ISSUE 20
06.02. - 19.02.2023
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- Security Update
- Ramstein meeting
- Personnel rotations in the Ministry of Defense of Ukraine
- A new threat: Russia deliberately drains Kakhovka Reservoir
- Who will benefit from compensation for destroyed housing?
- Russian economy finally feels the impact of sanctions
- Latest developments in Moldova
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The main efforts of the enemy are concentrated on the offensive in the Kupyansk, Lyman, Bakhmut, Avdiivka, and Shakhtarsk directions. The Russian missile attacks on objects in Zaporizhzhia oblast may indicate preparations for offensive actions in this direction. Over the past week, the number of sorties conducted by Russian combat aircrafts has increased to the level last observed in the summer of 2022. The Russian military command has begun to resort to limited missile strikes more often instead of the previous massive volleys, Natalia Humeniuk, head of the Joint Coordination Press Centre of the Defence Forces South, stated to the media. According to the Ukrainian intelligence, a team of instructors from Iran arrived in temporarily occupied Luhansk to train the Russian Armed Forces (RAF) in using attack UAVs. Also, Defence Intelligence reports that large-scale exercises of strategic nuclear forces are beginning in Russia. Currently, the preparation of units of the strategic nuclear forces for the launch of sea and land-based ballistic missiles, as well as air-based cruise missiles, has been confirmed. In addition, the Russian army tested Monolith, a centralised combat control system, within preparations for the exercises. By these actions, Ukrainian military officials believe that Russia is trying to use nuclear blackmail to react to US President Joe Biden's visit to Europe, scheduled for 20-22 February, as well as to weaken international support for Ukraine.
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Possible operation situation development may include an offensive in three directions in Zaporizhzhia oblast. The RAF will continue their efforts to capture Bakhmut before 24 February, approach the Sloviansk-Kramatorsk agglomeration, and capture Avdiivka, Maryinka, and Vuhledar. With around 320,000 Russian soldiers already in Ukraine and 150,000 estimated to be at training sites, the Kremlin could try to overwhelm Ukrainian positions through the sheer volume of attacks, including diverting Ukraine’s defenses by opening a new front in Sumy direction from the territory of Russia. The Defense Intelligence of Ukraine also monitors Russian troops on the territory of Belarus around the clock, and, so far, sees no signs of a possible attack in the immediate future. Another possible direction is Kharkiv, where Russia's defence ministry claimed on 18 February to have captured Hrianykivka, a village in the eastern Kharkiv region that is well to the north of the most significant fighting.
Overall, for much of the winter, the war in Ukraine settled into a slow-moving but exceedingly violent conflict along a 1,500 km-long frontline in the southeast. Putin is hoping for exactly such a stalemate, which he regards as a way to wear down Western resolve and popular support for Ukraine. What is needed is a game-changing shift in momentum, of which the Armed Forces of Ukraine (AFU) have proven themselves capable — if they have the resources. “It’s very clear to us that we don’t have any other alternatives, except for fighting further”, Oksana Markarova, Ukraine’s ambassador to the United States, told the media.
A Ukrainian offensive, experts believe, could be most effective in the South, with Melitopol the obvious key target. Meanwhile, the AFU conducted weekend exercises near Siversk, preparing to defend one of the possible targets of a new Russian offensive, and continue planning larger efforts to push Russian troops out of occupied regions.
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The tasks of consolidation of the Western support for Ukraine remains urgent; the status quo of relatively static battle lines is untenable. As Russia mobilizes hundreds of thousands of recruits for a new massive offensive and shifts its economy to an all-out wartime footing, the West’s piecemeal, reactive, only-what’s-essential-to-avoid-disaster approach has become a prescription for stalemate. That’s why Ukraine had quite high expectations for the 9th meeting of the Ukraine Defense Contact Group (known as Ramstein) which has brought representatives of 54 nations to Brussels’ NATO Headquarters. Andrii Sybiha, deputy head of the President's Office, claimed that Ukraine hoped the 9th Ramstein would focus on providing Ukraine with aircraft, including F-16 fighter jets.
