bad[.] Obvious Russian disinformation[.] Would you consider a retraction?” he wrote in punctuation-free English. “I know Sonnenfeld well,” he said, adding the two had been classmates in college and business school.
Who you were at school with hardly gets to the heart of what companies are doing in Russia, and what the net effect is on the Russian economy.
The greater pity is that this clash, which falls miles short of the most basic standards of civil academic discourse, does a disservice to the just cause of pressuring big business into dissociating itself from Putin’s murderous regime.
And, at the end of the day, estimates of the number of companies that have fully left Russia are in the same ballpark: The Kyiv School of Economics puts it at less than 200; the Swiss team at 120.
To a neutral outsider, it would look like Sonnenfeld and his mortal enemies are actually pulling in the same direction, trying to work out whether companies are really quitting. Yet both methodologies are problematic. What companies and databases say offers an imprecise answer to the strategic question: What foreign goods and services are available to Russians? Does a year of war mean no Samsung phones? No. Does it mean Heineken has sold out? Not yet, no.
This has now been submerged in a battle royal between Sonnenfeld and the Swiss researchers.
Appalled at his attacks on their work, St. Gallen and IMD finally sent a cease-and-desist letter to Sonnenfeld.
Yale Provost Scott Strobel is trying to calm the waters. In a letter dated February 6 and seen by POLITICO, he argued that academic freedom protected the speech of its faculty members. “The advancement of knowledge is best served when scholars engage in an open and robust dialogue as they seek accurate data and its best interpretation,” Strobel wrote. “This dialogue should be carried out in a respectful manner that is free from ad hominem attacks.”
With reporting by Sarah Anne Aarup, Nicolas Camut, Wilhelmine Preussen and Charlie Duxbury.
Douglas Busvine is Trade and Agriculture Editor at POLITICO Europe. He was posted with Reuters to Moscow from 2004-08 and from 2011-14.

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February 21, 2023
Joe Biden: EU conservative hero

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Joe Biden’s European friends may be miffed about his climate law.
But the U.S. president’s America-first, subsidy-heavy approach has actually gained some grudging — and for a Democrat unlikely — admirers on the Continent: Europe’s conservatives.
Within the center-right European People’s Party, the largest alliance of parties in the European Parliament, officials are smarting over why their own politicians aren’t taking a page from the Biden playbook.

