ISSUE 9
29. 08. - 05. 09. 2022
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- Security situation update
- The criminal case against General Kryvonos
- The IAEA mission at the ZNPP
- How do Ukrainian businesses function during the war?
- The world’s largest reconstruction project
- Russian opposition and its fight for Free Russia
- Hedge Politics in Italy: Giorgia Meloni’s profile
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SECURITY SITUATION UPDATE |
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On 29 August, the Ukrainian military (AFU) announced the start of a counteroffensive operation in the south of the country, primarily in the Kherson region. The day before, they reportedly destroyed the Antonivsky bridge - the main one in Kherson and the bridge near the Kakhovka hydroelectric station. As a result, the Russians faced complications in ensuring logistics required for reinforcements and provision of their troops. It is interesting that the USA provided weapons for this Ukrainian operation - at a specific request. Some media reported that the US supported Kyiv in planning the operation, advising to keep it limited in both its objectives and its geography to avoid becoming overextended and intractable on multiple fronts. Following the week of the alleged counteroffensive, territorial gains are quite limited, though many villages are now contested. Ukrainian officials directly stated that the ongoing Ukrainian counteroffensive is a methodical operation to intentionally degrade the Russian Armed Forces (RAF) and logistics in the south, rather than one aimed at immediately recapturing large swathes of territory. At the same time, RAF continue to accumulate forces in the Zaporizhzhia direction. The success of the counteroffensive (as well as its failure) will decisively affect the course of Russia’s war against Ukraine. Ukrainian media is widely reporting that combat actions are reportedly very fierce, bringing high numbers of losses for Ukrainian troops. In the same time, the Ukrainian Army performs effectively in targeting Russian military infrastructure, and is increasing the efficiency of its air defence system.
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During the six months of the Great War, Western partners provided Ukraine with a wide range of support, from financial to armed. Visible, symbolic victories will greatly simplify the process of further providing such support. It is important to demonstrate this to the societies of allied countries. It is important for Ukrainians and especially for residents of the newly occupied territories, who currently continue to wage a guerrilla war and are waiting for liberation. A successful counteroffensive will significantly facilitate the conditions for Ukraine to survive the winter (even taking into account the fact that Russia will precisely target its critical infrastructure), as well as Europe, which is interested in the maximum export of Ukrainian electricity.
Among the immediate successes of Ukraine’s move is another postponement of the so-called referenda planned by Russia to annex the territories. Previously they were announced for May, then scheduled for 11 September, and now they are presented as "house-to-house survey", rather than referenda.
If Ukraine’s operation fails, the RAF will have more room for manoeuvre in advancing towards Mykolaiv, which - in turn - will open the land corridor to the strategically important Odessa. It can be expected, according to the Ukrainian intelligence, that in order to disperse Ukrainian forces, Russians will conduct one more attempt of attacking from the Northern direction. In this regard, Ukrainian military command is following movements in Belarus, where big Command Post Exercises close to Ukraine’s border were announced for 8-14 September. Some air defence assets are also being moved closer to the border with Ukraine. Heavy artillery shelling of the Sumy, Kharkiv and Chernihiv regions also continue, destroying numerous civilian infrastructure objects.
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THE CRIMINAL CASE AGAINST GENERAL KRYVONOS |
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On 28 August, Ukrainian media reported on initiating a criminal case against former Deputy Secretary of the National Security and Defense Council of Ukraine (NSDC) Serhii Kryvonos, who commanded the defense of "Kyiv" International Airport at the beginning of the Russian invasion. According to the editor of Censor.NET, Yurii Butusov, the State Bureau of Investigation (SBI) sent a telegram to the military headquarters of the Armed Forces of Ukraine (AFU) asking for testimony on the possible illegal actions of Kryvonos during the defense of the capital. Commenting on the information, Serhii Kryvonos explained that during the alleged assault on the occupiers, the airfield’s runway was filled with machine oil and blocked with equipment; all objects were prepared for anti-landing defense. It is clear that these actions caused some damage to the airport’s property," he added. On 29 August, the SBI publicly confirmed the claims to be truthful. In addition, Kryvonos stated that the case was by hire because of possible political competition from the Office of the President of Ukraine. The General Staff of the Armed Forces of Ukraine noted that Kryvonos led the defense of "Kyiv Sikorsky" Airport as a volunteer, and his accusations of Zelensky’s influence on the investigative bodies do not correspond with reality. Immediately, Kryvonos’s military comrades came out in his support.