Ukrainian Defense Minister Oleksii Reznikov said he was delighted with the results of the meeting. The key word at the meeting was “unity”. Reznikov said that they also continued to talk about training units of the AFU for operating new equipment, which is provided to Ukraine, and the participants were presented with Ukraine’s report on the verification of the use of NATO systems transferred to the AFU. But no official announcements on fighter jets were delivered following the meeting. However, allies remain committed to supporting Ukraine’s counteroffensive in the spring, the head of the Pentagon, Lloyd Austin, said during the meeting in the Ramstein format. The UK also pledged to become the first nation to send long-range weapons to Ukraine.
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Despite continued support, Ukraine still lacks weaponry and munitions to achieve significant progress on the battlefield. Ramstein discussions also prompted looking for solutions at other platforms, including pool ammunition purchases in the European Union. A proposal circulated by Estonia this week to invest around €4 billion ($4.3 billion) to jointly procure a million rounds of ammunition won tentative support from the Netherlands and Romania. EU foreign ministers are expected to discuss the plan when they meet in Brussels on 20 February, and a final decision could come when the bloc’s leaders meet in March. At the same time, the U.S. prioritizes helping Ukrainians tweak the way they fight, relying less on artillery barrages and more on how the troops manoeuvre on the battlefield, as concerns mount over Western nations’ ability to replenish ammunition stocks. Another concern would be the ability of Ukraine to match Russia’s number of personnel: with the expected increase of Russian manpower, Ukraine’s only chance would be in improving the quality of soldiers' training and an effective coordination of forces.
Also, expectations for Russia to deplete its resources are undermined by China’s position, as U.S. Secretary of State Antony Blinken said that Beijing is considering supplying Moscow with "lethal support”. According to Blinken, the U.S. has already seen Chinese companies providing non-lethal support to Russia.
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PERSONNEL ROTATIONS IN THE MINISTRY OF DEFENSE OF UKRAINE |
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On 14 February, Minister of Defense of Ukraine (MoD) Oleksii Reznikov initiated changes to the Ministry's top leadership. The high-ranking official proposed posts for Lieutenant General Oleksandr Pavliuk, former deputy and ambassador to Canada Andriy Shevchenko, and volunteer Vitaliy Deyneha. Dismissed predecessors Ivan Rusnak and Oleh Haiduk will now hold advisers' positions in the Ministry of Defense. In addition, the MoD plans to reboot the anti-corruption department and introduce a mechanism of public control. 13 NGOs have already joined the creation of the anti-corruption council. Reznikov also stated that he would remain in his post. "It was [the] president's decision," he said.
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Due to a resonant scandal in the Ministry of Defense regarding purchasing products for the AFU at inflated prices, Oleksii Reznikov almost lost his post. On 5 February, the media speculated that Reznikov would be transferred to the Ministry of Strategic Industries of Ukraine, and the Chief of Defence Intelligence, Kyrylo Budanov, will be appointed the new minister of defense. However, at the last moment, the top leadership of Ukraine decided to avoid such personnel rotations. There are several reasons for this. Firstly, the escalation at the front and the Kremlin's probable "surprises" by 24 February require the military-political vertical to focus as much as possible on the security and defense of the state. Secondly, Reznikov's resignation before the Ramstein meeting (14 February) would be inappropriate in the context of Kyiv's international dialogue with its allies and the active phase of arms supplies. Thirdly, the appointment of Major General Kyrylo Budanov to the Ministry of Defense contradicts the principle of democratic control, according to which only civilians can get a senior position in the Ministry of Defense. However, this decision may be changed in the future. As Maryana Bezuhla, an MP from the Servant of the People party, informed, the Verkhovna Rada Committee on National Security, Defense, and Intelligence has prepared an amendment to Law No. 4210, which will make it possible to appoint a military figure to the position minister of defense (during martial law). Currently, the mentioned amendment is only a draft and rather a test of public reaction, which turned out to be negative because the amendment's text to the law contradicts the Euro-Atlantic principles of civilian control. At the same time, this motivates Oleksii Reznikov to demonstrate the Ministry's efficient work. He has already begun implementing the first steps: anti-corruption measures, establishing communication with civil society, and appointing new deputies. First Deputy Minister General Oleksandr Pavliuk has begun to perform his duties. President Volodymyr Zelenskyy (as an exception during martial law), by his decree, allowed the appointment of the military for the position of the first deputy defense minister. General Pavliuk has a good reputation in the military sphere. After the beginning of the full-scale invasion, he was responsible for the defense of the Kyiv region, and in March-May, he headed the Civil-military administration of Kyiv oblast. The other two deputies, Andriy Shevchenko and Vitaliy Deyneha are well-known public figures in Ukraine and will be responsible for European integration and digital transformation.