Their frustration is homing in on European Commission President Ursula von der Leyen — a putative conservative the EPP itself helped install. Officials fear they have let von der Leyen lead the party away from its pro-industry, regulation-slashing ideals, according to interviews with leading party figures.
Biden’s law has now brought their grumbling to the surface.
On Thursday, a wing of EPP lawmakers defected during a Parliament vote over whether to back von der Leyen’s planned response to Biden’s marquee green spending bill, the Inflation Reduction Act (IRA). Their concern: it doesn’t go far enough in championing European industries.
Essentially, they want it to feel more like Biden’s plan.
The IRA was an “embarrassment” for Europe, said Thanasis Bakolas, the EPP’s power broker and secretary general. The EU “had all these well-funded policies available. And then comes Biden with his IRA. And he introduces policies that are more efficient, more effective, more accessible to businesses and consumers.”
A bitter inspiration
European leaders were blindsided last summer when Biden signed the IRA into law.
Since then, they have complained loudly that the U.S. subsidies for homegrown clean tech are a threat to their own industries. But for the EPP, ostensibly on the opposite side to Biden’s Democrats, the law is also serving as bitter inspiration.
“It’s a little bit like in the fairy tale, that someone in the crowd — and this time it wasn’t the boy, it was the Americans — pretty much pointing the finger to the [European] Commission, and saying, ‘Oh, the king is naked?’” said Christian Ehler, a German European Parliament member from the EPP.
Viewed from bureaucratic, free-trading Brussels, Biden’s climate policy looks more sleek, geopolitically muscular — and, notably for the EPP, more appealing to voters on the right than anything actually coming out of the EPP-led Commission | Oliver Contreras/Getty Images
Under the EU’s centerpiece climate policy, the European Green Deal, the European Commission, the EU’s policy-making executive arm, has doggedly introduced law after law aimed at squeezing polluters from every angle using tighter regulations or carbon pricing. The goal is to zero out the bloc’s net greenhouse gas emissions by 2050.
Biden’s IRA approaches the same goal by different means. It is laden with voter- and industry-friendly tax breaks and made-in-America requirements. Viewed from bureaucratic, free-trading Brussels, Biden’s climate policy looks more sleek, geopolitically muscular — and, notably for the EPP, more appealing to voters on the right than anything actually coming out of the EPP-led Commission.
For some, the sense of betrayal isn’t directed at Washington, but inward.
“We learned that we lost track for the last two years on the deal part of the Green Deal,” said Ehler, who is using his seat on Parliament’s powerful Committee on Industry, Research and Energy to push for fewer climate burdens on industry. “We are in the midst of the super regulation.”
The irony is that Biden and the Democrats probably wouldn’t have chosen this path were it not for Republicans’ decades-long refusal to move any form of climate regulation through Congress.
The IRA was a product of political necessity, shaped to suit independent-minded Democratic senators such as Joe Manchin of coal-heavy West Virginia. If Biden and his party had their druthers, Biden’s climate policy might have looked far more like the Brussels model.
Let’s get political
As party boss, Bakolas is preparing the platform on which the EPP — a pan-European umbrella group of 81 center-right parties — will campaign for the 2024 EU elections.
He is also flirting with an alliance with the far right, meaning the center-right and center-left consensus that has dominated climate policy in Brussels could break up. Bakolas advocates “a more political approach.”
“We need to do the same [as the U.S.], with the same tenacity and determination,” he said.
One big problem: It’s hard for the European Union, which doesn’t control tax policy, to match the political eye-candy of offering cashback for electric Hummers (something Americans can now claim on their taxes).
“Can Europe, this institutional arrangement in Brussels … act as effortlessly and seamlessly as the American administration? No, because it’s a difficult exercise for Europe to reach a decision … but it’s an exercise we need to do,” said Bakolas.
Within the center-right European People’s Party, the largest alliance of parties in the European Parliament, officials are smarting over why their own politicians aren’t taking a page from the Biden playbook | Kenzo Tribouillard/AFP via Getty Images
In other words, the EPP is looking to emulate Biden’s law — at least in spirit, if not in legalese.
The conservative thinking is beginning to coalesce into a few main themes: slowing down green regulation they feel burden industry; using sector-specific programs to help companies reinvest their profits into cleaning up their businesses; and slashing red tape they say slows already clean industries from getting on with the job.
EPP lawmaker Peter Liese said he had been “desperately calling” for these red-tape-slashing measures. He was glad to see some in von der Leyen’s contested IRA response plan. But Liese and the EPP want more.
“We can have an answer of the two crises, the two challenges, that we have: the climate crisis and challenge for our economy, including the IRA,” said Liese.
Green groups and left-wing lawmakers argue the EPP is simply using the IRA and Europe’s broader economic woes as a smokescreen to cover a broad retreat from the Green Deal. In recent months the party has blocked, or threatened to block, a host of green regulations proposed by the Commission.
“This is like trying to put on the ballroom shoes of your grandfather and trying to do a 100-meter sprint,” Green MEP Anna Cavazzini told Parliament on Wednesday.
Bakolas rejected that.
He said the party had finally woken up to the need to set a climate agenda that better reflected its own, center-right, free-market ideals.
“What the IRA did,” he said, “is to ring an alarm bell.”