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The criminal case against Kryvonos resonated through society, chiefly due to his authority among the militaries. Major General Serhii Kryvonos is a career military man at the front since 2014. He held high government positions and ran for the President of Ukraine in 2019 but withdrew his candidacy in favour of Petro Poroshenko. In December 2020, Volodymyr Zelenskyy dismissed Kryvonos from the post of Deputy Secretary of the NSDC, and six months later, from the Armed Forces of Ukraine. At the beginning of the armed aggression of the Russian Federation, commander-in-chief of the Armed Forces of Ukraine Valerii Zaluzhnyi entrusted him to lead the defense of the airport "Kyiv Sikorsky", taking into account the combat experience of general. "Kryvonos considered it a chance to return to the Armed Forces. However, after stabilizing the situation around Kyiv, the "major general of the reserve was dismissed from assistance," the General Staff said. According to Kryvonos, Bankova (the Presidential Office of Ukraine) did not welcome his return to the Armed Forces of Ukraine: "On March 29, I arrived at Valerii Zaluzhnyi and learned that the order to enlist me was cancelled by order of the Supreme Commander Zelenskyy." Few people would have known about this story if the criminal case of the SBI had not started.
The conflict between Kryvonos and Bankova has a long history. The general has repeatedly criticized the President’s Office, for which he lost his position and service in the Armed Forces of Ukraine. However, this situation is different from the previous ones. For Kryvonos himself, this scandal is beneficial because it makes it possible to declare his political ambitions. Accusing Zelenskyy of "eliminating political opponents" does not look realistic for now. According to recent polls, Kryvonos is not on the list of potential competitors for the presidency. The general has authority in military circles but is not influential on a national scale. However, such a public appearance may contribute to this in the future. The next presidential elections in Ukraine will be in a year and a half and, by that time, if the war is over, voters’ preferences may have changed. At the same time, trust in the Armed Forces of Ukraine and the demand for a strong leader will remain in Ukrainian society. Thus, politically, the case of the SBI only contributed to the recognition of Kryvonos.
On the other hand, such a step by the SBI is unreasonable and risky in wartime. Internal disputes and political conflicts now only serve the interests of the Kremlin. Kyiv’s primary focus should be on the fight against the aggressor and restoring Ukraine’s territorial integrity. It is essential not to give Russian propagandists any reasons to talk about internal disagreements by making scandals public.
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THE IAEA MISSION AT THE ZNPP |
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One of the most anticipated events of recent weeks - the visit of the International Atomic Energy Agency (IAEA) to the Zaporizhzhia nuclear power plant (ZNPP) captured by the Russians - did not bring clarity or reassure the Ukrainian and international community, but rather caused disappointment among many observers. And although IAEA Director General Rafael Grossi will report to the UN Security Council about the visit of the IAEA mission to the ZNPP only on Tuesday, a certain analysis can already be made based on some facts established public during the visit.
We have the recognition by the head of the IAEA of repeated damage to the ZNPP, control over the Ukrainian nuclear power plant by the Russian occupying forces, and an acknowledgement of the unacceptable state of affairs and the existing danger. Grossi himself spent three hours at the station, left six of his employees there to further study the situation, and promised that two of them would be at the ZNPP permanently.
Grossi’s statements were concise and cautious: the situation at the ZNPP is "unique and unprecedented", and the question of transferring control over the ZNPP to Ukraine is "beyond the IAEA’s capabilities". He did not say the main thing that was expected of him - that a demilitarized zone should be created around the ZNPP.