In the context of the dynamic Euro-Atlantic agenda, all three appointments may boost the Ukrainian Defense Ministry (improving, particularly, anti-corruption mechanisms), which will allow Oleksii Reznikov to keep the post for a while.
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A NEW THREAT: RUSSIA DELIBERATELY DRAINS THE KAKHOVKA RESERVOIR |
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Ukrainian Prime Minister Denys Shmyhal called on international partners to use all available means possible to put pressure on Russia to close the floodgates and restore hydro-technical structures at the Kakhovka Hydroelectric Power Plant (HPP) or to allow Ukrainian specialists to do it. Otherwise, Ukraine will face an ecological catastrophe and countless destructive consequences for the entire continent.
The Kakhovka HPP, built on the Dnipro River, and the Zaporizhzhia Nuclear Power Plant (ZNPP) are on Ukrainian territory occupied by the Russians for almost a year. The Russian energy and military have full control over these two power plants. We have reported on the situation at ZNPP in previous briefings (e.g., here and here).
The Kakhovka reservoir performs several important functions at once: cooling the reactors of the ZNPP; provision of conditions for the operation of the Kakhovka HPP, and water supply to a large number of settlements in the southern regions of Ukraine. The reservoir was also a critical source of water for the Crimean Peninsula, which is supplied via a 403-kilometer canal. After the partial destruction of the dam and the deliberate opening of the sluice gates by the Russians, thousands of cubic meters of water are lost every day. As a result, up to 1 million people may be left without access to drinking water.
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The Dnipro Cascade is a cascade of 6 HPPs on the Dnipro River, built by the Soviet authorities between 1927 and 1975. The total volume of accumulated water is 43.8 cubic km - this huge volume of water is regulated along the entire length of the Dnipro by numerous dams and requires strict control at each of them. The Kakhovka Reservoir is important for the economy and infrastructure of the southern regions of Ukraine.
After the counteroffensive of the AFU in the Kherson region, the Russian invaders blew up the road above the dam of the Kakhovka HPP. Following the explosion, it was revealed that they had deliberately opened additional sluice gates on the Russian-controlled side of the dam, allowing water to begin spilling out of the reservoir. In November, the occupiers reported "enormous damage" to the Kakhovka HPP. Satellite images show the extent of the damage. At the same time, the State Inspection of Nuclear Regulation of Ukraine tasked NNEGC (National Nuclear Energy Generating Company) Energoatom to urgently analyse the issue of the safety of operation of power units of the largest NPP in Europe – ZNPP. If the water level decreases below the critical level it will lead to disruptions in the cooling system of ZNPP’s reactors.
The photos published in February caused serious concerns. They confirm that the water level has fallen to the lowest level in 30 years of satellite observations. According to the results of the meeting of the special commission on 7 February, it was reported that currently, the water level has stabilized at 13,6 m (compared to a normal level of 16 m). The situation is saved by an increase in the inflow upstream of the Dnipro (controlled flooding). Under such conditions, the pond cooler at the ZNPP (filled with water from the Kakhovka Reservoir) is still sufficiently full. For comparison - the critical level (of Kakhovka Reservoir) is 12 m, and the emergency level is 12.8 m.
Experts are inclined to conclude that the occupiers are draining the Kakhovka Reservoir with the aim of flooding the area south of the dam and thus preventing the AFU from crossing the Dnipro River. But the main goal of the Russians is to fill the reservoirs in the annexed Crimea and have enough water for at least two years. When they occupied the Kherson region (and the Kakhovka HPP), the first thing they did was re-open of the North Crimean Canal, which had been blocked by Ukraine after the Russian annexation of Crimea.
Currently, the Russians have shut down the ZNPP and it does not produce electricity. However, cooling water is still needed - nuclear fuel in the core needs cooling. There is a cooling pool with a mirror area of 8 square kilometres behind the fence of the ZNPP. The water level of the cooling pond in the winter period is more or less stable, but in summer, when water evaporates faster, the volume of water will be sufficient for only two months.