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( With inputs from : www.politico.eu )

February 16, 2023
China talks ‘peace,’ woos Europe and trashes Biden in Munich

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MUNICH — China is trying to drive a fresh wedge between Europe and the United States as Russia’s invasion of Ukraine trudges past its one-year mark.
Such was the motif of China’s newly promoted foreign policy chief Wang Yi when he broke the news at the Munich Security Conference on Saturday that President Xi Jinping would soon present a “peace proposal” to resolve what Beijing calls a conflict — not a war — between Moscow and Kyiv. And he pointedly urged his European audience to get on board and shun the Americans.
In a major speech, Wang appealed specifically to the European leaders gathered in the room.

“We need to think calmly, especially our friends in Europe, about what efforts should be made to stop the warfare; what framework should there be to bring lasting peace to Europe; what role should Europe play to manifest its strategic autonomy,” said Wang, who will continue his Europe tour with a stop in Moscow.
In contrast, Wang launched a vociferous attack on “weak” Washington’s “near-hysterical” reaction to Chinese balloons over U.S. airspace, portraying the country as warmongering.
“Some forces might not want to see peace talks to materialize,” he said, widely interpreted as a reference to the U.S. “They don’t care about the life and death of Ukrainians, [nor] the harms on Europe. They might have strategic goals larger than Ukraine itself. This warfare must not continue.”
Yet at the conference, Europe showed no signs of distancing itself from the U.S. nor pulling back on military support for Ukraine. The once-hesitant German Chancellor Olaf Scholz urged Europe to give Ukraine even more modern tanks. And French President Emmanuel Macron shot down the idea of immediate peace talks with the Kremlin.
And, predictably, there was widespread skepticism that China’s idea of “peace” will match that of Europe.
“China has not been able to condemn the invasion,” NATO Secretary-General Jens Stoltenberg told a group of reporters. Beijing’s peace plan, he added, “is quite vague.” Peace, the NATO chief emphasized, is only possible if Russia respects Ukraine’s sovereignty.
Europe watches with caution
Wang’s overtures illustrate the delicate dance China has been trying to pull off since the war began.
Keen to ensure Russia is not weakened in the long run, Beijing has offered Vladimir Putin much-needed diplomatic support, while steering clear of any direct military assistance that would attract Western sanctions against its economic and trade relations with the world.
Ukrainian Foreign Minister Dmitro Kuleba is expected to hold a bilateral meeting with Wang while in Munich | Johannes Simon/Getty Images
“We will put forward China’s position on the political settlement on the Ukraine crisis, and stay firm on the side of peace and dialogue,” Wang said. “We do not add fuel to the fire, and we are against reaping benefit from this crisis.”
According to Italy’s Foreign Minister Antonio Tajani, who met Wang earlier this week, Xi will make his “peace proposal” on the first anniversary of the war, which is Friday.
Ukrainian Foreign Minister Dmitro Kuleba is expected to hold a bilateral meeting with Wang while in Munich. He said he hoped to have a “frank” conversation with the Beijing envoy.
“We believe that compliance with the principle of territorial integrity is China’s fundamental interest in the international arena,” Kuleba told journalists in Munich. “And that commitment to the observance and protection of this principle is a driving force for China, greater than other arguments offered by Ukraine, the United States, or any other country.”
EU foreign policy chief Josep Borrell is also expected to meet Wang later on Saturday.
Many in Munich were wary of the upcoming Chinese plan.
German Foreign Minister Annalena Baerbock welcomed China’s effort to use its influence to foster peace but told reporters she had “talked intensively” with Wang during a bilateral meeting on Friday about “what a just peace means: not rewarding the attacker, the aggressor, but standing up for international law and for those who have been attacked.”
“A just peace,” she added, “presupposes that the party that has violated territorial integrity — meaning Russia — withdraws its troops from the occupied country.”
One reason for Europe’s concerns is the Chinese peace plan could undermine an effort at the United Nations to rally support for a resolution condemning Russia’s invasion of Ukraine, which will be on the U.N.’s General Assembly agenda next week, according to three European officials and diplomats.
Taiwan issue stokes up US-China tension
If China was keen to talk about peace in Ukraine, it’s more reluctant to do so in a case closer to home.
When Wolfgang Ischinger, the veteran German diplomat behind the conference, asked Wang if he could reassure the audience Beijing was not planning an imminent military escalation against Taiwan, the Chinese envoy was non-committal.
Nato Secretary-General Jens Stoltenberg said “what is happening in Europe today could happen in east Asia tomorrow” | Johannes Simon/Getty Images
“Let me assure the audience that Taiwan is part of Chinese territory. It has never been a country and it will never be a country in the future,” Wang said.
The worry over Taiwan resonated in a speech from NATO Secretary-General Jens Stoltenberg, who said “what is happening in Europe today could happen in east Asia tomorrow.” Reminding the audience of the painful experience of relying on Russia’s energy supply, he said: “We should not make the same mistakes with China and other authoritarian regimes.”
But China’s most forceful attack was reserved for the U.S. Calling its decision to shoot down Chinese and other balloons “absurd” and “near-hysterical,” Wang said: “It does not show the U.S. is strong; on the contrary, it shows it is weak.
Wang also amplified the message in other bilateral meetings, including one with Pakistani Foreign Minister Bilawal Bhutto Zardari. “U.S. bias and ignorance against China has reached a ridiculous level,” he said. “The U.S. … has to stop this kind of absurd nonsense out of domestic political needs.”
It remains unclear if Wang will hold a meeting with U.S. Secretary of State Antony Blinken while in Germany, as has been discussed.
Hans von der Burchard and Lili Bayer reported from Munich, and Stuart Lau reported from Brussels.