The Russians did not allow the independent mass media that were supposed to accompany the mission to the station. The event was covered only by the Russian media. The person who showed ZNPP to the mission and explained the state of affairs turned out to be the Russian Renat Karchaa. The Russian mass media call him a "Russian expert", but in fact he is an adviser to the general director of Rosatom, a political technologist and a journalist with a criminal past. And although Grossi said that he visited all the main areas of the NPP, the representatives of the mission were not allowed even to the crisis centre of the ZNPP.
If we add to this the message of the Ukrainian intelligence about how carefully the Russians prepared a staged show at the ZNPP before the IAEA visit, what repressions were applied to the "unreliable" Ukrainian hostages, there are many doubts about whether the mission received all the information and whether its conclusions are unbiased. Based on the results, the leadership of Russia positively evaluated the visit of the IAEA, while the leadership of Ukraine expressed disappointment at the weakness of the statements.
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The visit of the mission was important not only for Ukraine, but also for the whole of Europe. For the first time in history, the IAEA is inspecting a nuclear plant on the occupied territories. There is no established practice on how to act in such cases. The IAEA did not make its plans public, but based on the main goal of the organization - control over the non-proliferation of nuclear materials, it was obviously important for them to check the condition of nuclear facilities, reactors and the storage of spent nuclear fuel, as well as the condition of physical protection, which has already been violated due to the presence of armed persons there.
The mission also had to inquire about the condition of the diesel generators and fuel reserves for them. This is critical so that the Fukushima scenario does not occur due to overheating. Inspectors should also confirm that the crisis centre at the station works. The crisis centre is a bunker protected from radiation, where in case of an accident a group of engineers gathers to implement an emergency plan and where the power unit monitoring system is located. This is the place where employees of the state-owned Russian NPP operator Rosatom and the Russian military are currently illegally hiding. IAEA experts were not allowed to go there.
The mission was led by the Russians and showed only what they could see. But Grossi should have understood that military equipment in the engine room is also a significant violation. After all, there is a lot of equipment for the safe operation of the reactor, and damage to anything in the engine room can lead to an accident with a subsequent radioactive release.
We previously wrote in detail about the purpose of the Russians’ stay at the ZNPP. An important question arises - how can you listen to and take seriously the information from the operator of the NPP of the state that seized the NPP of another state? There are no legal grounds for Rosatom’s presence on the territory of the ZNPP. While going into the technical details and analysis of the state of safety at the nuclear power plant, we should not forget the main thing - both Rosatom and the Russian military are there illegally, in violation of all rules and regulations.
The second question. Why are the gas and oil monopolies of Russia subject to EU sanctions, but Rosatom is not? It turns out that the criminal company remains unpunished. Despite the fact that he has been illegally staying and interfering in the work of another country’s NPP for six months, endangering the security of not only Ukraine, but also the whole of Europe and the world. Recently, Hungary issued a permit for the Paks 2 project - the expansion of the Paks NPP, which will be conducted by Rosatom. For a long time, Russia wanted Rosatom to receive permission to operate on the territory of the EU and build its NPP. The price of this is not known for sure, but according to some sources, the permit for the construction of Paks 2 could be a condition under which Russia agreed to give Hungary an additional 700 million cubic meters of gas after the visit of the head of the Hungarian Foreign Ministry, Peter Szijarto, to Moscow. Russia’s full-scale invasion of Ukraine did not force Hungary to abandon energy cooperation with Russia. Recently, an investigation was published, according to which the expansion of Paks 2 NPP in Hungary will be located on a tectonic fault. However, Szijarto said that construction will begin in September, with its total cost expected to reach 12.5 billion euros.
For Russia, it is not just a business but geopolitics and hybrid influence. It was a challenge for Rosatom to get permission from the European Union for these works, which was granted in 2019. Currently Hungary remains the last EU country prepared to play by the Kremlin’s rules. They constantly emphasize that it is technically impossible to operate Soviet style nuclear power plants without Russian specialists and resources. However, Ukraine is a vivid example that it is possible to do this.
And although in connection with the insane shortage of energy resources in the EU (caused by Russian blackmail), hopes for an "atomic renaissance" appeared in the EU, it is worth remembering the long-term perspective and the currently forgotten plans for the green transition. It is also worth remembering who you can do projects with and who you cannot. It is precisely the development of the situation at the ZNPP that will be of critical importance for further plans for the development of nuclear energy and, perhaps, will push the EU to expand sanctions on the Russian nuclear industry.