The International Atomic Energy Agency (IAEA) is aware of the risks. Ukraine hopes that the IAEA mission deployed at ZNPP will monitor the situation and act accordingly. The security zone around the ZNPP has still not been created, despite all the efforts of the IAEA. On 10 February, the Russians prevented the rotation of IAEA experts at ZNPP. Obviously, Russia will not meet the IAEA, violating all the conventions that constitute the regime of nuclear radiation safety and Article 56 of the Protocol Additional Geneva Convention of 1949.
The environmental and social consequences are also a concern. Local authorities together with special civil protection services are working out action plans in the case of a rupture of the hydro structures of the Dnipro cascade. If an emergency situation (major flooding) occurs, the population must have enough time for an evacuation. The Ministry of Environmental Protection and Natural Resources of Ukraine announced the environmental threat during a joint briefing with the EU Commissioner for the Environment. The European Commissioner promised to raise this issue at the highest level and noted that such actions of Russia are proof of another act of terrorism.
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WHO WILL BENEFIT FROM COMPENSATION FOR DESTROYED HOUSING? |
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In March 2022, Verkhovna Rada registered draft law 7198 on compensation for housing damaged or destroyed as a result of Russian military aggression and passed it in the first reading in April. On 7 February, the proceeding of the draft in the second reading was postponed due to the number of proposed amendments. The goal of this law is to establish a mechanism for compensation for citizens whose homes were destroyed or damaged by Russian aggression. Before the second reading, the compensation procedure looks as follows:
- Owners of damaged or destroyed housing submit their requests via Diia (316,000 requests as of January 2023) or alternatively via local administrative service centers (ASCs).
- The commission formed by local administration analyzes the request and provides a conclusion within 30 days of receiving the request.
- If compensation is approved, the homeowner receives a digital “housing certificate” for purchasing an apartment or a private house. The validity of this certificate is five years since its issuing.
The main sources of compensation are stated to be confiscated Russian assets. The draft before the second reading is not publicly available.
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Efforts of the government to compensate citizens for destroyed homes is certainly a good step. Apart from providing housing for citizens who lost their homes, this mechanism would help keep Ukrainians from moving abroad and/or stimulate their return. However, some provisions of the 7198 draft pose risks for the housing market and long-term reconstruction, as well as some corruption risks. First of all, this mechanism will raise demand for housing causing house prices to explode, especially with the fact that certificates should be used within a limited time – five years. Secondly, such a mechanism could lead to a sporadic construction process with negative implications for the long-term reconstruction of destroyed cities where issues such as demographic situation, employment opportunities, and cities’ master plans should be taken into account. And last but not least, NAPC (National Agency on Corruption Prevention) in its conclusion regarding the draft law also mentions the corruption risks posed by legislative uncertainty regarding the procedure and competencies of the compensation commissions. Also, this draft does not offer compensation to those who did not wait for compensation from the state and already reconstructed their housing by themselves.
Draft law 7198 follows the track of law 5655 on urban planning reform. Both drafts were authored by Olena Shuliak who is famous for backing the interests of real-estate developers. In the case of the 7198 draft, developers will benefit from peaks in housing prices while the market demand will remain high due to limited time for using compensation (five years). In the case of 5655, the law sets up “a private oversight of construction process” at the same time limiting the participation of architects, local authorities, and local communities in the urban planning process.
Both 7198 and 5655 are crucial laws since they establish the legal framework for the post-war reconstruction of Ukrainian cities and communities. In December last year, the Ukrainian government liquidated the Ministry for Communities and Territories responsible for regional development and local governance reform, merging it with the Ministry of Infrastructure. Experts warned against this merger because regional development would lose focus during reconstruction. At the same time, Ukraine’s resilience in the face of Russian aggression is largely owed to the resilience of local communities and regional authorities.
It is very difficult, especially during martial law, to draw the line between rebuilding fast and approaching reconstruction strategically based on strong institutions. What’s certain is that decisions on reconstruction now will define how Ukrainian cities and the country will look in the decades to come after the war.
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RUSSIAN ECONOMY FINALLY FEELS THE IMPACT OF SANCTIONS |
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From 5 February, an embargo on sea deliveries of oil products from the Russian Federation to the EU, and price caps on them, came into force. These sanctions are a continuation of those introduced on 5 December 2022. In 2021, almost 36% of Russia's federal budget revenues consisted of oil and gas revenues. These sanctions are aimed at weakening the economy of the Russian Federation and thus reducing its financial capacity to continue the war against Ukraine.
