by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
AS THE WAR BEGAN, we had no doubt that brave Ukrainian patriots would fight furiously, and we thought NATO would show surprising unity on sanctions to cripple Russia’s economy.
BUT THE SHOCKER has been the lumbering Russian military, poorly led, out of key supplies and facing a morale crisis among soldiers who have little enthusiasm for a war against civilians.
WITH WEEKS OF FIGHTING AHEAD, Moscow appears content to wage a war against civilians — not simply making them collateral damage but actually trying to kill and terrorize them. War crimes appear to be Moscow’s preferred option, because its military has failed.
THE MILITARY IS A KEY ELEMENT of Putin’s troika; the other two-thirds are the oligarchs and ordinary Russians. The super-rich see the ruble collapsing and their assets confiscated in the West, while the general public faces a dramatic collapse in its living standards.
BUT IT’S THE MILITARY that has suffered the most dramatic fall from grace. Most experts believe Russian casualties have topped 5,000 in less than two weeks of war — at least half of them fatalities. Reports of surrenders and low morale persist, with Russian soldiers shocked to find they aren’t greeted as heroes, as their leaders promised.
THE NEW YORK TIMES REPORTS this morning that some Russian troops have crossed the border with MREs (meals ready to eat) that expired in 2002, and Western officials report that soldiers have surrendered and sabotaged their own vehicles to avoid fighting.
WE’RE NOT NAIVE, WE CONCEDE that the Russian Army can bludgeon Ukraine and take most of the major cities. But as Vietnam and Afghanistan proved, an insurrection eventually can prevail against Superpowers.
AS THE NEW YORK TIMES REPORTS, militaries in Europe that once feared Russia say they are not as intimidated by Russian ground forces as they were in the past. Part of this narrative is the eagerness of the U.S. to supply arms and apply aggressive sanctions (an oil ban is coming, and higher defense outlays are certain).
BUT PART OT THIS STORY is that the Russian military has been strategically inept, exposing a 40-mile convoy to relentless Ukrainian attacks. And part of this story is the failure of the Russian army to modernize.
TODAY’S TIMES ARTICLE, HIGHLY RECOMMENDED, quotes a Russian military expert: Much of the money to upgrade the military “was stolen and spent on mega-yachts in Cyprus. But as a military advisor you cannot report that to the President. So they reported lies to him instead. Potemkin military.”
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This post was first published at the AGF Perspectives Blog.