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( With inputs from : www.politico.eu )

February 16, 2023
Putin is staring at defeat in his gas war with Europe

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There’s more bad news for Vladimir Putin. Europe is on course to get through winter with its vital gas storage facilities more than half full, according to a new European Commission assessment seen by POLITICO.
That means despite the Russian leader’s efforts to make Europe freeze by cutting its gas supply, EU economies will survive the coldest months without serious harm — and they look set to start next winter in a strong position to do the same.
A few months ago, there were fears of energy shortages this winter caused by disruptions to Russian pipeline supplies.

But a combination of mild weather, increased imports of liquefied natural gas (LNG), and a big drop in gas consumption mean that more than 50 billion cubic meters (bcm) of gas is projected to remain in storage by the end of March, according to the Commission analysis.
A senior European Commission official attributed Europe’s success in securing its gas supply to a combination of planning and luck.
“A good part of the success is due to unusually mild weather conditions and to China being out of the market [due to COVID restrictions],” the official said. “But demand reduction, storage policy and infrastructure work helped significantly.”
Ending the winter heating season with such healthy reserves — above 50 percent of the EU’s roughly 100bcm total storage capacity — removes any lingering fears of a gas shortage in the short term. It also eases concerns about Europe’s energy security going into next winter.
The positive figures underlie the more optimistic outlook presented by EU leaders in recent days, with Energy Commissioner Kadri Simson saying on Tuesday that Europe had “won the first battle” of the “energy war” with Russia.
EU storage facilities — also vital for winter gas supply in the U.K., where storage options are limited — ended last winter only around 20 percent full. Brussels mandated that they be replenished to 80 percent ahead of this winter, requiring a hugely expensive flurry of LNG purchases by European buyers, to replace volumes of gas lost from Russian pipelines.
The wholesale price of gas rose to record levels during storage filling season — peaking at more than €335 per megawatt hour in August — with dire knock-on effects for household bills, businesses’ energy costs and Europe’s industrial competitiveness.
Gas prices have since fallen to just above €50/Mwh amid easing concerns over supplies. The EU has a new target to fill 90 percent of gas storage again by November 2023 — an effort that will now require less buying of LNG on the international market than it might have done had reserves been more seriously depleted.
“The expected high level of storages at above 50 percent [at] the end of this winter season will be a strong starting point for 2023/24 with less than 40 percent to be filled (against the difficult starting point of around 20 percent in storage at the end of winter season in 2022,” the Commission assessment says.
Analysts at the Independent Commodity Intelligence Services think tank said this week that refilling storages this year could still be “as tough a challenge as last year” but predicted that the EU now had “more than enough import capacity to meet the challenge.”
Across the EU, five new floating LNG terminals have been set up — in the Netherlands, Greece, Finland and two in Germany — providing an extra 30bcm of gas import capacity, with more due to come online this year and next.
However, the EU’s ability to refill storages to the new 90 percent target ahead of next winter will likely depend on continued reduction in gas consumption.
Brussels set member states a voluntary target of cutting gas demand by 15 percent from August last year. Gas demand actually fell by more than 20 percent between August and December, according to the latest Commission data, partly thanks to efficiency measures but also the consequence of consumers responding to much higher prices by using less energy.
The 15 percent target may need to be extended beyond its expiry date of March 31 to avoid gas demand rebounding as prices fall. EU energy ministers are set to discuss the issue at two forthcoming meetings in February and March.