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Russia was preparing for the full-scale invasion and accumulated large financial reserves. Therefore, freezing gold and foreign exchange reserves and the first sanctions from the Western countries could not prevent the continuation of hostilities. As a result of the actions of the Russian Central Bank, the Ministry of Finance, and the Government of the Russian Federation, the Kremlin was able to minimize the impact of sanctions. Mandatory regulations on the sale of foreign currency by exporters, a ban on the withdrawal of dividends and interest on securities for non-residents, significant restrictions on the stock market, and other actions made it possible to reduce panic on the foreign exchange market and create the illusion of stability in the Russian economy. Meanwhile, oil prices increased due to uncertainty on world markets at the beginning of the war. In the first months after 24 February, Russia received surplus profits from sales of energy resources, particularly to EU countries.
Later, due to the onset of the recession, world oil prices began to fall. Europe continued to work on sanctions and reducing its dependence on Russian energy resources. Price caps and embargoes hit Russia the hardest and forced it to redirect its export to Asia where the oil was sold at a significant discount.
Russia's constant gas blackmail of Europe and threats to cut off supplies or "accidental" breakdowns on the gas transmission systems have pushed the EU to accelerate the diversification of its supplies. The EU decreased its dependence on Russian gas from 40% to 7% faster than it was planned. Although high gas prices helped Gazprom maintain profit in 2022, gas production and exports fell significantly. Due to the decrease in demand for Russian gas in the EU, which was its key customer, Russia is unlikely to be able to repeat such financial results in 2023. It is impossible to swiftly reorient the gas sales to markets in Asia, as was done with oil.
Sanctions cannot have an immediate impact on the economy. They are effective in a long-term perspective. In addition, their effectiveness depends on the political will of the Western countries. For the first time since 1998, Russia's federal budget deficit reached $25 billion. The Russians planned to use blackmail to stop Europeans from supporting Ukraine. With this, they succeeded in helping Europe accelerate the diversification of its energy supplies, thereby boosting its immunity from similar manufactured crises in the future.
In 2022, the Russian economy did not suffer the losses expected by experts. However, the impact of sanctions is now being felt. At the same time, new sanctions packages are being prepared. This is happening against the background of Russia's huge spending on the war, which made up approximately a quarter of the country's income for 2021 ($82 billion). The Russian Federation is expected to continue to wage its war on Ukraine by taking money from domestic social funds and the Russian National Wealth Fund. This will only deepen the crisis. Such losses lead to stagnation, depriving the country of opportunities for economic recovery and development.
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LATEST DEVELOPMENTS IN MOLDOVA |
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On 9 February during the EU Summit, Ukrainian President Volodymyr Zelenskyy said that Ukraine’s intelligence service intercepted information about Russia’s plans to destroy the democratic political order in Moldova and overtake the country. The head of Ukraine’s National Security and Defense Council Oleksiy Danilov stated the Russian soldiers who fought against Ukraine and travelled to Turkey as part of an earthquake rescue mission might end up in Moldova for this purpose. On 13 February, Moldovan President Maia Sandu said Ukraine has provided sufficient evidence on "the locations and logistical aspects", and made public the details of Russia’s plot - to use Russian and other foreign citizens to spark protests, attack state institutions and take hostages. The Kremlin has denied these accusations.
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Moscow still plans to continue its war against Ukraine and wants to achieve its goals. As for Moldova, Moscow sees it as part of its sphere of influence and wants to stop its pro-European course and use it in the war against Ukraine. Moldova is vulnerable to hybrid threats, and Moscow has an extensive network in the country. Maia Sandu named the forces that were allegedly part of the plot - oligarchs such as llan Shor and Vladimir Plahotniuc, certain veterans, and former law enforcement employees. Chisinau seemed to take the information seriously. It ordered increased security measures, groups of Serbian and Montenegrin nationals were denied entry into the country, and airspace was closed for a few hours. Staged protests are nothing new for Moldova - during the heating season the pro-Russian populist Shor Party led demonstrations against high energy prices. Chisinau, with the help of the EU, managed the crisis by introducing subsidies for households. Last year, six TV channels promoting Russian narratives and disinformation were closed. The next step might be to ban the Shor Pary; however, enough evidence must be gathered, and the government should demonstrate such actions are directed at protecting the state, which Chisinau has failed to do in previous decades. So far, no Western country has publicly confirmed the information on the Russians’ plot. The U.S. state secretary Anthony Blinken told Sandu the U.S. is deeply concerned about Russia’s plots to destabilize Moldova.