It is worth noting that Ukraine also took its time with sanctions against Rosatom, with the Ukrainian government only approving the decision to impose sanctions on the Rosatom corporation, as well as against its managers, enterprises and subsidiaries, on September 2. But better late than never.
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HOW DO UKRAINIAN BUSINESSES FUNCTION DURING THE WAR? |
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Since the start of the full-scale war in Ukraine, every fifth Small and Medium Enterprise (SME) has reported war losses of over $100,000. Almost 65,000 Ukrainian businesses are registered in the temporarily occupied territories. This is about 5% of the total number of legal entities in the country. The state is helping enterprises move their facilities to safer regions. However, as of mid-August, slightly more than 700 enterprises have gone through the relocation process, of which 500 have resumed work.
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SMEs make a significant contribution to the country’s economy through the payment of taxes, the organization of jobs, and the production of goods. In addition, almost all working businesses are now actively helping Ukraine to fight for its independence. According to various estimates, 48-65% of SMEs have fully or partially resumed operations. Less than 20% could maintain their income at the pre-war level. Therefore, the state budget will not receive a large share of its revenues at the end of this year.
To support SMEs, Ukraine has organized many programs that help entrepreneurs get back on their feet and resume their work. For example, the state programs Diia Business and the Ukrainian Startup Fund help existing entrepreneurs and beginners to develop their businesses, obtain financing, and enter the foreign markets. In the conditions of war and crisis, many entrepreneurs see their development in establishing cooperation with the European market. This helps them keep their assets and compensate for losing their positions in the Ukrainian market. It is also accelerating the process of Ukraine’s integration further into the EU. The state is currently allocating millions of hryvnias to implement grant programs to support businesses. In exchange, it receives its benefits from the development of entrepreneurship in the country. It creates new taxpayers, functioning businesses support the economy, and new jobs, including for IDPs. In addition, it contributes to the fact that people have the opportunity to implement their ideas in Ukraine and not take their assets abroad.
The process of business support in wartime does not stop at grant programs. The state creates mechanisms simplifying the conditions for entrepreneurs during and after the war. The development of entrepreneurship is also an essential component of the state plan for Ukraine’s recovery. Currently, the main business problems are:
- Lack of solvent customers on the domestic market;
- The unpredictability of the situation in Ukraine;
- Disruption of supply chains;
- Inefficient, lengthy and expensive logistics.
These problems cannot be solved quickly during the war. Despite this, 91% of those enterprises that suspended their activities due to the war are ready to resume in the future. Therefore, continued mutually beneficial cooperation between the state and SMEs will help to support the economy and reduce the number of unemployed in the future.
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THE WORLD'S LARGEST RECONSTRUCTION PROJECT |
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As Ukraine is facing urgent needs ahead of a difficult winter, the talks about long-term reconstruction seem to be murky and premature. However, these talks are ongoing and the Ukrainian government already presented its framework of short-term and long-term recovery in early July at the Lugano conference. The plan, which should be implemented within ten years, consists of three stages (until the end of 2022, 2023-2025, 2026-2032), with the total cost estimated by the government to be USD 750 billion. The projected annual GDP growth is 7% which will help achieve pre-war level in ten years’ time. During the Lugano conference, Ursula von der Leyen announced that the EU will be in charge of establishing and coordinating an international platform for Ukraine’s reconstruction.
