Key takeaways:
On August 6th , The Ukrainian Armed Forces (UAF) began an offensive into Russia's Kursk Oblast and are currently advancing towards Sudzha, a town about 10km from the border. In response to the Ukrainian incursion, Russia has declared a state of emergency and evacuated residents of the region. The offensive into Kursk has been met with Western approval, as both EU financial support and US military aid fortify Ukrainian efforts
KSG assesses that gas imports from North Africa and Azerbaijan could help mitigate the consequences of a potential shut off of gas flow through the Trans-Siberian Gas Pipeline via the captured Sudzha measuring station.
Despite swift Ukrainian territorial gains, it is unlikely that it will be able to sustain its forward position as significant Russian reinforcements are deployed to Kursk.
KSG assesses that the current offensive is motivated by a desire to bolster Ukrainian leverage in potential peace talks as US elections draw near.
On August 6th, Ukrainian forces entered the Russian Kursk Oblast capturing significant portions of Russian territory and forcing the declaration of a state of emergency by the Russian Government Commission for the Prevention and Elimination of Emergencies and Ensuring Fire Safety. Updates from the Russian Ministry of Defense indicate that the UAF are approaching Sudzha, a town strategically located 10 kilometres from the Russo-Ukrainian border. Reports from Rybar, a pro-Kremlin Telegram channel that provides up-to-date progress of the war, state that at least 76 thousand people have been evacuated from the Kursk region already. Russia appears to potentially be trying to smooth over the reality of the situation in Kursk. The Kremlin released an overview of a meeting between Russian President Vladimir Putin and Acting Governor of the Kursk Region Alexei Smirnov, in which the response to Ukraine’s progress into Russia is portrayed as swift and resourceful. This contradicts local reports which have depicted a more chaotic environment with fighting occurring in various villages surrounding Sudzha.
Western Reaction
Despite previous apprehension regarding Ukrainian strikes and military action inside Russian territory, the US appears to approve of the current offensive into Kursk, although it has not officially addressed the topic. On August 9th, the Biden Administration announced $125 million USD in further security assistance, containing munitions like Stinger missiles. While the US Republican Party continues its struggle between establishment and new generation views on Ukraine, continued Ukrainian gains will make it difficult to justify significant decline in US support.
Ukraine’s offensive roughly coincides with the reception of F-16s from the Netherlands and Denmark on July 31st. The addition of the fourth generation fighter F-16 Fighting Falcon is a significant upgrade to Ukraine’s fleet of Su-27 Flankers and MiG-29 Fulcrums. This US-approved donation is part of a Western campaign to combat Russian air superiority that has centred around air and missile defence capacity, and has succeeded in mitigating Russian aerial dominance in many regions. While the arrival of F-16s will aid Ukraine in air strike and air defence capabilities, KSG assesses that the aircrafts will not significantly alter the trajectory of the war thus far in 2024.
The EU addressed the Ukrainian offensive into Kursk directly with EU Foreign Service spokesman Peter Stano stating that the push into Kursk would not affect EU support for Ukraine. Coincidentally, the Council of the EU approved the first payment of the Ukraine Plan the same day that Ukraine began its assault into Kursk. The funding entails €4.2 billion EUR for maintaining Ukrainian economic stability and supporting Kyiv in its government operations. Following developments, Viktor Orban may decide to soften his Russian support, especially as Hungary continues to lose favour in Europe over its stance on the Russo-Ukrainian conflict.
Potential for European Gas Fallout
In Ukraine’s offensive towards Sudzha, it has apparently captured a key gas transit point, a Gazprom gas measuring station. Ukraine’s 61st mechanised brigade posted a video outside the station on August 9th, but Gazprom spokesman, Sergey Kupriyanov, has confirmed that gas continues to flow through the transit point. The station is crucial to delivering Russian exports of gas to Europe through the Trans-Siberian pipeline. While it may be perceived as bad faith for Ukraine to strike a blow to European gas imports, cutting into already declining Russian gas export revenues would be an effective option for Ukraine. KSG assesses that the cutoff of gas through the Sudzha station is unlikely. Ukrainian special forces would have the ability to sabotage this infrastructure regardless of a conventional military occupation of the region, thus this offensive does not increase the likelihood.
In addition, the Ukrainian shutoff of Russian gas would create a sizable European demand spike for gas, but nothing overwhelming due to the phase out of Russian gas reliance by EU states. However, Austria and Hungary still remain heavily reliant on Russian natural gas imports, with 85% of Hungarian natural gas made up by Russian imports and Austria being 64% reliant on Russian gas imports as of April 2023. While Hungary receives some of its Russian gas through alternative pipelines such as TurkStream, a natural gas pipeline that runs through the Black Sea from Russia to Europe, the shutoff of the Trans-Siberian pipeline would still be harmful to the Hungarian energy sector. In such an event, KSG assesses that Azerbaijan and North African countries, who have already played a role in helping Europe transition from Russian gas, are poised to supply the spike in gas demand. Austrian firm OMV has already begun investing in North Africa’s energy sector, like at the Tunisian Nawara Gas Development Project, or Libya’s El Sharara Oil Field, which recently suspended production.
Looking forward:
Without a Western green light to use long-range missiles like the Army Tactical Missile System (ATACMS) to strike deeper into Russian territory, KSG assesses a low likelihood that Ukraine will be able to sustain significant territorial gains in the Kursk Oblast in the coming months.
Ukraine may sense the potential ticking clock that is US support as the US’s November elections draw closer. By capturing Russian territory, Ukraine seeks to gain an edge at the future negotiating table should it lose US support, especially as Ukrainian popular sentiment towards accepting certain territorial losses in order to put an end to the war softens. KSG assesses that in the run-up to the US election, Ukraine will stay on the offensive, attempting to consolidate potential leverage until it ensures continued US support through a Harris victory.
KSG assesses that in the next 4 months, US defence companies like Lockheed Martin and Raytheon Technologies (as well as adjacent industries), will continue to secure contracts as the US continues to both support Ukraine and develop its own lagging munitions supply.
KSG assesses that Hungary and Austria will likely turn to Italy to supply a potential gas deficit from a potential shut off of the Trans-Siberian pipeline through Italian energy partnerships with North Africa countries, especially as Italian-Hungarian relations strengthen. Azerbaijani gas will likely play a supplementary role as well due to the feasibility of the Southern Gas Corridor, and may even overshadow North Africa should Libyan gas production falter due to domestic political unrest.
By Carter Morton