Immediately after the news, Moldovan Prime Minister Natalia Gavrilita resigned, but her dismissal was not unexpected. Sandu managed to gain her party’s support and appoint Dorin Recean - Sandu’s former defence advisor and former minister of internal affairs (2012-15) known for working on visa liberalisation conditions and energy contracts with Transnistria. The new government was formed with a focus on security and to gain popularity for the government party, and it will continue the pro-European agenda.
Earlier in February, Chisinau made an important step in regulating of the “Transnistria issue” - for the first time introducing criminal liability for acts of separatism. The anti-separatism law for the Moldovan criminal code would allow the prosecution of Tiraspol’s top officials and political elite. The law was further amended with regulations that introduce criminal liability for the Russian military leadership for “illegally crossing the airspace of Moldova by objects used for military purposes”. The first step hints at Moldova’s intent to end the existence of the quasi-state. However, the law is very problematic, and controversial, and it can’t be implemented comprehensively. The Moldovan president will sign the law, but amendments are necessary to improve it, and make it specific, complete, and not-contradictory. Otherwise, Chisinau will implement it partially, and there is a risk the vague definitions might be exploited for political purposes.
The existence of the quasi-state entity with Russian military presence there creates a threat to both Ukraine and Moldova’s security and European future. Moldova’s government wants Russian troops to leave, but it doesn’t want a military confrontation, as the situation developed in a way that Moldova now relies on electricity produced in Transnistria (Cuciurgan power station) which is powered by Russian gas. If Moldova ends its dependence on Transnitrian electricity and Russian gas, it will, together with Ukraine, have great leverage over the Transnistrian administration. Smuggling (an important source of income for Tiraspol) was restricted - the Transnistrian segment on the Moldova-Ukraine border is no longer functional since Ukraine closed all border crossing points. It’s best for Kyiv and Chisinau to work together, but the EU’s support is needed as well. Firstly, Moldova needs to proactively develop a strategy, and find ways to maintain its economy while no longer financing the Transnistrian administration. The share of electricity supplied from the EU is growing, and after its victory, Ukraine can also supply more electricity to Moldova, as both electricity grids were synchronized with the EU last year. Sandu’s government has already started first imports of non-Russian gas, and is planning to increase imports from Azerbaijan. Moscow should be weakened to the extent it won’t be able to support the “PMR” (Transnistrian quasi-republic) as before. An attack from the Transnistrian territory against Ukraine is still an unlikely possibility, but if it happens, it will be followed by a rightful military response from Ukraine. The large arms depots in Transnistrian territories are stocked with Soviet-era weapons in questionable conditions. But it’s important not to overestimate or underestimate the capabilities of RAF. Moldova, on the other hand, is almost defenceless, but it can count on the support of its neighbour. Chisinau already relies on Ukrainian air defence. The Russian-occupied strip of land prevents Ukraine and Moldova from fully realizing their logistics potential, and stands as a barrier to EU membership, keeping Moldova dependent on Russia. It is home to serious human rights violations, smuggling, and a wide range of illicit activities, including cybercrime. The unrecognized administration of “PMR” and Russian troops stationed there as “peacekeepers” have no future in a peaceful European Ukraine and a European Moldova with full territorial sovereignty.
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WAR IN UKRAINE: LESSONS LEARNED |
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Russia's current war against Ukraine demonstrated the readiness of the democratic world to unite in the fight for freedom and liberal values. However, there are democracies all over the world in need of protection against autocracies willing to challenge international order. One year from the start of full-scale invasion, we introduce you the report “War in Ukraine: Lessons identified and lessons learned“, which analyzes policies and practices that have impacted Ukraine’s resilience in key sectors. Outcomes of this research can be used as recommendations for other democracies building resilience against conventional, hybrid, or other threats (e.g., natural disasters), from Europe to the Pacific.
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