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February 16, 2023
West struggles to deliver on Zelenskyy’s defense wish list

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BRUSSELS — With Ukraine’s partners racing to send more weapons to Kyiv amid an emerging Russian offensive, fulfilling Ukrainian requests is becoming trickier.
Ukraine is still waiting for promised deliveries of modern tanks. Combat jets, though much discussed, are mired in the throes of government hesitation.
On top of that, Kyiv is using thousands of rounds of ammunition per day — and Western production simply can’t keep up.

As members of the U.S.-led Ukraine Defense Contact Group gather in Brussels on Tuesday to coordinate arms assistance to Ukraine, they face pressure to expedite delivery and provide even more advanced capabilities to Ukrainian forces.
“We have received good signals,” Ukraine’s President Volodymyr Zelenskyy said in a video address following visits to London, Paris and Brussels.
“This applies both to long-range missiles and tanks, and to the next level of our cooperation — combat aircraft,” he said, however adding, “We still need to work on this.”
And while most of Ukraine’s partners are committed to responding to Zelenskyy’s stump tour with expanded support as the conflict threatens to escalate, Western governments will have to overcome political and practical hurdles.
“It is clear that we are in a race of logistics,” NATO Secretary-General Jens Stoltenberg told reporters on Monday. “Key capabilities like ammunition, fuel, and spare parts must reach Ukraine before Russia can seize the initiative on the battlefield.”
Existing and future supply of weapons to Ukraine will both be on the table when the defense group — made up of about 50 countries and popularly known at the Ramstein format — meets at NATO headquarters.
NATO allies will also hold a meeting of defense ministers directly afterward to hear the latest assessment from Ukrainian counterparts and discuss the alliance’s future defense challenges.
Ukrainian officials will use the session, which would typically be held at the U.S. base in Ramstein, Germany, to share their latest needs with Western officials — from air defense to ground logistics — while it will also be a venue for Kyiv’s supporters to check in on implementation of earlier pledges and availabilities in the near future.
The aim of the session, said a senior European diplomat, is “to step up military support as much as needed — not only commitments, but actual speedy deliverables is of particular significance.”
“Tanks are needed not on paper but in the battlefield,” said the diplomat, who spoke on condition of anonymity due to the sensitivity of discussions.
Ammo, ammo, ammo
One of the most pressing issues on the table in Brussels this week is how to keep the weapons already sent to Ukraine firing.
“Of course it is important to discuss new systems, but the most urgent need is to ensure that all the systems which are already there, or have been pledged, are delivered and work as they should,” Stoltenberg said.
During meetings with EU heads on Thursday, Zelenskyy and his team provided each leader with an individualized list requesting weapons and equipment based on the country’s known stocks and capabilities.
But there was one common theme.
“The first thing on the list was, everywhere, the ammunition,” Estonian Prime Minister Kaja Kallas said.
“If you have the equipment and you don’t have the ammunition, then it’s no use,” the Estonian leader told reporters on Friday.
And while Ukraine is in dire need of vast amounts of ammo to keep fighting, Western countries’ own stocks are running low.
“It’s a very real concern,” said Ben Hodges, a former commander of U.S. Army Europe. “None of us, including the United States, is producing enough ammunition right now,” he said in a phone interview on Sunday.
Munitions will also be top of mind at the session of NATO defense ministers on Wednesday, who will discuss boosting production of weapons, ammunition and equipment, along with future defense spending targets for alliance members.