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There have been debates whether reconstruction planning is timely or whether Ukraine should just focus on urgent weapons supply and humanitarian relief to those most in need. Indeed, talks about reconstruction are useless without Ukraine winning the war. On the other hand, as mentioned by ICRC spokesperson Erika Oman “The gradual degradation of conditions and human dignity cannot be addressed by simple relief activities but calls for a more sustainable and structural response”. That’s why talks about reconstructing economic activities to help people sustain themselves is timely already. They are timely also because planning, coordination, and needs assessment will take a lot of time and patience. The world is expecting probably the largest post-war reconstruction in its history, so shouldn’t we start working on it right now? Though the Lugano recovery plan presents an extensive list of what has to be done, it says very little about to how it will be done. What will be the division of labour between the EU, Ukrainian government, other major stakeholders that are also big donors, like the US, UK, Turkey? The EU has sufficient technical capacity to coordinate this process, but Ukraine’s ownership and leadership is expected, as well as coordination of stakeholders, like local government and civil society. Working closely with the EU on reconstruction will help Ukraine on its way to joining the EU as Ukraine has to do its “homework” in implementing the EU’s seven recommendations for further EU integration. On the other hand, the US as the largest donor of Ukraine’s security, 90% of its funding coming in grants rather than loans, would want to play a big role in its reconstruction.
Reconstruction will be a long process, and the first steps can be made now. Among those first steps would be assessing damages as well as learning the lessons of other reconstructions, many of which are considered failed ones. In terms of collecting damage, Ukraine is doing a good job – there are at least two platforms that are doing it Ukraine-wide. One is the project “Russia will pay” by Kyiv School of Economics and another is the World Bank’s comprehensive assessment of damages and needs. The World Bank estimates Ukraine’s war losses at USD 350 billion, including about USD 250 billion for “better than it was” reconstruction and USD 100 billion for current needs. The World Bank interim report on damages will be presented in Brussels on 9 September. In terms of lessons learned, experts argue that for the Ukrainian economy already in debt, foreign support should come predominantly in grants rather than in loans. At the same time, as the study of Iraq and Afghanistan shows, fuelling local budgets with foreign funds will do harm leading to inflation. Another issue connected with local capacity is supporting local civil society organizations rather than international NGOs that proved to be incompetent in handling the crisis. Analysis of humanitarian aid funding received versus humanitarian aid provided shows that Ukrainian CSOs proved to allocate humanitarian funds much more effectively than the international ones. However, creating favourable business environment to boost the economy will be key and the EU has started providing loan guarantees for businesses to cover for military risks. Looking at the lessons of the Marshall Plan, the economists claim that the establishment of national development banks allowed the countries to recover faster. One of its examples, the German KfW (Kreditanstalt für Wiederaufbau) working until today, distributes the funds that arrive from foreign investors in the form of loans and repaid loans allow for funding of further development projects. What will also be crucial for the international partners is that the banking procedures of the development bank also allows for projects’ higher quality standards.
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RUSSIAN OPPOSITION AND ITS FIGHT FOR FREE RUSSIA |
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On 31 August, the “Freedom of Russia” Legion, the Russian Volunteer Corps (RDC) and the National Republican Army (NRA) jointly signed a Declaration on Cooperation and announced the creation of the Joint Political Center in Kyiv to coordinate Russian Armed opposition against the regime of Vladimir Putin. The Joint Political Center will be headed by Ilya Ponomaryov, former member of the Russian Duma, who voted against the annexation of Crimea in 2014 and, subsequently, was granted Ukrainian citizenship. He claimed that the countdown to the end of the Putin’s regime had begun. The Russian opposition activities would allegedly include organized armed resistance to Russian fascism, and information campaigns. The number of the active participants of the movement is not disclosed, but, according to Ponomaryov, is close to 1000 fighters. The Legion “Freedom of Russia”, formed in March 2022 consists of Russian citizens who lived in Ukraine before the full-scale invasion and joined the Ukrainian Armed Forces. The NRA – a partisan network on the territory of the Russian Federation – took responsibility for the death of Daria Dugina, and claimed involvement in number of arson activities against Russian military registration and enlistment services, against the cars of Russian military “volunteers,” as well as acts of railroad sabotage. But there is no evidence of its existence, other than the statements of Ponomaryov.
