Russia Is Not Just Winning The Financial War. They’re Winning On The Ground Too.

We have provided extensive analysis of the financial war between the U.S. and Russia related to Russia’s invasion of Ukraine. That’s important because the consequences are not confined to the battlefield or even the combatant nations.

The consequences are felt globally in the form of higher prices, shortages of goods, supply chain disruptions, and possible mass starvation later this year. What about the kinetic war? How are things going on the ground?

As we’ve said before, it’s difficult to get accurate information because both sides lie about progress for themselves and setbacks for their opponents. On top of the outright lies (or mere silence) comes a heavy layer of propaganda; the Ukrainians seem to be particularly skilled at this and are getting plenty of help from western media.

We have found some reliable channels of information including this report from Reuters. Russia’s assault is slow and brutal, but it is proving effective in achieving Russia’s goals.

Those objectives include building a land bridge from Russian territory to Crimea (and possibly beyond to Odessa), cutting Ukraine off from access to the Sea of Azov and the Black Sea, and surrounding Ukrainian troops in the east behind a wall of control that runs roughly from Kharkiv to Kherson and Mykolaiv. Once that wall of control is established, the Ukrainian Army trapped behind the line will have no choice but to surrender or face annihilation.

A major battle is now shaping up near the twin cities of Severodonetsk and Lysychans’k on opposite sides of the Siverski-Donets River near Luhansk. It is estimated that 10,000 or more Ukrainian army troops are in the Lysychans’k pocket and are under a Russian artillery barrage. This battle may take weeks to play out, but Russian victory is likely given the extent to which the Ukrainians are outnumbered and outgunned.

If the Ukrainian forces fall, there will be little left in the east to stop a Russian consolidation that would give control of about 1/3 of Ukraine to Russia.

This unfolding battle is not what you’ll be hearing about in legacy media outlets in the west. But investors should not be lulled into false confidence by bad reporting. Russia is winning the financial war, and they’re winning on the ground.

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