Boosting stockpiles and production, Stoltenberg emphasized on Monday, “requires more defense expenditure by NATO allies.”
Estonia’s Prime Minister Kaja Kallas | Kenzo Tribouillard/AFP via Getty images
And while the NATO chief said some progress has been made on work with industry on plans to boost stockpile targets, some current and former officials have expressed frustration about the pace of work.
Kallas last week raised the idea of joint EU purchases to help spur production and hasten deliveries of weapons and ammunition to Ukraine, although it’s not clear whether this plan would enjoy sufficient support within the bloc — and how fast it could have an impact.
Hodges thinks companies need a clearer demand signal from governments. “We need industry to do more,” he said.
But he noted, “These are not charities … they are commercial businesses, and so you have to have an order with money before they start making it.”
Jets fight fails to take off (for now)
Fighter jets are a priority ask for Ukrainian officials, although Western governments seem not yet ready to make concrete commitments.
Numerous countries have expressed openness to eventually providing Ukraine with jets, indicating that the matter is no longer a red line. Regardless, hesitation remains.
NATO Secretary-General Jens Stoltenberg | Valeria Mongelli/AFP via Getty Images
The U.K. has gone the furthest so far, announcing that it will train Ukrainian pilots on fighter jets. But when it comes to actually providing aircraft, British Defense Secretary Ben Wallace cautioned that “this is not a simple case of towing an aircraft to the border.”
Polish President Andrzej Duda, meanwhile, said sending F-16 aircraft would be a “very serious decision” which is “not easy to take,” arguing that his country does not have enough jets itself.
For some potential donors, the jets debate revolves around both timing and utility.
“The essential question is: What do they want to do with planes? It’s not clear,” said one French diplomat, who was unauthorized to speak publicly. “Do they think that with 50 or 100 fighter jets, they can retake the Donbas?” the diplomat said.
The diplomat said there is no point in training Ukrainians on Western jets now. “It’ll take over six months to train them, so it doesn’t respond to their immediate imperatives.”
But, the diplomat added, “maybe some countries should give them MiGs, planes that they can actually fly.”
Slovakia is in fact moving closer to sending MiG-29 jets to Ukraine.
“We want to do it,” said a Slovak official who was not at liberty to disclose their identity. “But we must work out the details on how,” the official said, adding that a domestic process and talks with Ukraine still need to take place.
No big jet announcements are expected at the Tuesday meeting, though the issue is likely to be discussed.
Where are the tanks?
And while Western governments have already — with great fanfare — struck a deal to provide Ukraine with modern tanks, questions over actual deliveries will also likely come up at Tuesday’s meeting.
Germany’s leadership in particular has stressed it’s time for countries that supported the idea of sending tanks to live up to their rhetoric.
“Germany is making a very central contribution to ensuring that we provide rapid support, as we have done in the past,” German Chancellor Olaf Scholz said last week.
German Chancellor Olaf Scholz is shown an anti-aircraft gun tank Gepard | Morris MacMatzen/Getty Images
“We are striving to ensure that many others who have come forward in the past now follow up on this finger-pointing with practical action,” he went on. Germany’s goal is for Ukraine to receive tanks by the end of March, and training has already begun.
Along with tanks, another pending request that Ukrainian officials will likely bring up this week is long-range missiles.
Hodges, who has been advocating for the West to give Ukraine the weapons it would need to retake Crimea, said he believes long-range precision weapons are the key. “That’s how you defeat mass with precision.”
Any such weapon, he argued, “has got to be at the top of the list.”
Clea Caulcutt contributed reporting from Paris and Hans von der Buchard contributed from Berlin.