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The roots and background of the anti-Putin armed opposition, which allegedly joined forces in Kyiv and agreed to act under the unified white-and-blue symbolic, remain vague. Initially it was announced that it would be joined by Russian opposition figures such as Andrey Illarionov, Mark Feygin, and former vice president of Gazprombank Igor Volobuyev, as well as well-known Ukrainian politicians (adviser to the Minister of Interior Anton Gerashchenko, adviser to the head of the President’s Office, Oleksiy Arestovych, leader of the Crimean Tatars, Mustafa Dzhemilev). However, later some of those, like Dzhemilev, claimed that did not know about their engagement and were mistakenly put on the list. The Ukrainian expert community is divided in its assessment of the newly established organization. Arestovych was very outspoken in favour of the Russian armed opposition, which prompted speculation that Ukraine may have initiated the whole plot as part of the strategic communication campaign to accumulate internal Russian resource to defeat Putin. However, more and more Ukrainian experts express concerns about the organization. Ukrainian MP from the ruling Servant of the People Party Oleh Dunda, who initially was even indicated on the list of the founders of the Joint political centre, disclaimed the whole idea, stating that Ponomaryov could be an infiltrated Federal Security Bureau (FSB) agent, whose task was to instigate competition inside the liberal Russian opposition, to radicalize it, thereby minimizing international support. Nevertheless, Ponomaryov’s links to Vladislav Surkov, as well as his previous political and business career, contribute to reasonable doubts about the real purposes of the National Republican Army, if the latter exists. Predictably, Ponomaryov denied the allegation, and assured that he spent already more than 1 million USD his personal funds to support the Russian armed opposition movement. Other opposition leaders like Garry Kasparov are too careful to work directly with Ukraine. The single goal of the Joint political centre is defined as “the defeat of the Russian army in Ukraine, the liberation of Donbas and Crimea, as well as the destruction of the Putin regime and its remnants”. At the same time, participating organizations remain free in choosing methods and targets to achieve the goal, Ponomaryov explained to media. The Joint political centre was, therefore, created predominantly for communication and coordination purposes. However, for Ukraine, its existence presents more risks than benefits. It can be expected that Russian propaganda would promote the narrative of Ukraine as a sponsor of international terrorism and supporter of terrorist cells on its territory. Those accusations will find their target audience in the world, deviating public opinion and jeopardising international supplies of weapons to Ukraine.
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HEDGE POLITICS IN ITALY: GIORGIA MELONI'S PROFILE |
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As the elections in Italy are approaching, more details of the political campaign are emerging. Polls predict there will be a growth in abstentions due to widespread distrust in all political parties, especially among voters under 35. The same polls indicate that, for the first time in Italy’s history, a woman will become prime minister. Giorgia Meloni, leader of the Brothers of Italy party, continues to surprise, provoke and make headlines with her controversial tweets and statements.
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Far-right politician Giorgia Meloni is the front-runner in a race to become Italy’s next prime minister. At 45 years old, the unmarried mother Giorgia Meloni, leader of the Brothers of Italy political party and President of European Conservative and Reformists Party (ECRP), is gaining the trust of more and more potential voters. However, some of Meloni’s recent steps, e.g. the decision to share a controversial video, provoked negative reaction. The condemnation came not only from Italian Democratic Party leaders (left-wing) but even right-wing MPs and senators. Twitter even had to remove the controversial video from the network. Some even saw Russian interference behind the following campagna against Meloni, though an investigation appeared to disprove this notion. Meloni herself is in the crosshairs of the Kremlin. Russian newspaper Pravda is constantly attacking her for not supporting a Russian authorities’ proposal to cooperate. Meloni irritated Moscow when she and her party wholeheartedly endorsed Dragi’s cabinet decision to send weapons to Ukraine.
‘Brothers of Italy’ as well as its leader Meloni, contrary to other right-wing parties like Lega and Forza Italia, cannot be accused of having a Russian ‘legacy’. Moreover, Meloni is perceived by the Kremlin as an annoying political actor that refuses to play according to Kremlin’s script. Therefore, Russia will invest more of its forces in order to discredit the ‘Brothers of Italy’ as well as its leader in order to steal some percentage of votes and thus help its two key allies Lega and Forza Italia. This Kremlin’s tactic is aimed at achieving such election results which will force Meloni to negotiations with all the right-wing (and pro-Russian) parties and secure them more seats in the new coalition government.
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CZK: Transparent account
AN: 2300405420/2010
VS: 2022
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