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( With inputs from : www.politico.eu )

February 8, 2023
Heads roll in Ukraine graft purge, but defense chief Reznikov rejects rumors he’s out

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KYIV — Heads are rolling in President Volodymyr Zelenskyy’s expanding purge against corruption in Ukraine, but Defense Minister Oleksii Reznikov is denying rumors that he’s destined for the exit — a move that would be viewed as a considerable setback for Kyiv in the middle of its war with Russia.
Two weeks ago, Ukraine was shaken by two major corruption scandals centered on government procurement of military catering services and electrical generators. Rather than sweeping the suspect deals under the carpet, Zelenskyy launched a major crackdown, in a bid to show allies in the U.S. and EU that Ukraine is making a clean break from the past.
Tetiana Shevchuk, a lawyer with the Anti-Corruption Action Center, a watchdog, said Zelenskyy needed to draw a line in the sand: “Because even when the war is going on, people saw that officials are conducting ‘business as usual’. They saw that corrupt schemes have not disappeared, and it made people really angry. Therefore, the president had to show he is on the side of fighting against corruption.”
Since the initial revelations, the graft investigations have snowballed, with enforcers uncovering further possible profiteering in the defense ministry. Two former deputy defense ministers have been placed in pre-trial detention.
Given the focus on his ministry in the scandal, speculation by journalists and politicians has swirled that Reznikov — one of the best-known faces of Ukraine’s war against the Russian invaders — is set to be fired or at least transferred to another ministry.
But losing such a top name would be a big blow. At a press conference on Sunday, Reznikov dismissed the claims about his imminent departure as rumors and said that only Zelenskyy was in a position to remove him. Although Reznikov admits the anti-corruption department at his ministry failed and needs reform, he said he was still focused on ensuring that Ukraine’s soldiers were properly equipped.
“Our key priority now is the stable supply of Ukrainian soldiers with all they need,” Reznikov said during the press conference.
Despite his insistence that any decision on his removal could only come from Zelenskyy, Reznikov did still caution that he was ready to depart — and that no officials would serve in their posts forever.

The speculation about Reznikov’s fate picked up on Sunday when David Arakhamia, head of Zelenskyy’s affiliated Servant of the People party faction in the parliament, published a statement saying Reznikov would soon be transferred to the position of minister for strategic industries to strengthen military-industrial cooperation. Major General Kyrylo Budanov, current head of the Military Intelligence Directorate, would head the Ministry of Defense, Arakhamia said.
However, on Monday, Arakhamia seemed to row back somewhat, and claimed no reshuffle in the defense ministry was planned for this week. Mariana Bezuhla, deputy head of the national security and defense committee in the Ukrainian parliament, also said that the parliament had decided to postpone any staff decisions in the defense ministry as they consider the broader risks for national defense ahead of another meeting of defense officials at the U.S. Ramstein air base in Germany and before an expected upcoming Russian offensive.
Zelenskyy steps in
The defense ministry is not the only department to be swept up in the investigations. Over the first days of February, the Security Service of Ukraine, State Investigation Bureau, and Economic Security Bureau conducted dozens of searches at the customs service, the tax service and in local administrations. Officials of several different levels were dismissed en masse for sabotaging their service during war and hurting the state.
“Unfortunately, in some areas, the only way to guarantee legitimacy is by changing leaders along with the implementation of institutional changes,” Zelenskyy said in a video address on February 1. “I see from the reaction in society that people support the actions of law enforcement officers. So, the movement towards justice can be felt. And justice will be ensured.”
Yuriy Nikolov, founder of the Nashi Groshi (Our Money) investigative website, who broke the story about the defense ministry’s alleged profiteering on food and catering services for soldiers in January, said the dismissals and continued searches were first steps in the right direction.
“Now let’s wait for the court sentences. It all looked like a well-coordinated show,” Nikolov told POLITICO.  “At the same time, it is good that the government prefers this kind of demonstrative fight against corruption, instead of covering up corrupt officials.”
Still, even though Reznikov declared zero tolerance for corruption and admitted that defense procurement during war needs reform, he has still refused to publish army price contract data on food and non-secret equipment, Nikolov said.
During his press conference, Reznikov insisted he could not reveal sensitive military information during a period of martial law as it could be used by the enemy. “We have to maintain the balance of public control and keep certain procurement procedures secret,” he said.
Two deputies down
Alleged corruption in secret procurement deals has, however, already cost him two of his deputies.
Deputy Defense Minister Vyacheslav Shapovalov, who oversaw logistical support for the army, tendered his resignation in January following a scandal involving the purchase of military rations at inflated prices. In his resignation letter, Shapovalov asked to be dismissed in order “not to pose a threat to the stable supply of the Armed Forces of Ukraine as a result of a campaign of accusations related to the purchase of food services.”
Another of Reznikov’s former deputies, Bohdan Khmelnytsky, who managed defense procurement in the ministry until December, was also arrested over accusations he lobbied for a purchase of 3,000 poor-quality bulletproof vests for the army worth more than 100 million hryvnias (€2.5 million), the Security Service of Ukraine reported.  If found guilty he faces up to eight years in prison. The director of the company that supplied the bulletproof vests under the illicit contract has been identified as a suspect by the authorities and now faces up to 12 years in prison if found guilty.
Both ex-officials can be released on bail.
Another unnamed defense ministry official, a non-staff adviser to the deputy defense minister of Ukraine, was also identified as a suspect in relation to the alleged embezzlement of 1.7 billion hryvnias (€43 million) from the defense budget, the General Prosecutors Office of Ukraine reported.
When asked about corruption cases against former staffers, Reznikov stressed people had to be considered innocent until proven guilty.
Reputational risk
At the press conference on Sunday, Reznikov claimed that during his time in the defense ministry, he managed to reorganize it, introduced competition into food supplies and filled empty stocks.
However, the anti-corruption department of the ministry completely failed, he admitted. He argued the situation in the department was so unsatisfactory that the National Agency for the Prevention of Corruption gave him an order to conduct an official audit of employees. And it showed the department had to be reorganized.
“At a closed meeting with the watchdogs and investigative journalists I offered them to delegate people to the reloaded anti-corruption department. We also agreed to create a public anti-corruption council within the defense ministry,” Reznikov said.
Nikolov was one of the watchdogs attending the closed meeting. He said the minister did not bring any invoices or receipts for food products for the army, or any corrected contract prices to the meeting. Moreover, the minister called the demand to reveal the price of an egg or a potato “an idiocy” and said prices should not be published at all, Nikolov said in a statement. Overpriced eggs were one of the features of the inflated catering contracts that received particular public attention.
Reznikov instead suggested creating an advisory body with the public. He would also hold meetings, and working groups, and promised to provide invoices upon request, the journalist added.
“So far, it looks like the head of state, Zelenskyy, has lost patience with the antics of his staff, but some of his staff do not want to leave their comfort zone and are trying to leave some corruption options for themselves for the future,” Nikolov said.
Reznikov was not personally accused of any wrongdoing by law enforcement agencies.
But the minister acknowledged that there was reputational damage in relation to his team and communications. “This is a loss of reputation today, it must be recognized and learned from,” he said. At the same time, he believed he had nothing to be ashamed of: “My conscience is absolutely clear,” he said.

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( With inputs from : www.politico.eu )

February 6, 2023