Key Takeaways:
Ukraine continues to hold significant territory in Russia's Kursk region, while Russia focuses its main efforts on advancing in Eastern Ukraine, particularly around the city of Pokrovsk. Both countries have escalated missile and drone attacks, targeting critical infrastructure.
Western support for Ukraine is facing increasing domestic pressure, with some European countries advocating for negotiations. Military aid is being reduced by certain nations, as exemplified by Germany's budget cuts. The shifting political landscape is negatively affecting overall support levels for Ukraine.
Both Russia and Ukraine are experiencing economic difficulties. Russia is struggling with high inflation and relies heavily on China, while Ukraine faces labour shortages and electricity supply disruptions.
KSG assesses that Ukraine will maintain control over significant territory in Kursk over the next month. Russia will likely fail to take Pokrovsk and make marginal gains in Eastern Ukraine. Over the winter, significant territorial gains for either side are unlikely due to weather conditions and manpower shortages, as well as ammunition shortages in the case of Ukraine.
KSG assesses that in 2025, there will be an increased desire for a negotiated peace - driven by declining support for Ukraine from its allies, as well as economic and logistical challenges for both sides.
Military Developments
Following Ukraine’s initial incursion into Russia’s Kursk region on the 6th of August and the immediate aftermath as assessed by KSG, the Ukrainian Armed Forces (UAF) have maintained their offensive, still holding significant territory in Kursk, including the town of Sudzha. While Russia has made gains recapturing disputed territory in the Oblast during a counteroffensive initiated on the 10th of September, its priority remains the offensive in Eastern Ukraine. Here, the Russian military is advancing along the frontline in Luhansk while closing in on the city of Pokrovsk, which is crucial to controlling the Donbas.
Both Ukraine and Russia have stepped up missile and drone attacks. Ukraine is utilising its limited capacity to strike Russian territory to destroy oil export infrastructure and diminish the country’s capacity to carry out aerial bombardments. It is constrained by the US decision not to permit the use of long-range missiles to offensively strike deep into Russian territory. Russia is engaging in large-scale attacks on Ukrainian energy infrastructure, which has resulted in electricity production reaching a critical level, preventing any exports.
Russia’s capacity to attack energy infrastructure is reinforced by Iranian supplies of short-range ballistic missiles to Moscow, which Tehran denies.
President Putin announced an increase in the size of the Russian army by 180,000 to include 1.5 million soldiers by December.
Western Support for Ukraine
Both the US and key partners in Europe, such as Germany, have promised continued support. On a visit to Kyiv on the 11th of September, UK Foreign Secretary David Lammy announced the UK will provide additional funding to help rebuild infrastructure, provide humanitarian assistance and military equipment. However, the most recent meeting between Prime Minister Starmer and President Biden on the 13th of September failed to generate US approval for Ukrainian forces to use British long-range missiles or American made ATACMS missiles to strike offensively into Russian territory.
Simultaneously, weak approval ratings of European governments pressure them to seek a negotiated solution to end the war to prevent a loss of support in future elections. The German chancellor has already indicated stronger advocacy for negotiations to end the war and the German budget for 2025 sees a significant reduction in military aid to Ukraine.
Receiving a new migrant wave from Ukraine, alongside increased pressure on European governments to push for a negotiated settlement, poses significant challenges to neighbouring countries such as Moldova and Romania, as well as major European powers like Germany. Large migration waves would likely undermine support for Ukraine, as it would contribute to domestic challenges such as economic recession, and it would coincide with increasing anti-immigration sentiment in Germany.
Russian Diplomacy
On the 3rd of September, Putin visited Mongolia in defiance of an ICC warrant for his arrest. This was his first visit to an ICC member country since its issue. Mongolia refused to execute the warrant, prioritising amicable relations with Russia over adhering to the Rome Statute and aligning itself with Western interests. Mongolia is significant to Russia’s intensifying economic relations with China as the ‘Power of Siberia II’ gas pipeline is expected to run through its territory, crucial to increasing Russian gas exports to China to make up for the loss of the European market.
Russia has made efforts to increase cooperation with China through multilateral efforts after its economy has become increasingly dependent on the country throughout the war. Russia is also intensifying dialogue through BRICS in an effort to attract non-aligned countries through economic means. Prime Minister Modi met with both Putin and Zelensky, signalling India’s willingness to pragmatically engage with both Russia and Ukraine without expressing explicit support for any one side in the war.
Middle Eastern countries underscored their role as mediators between Russia and Ukraine as the UAE facilitated an unprecedented two prisoner exchanges on the 13th and 14th of September.
As a reaction to the Iranian missile shipment, the US, France, the UK and Germany have announced a new round of sanctions. They target both Russian and Iranian individuals while also restricting air travel between Iran and the West by sanctioning Iran Air.
Domestic Stability in Russia
The Russian war economy continues to be plagued by labour shortages and high inflation. Rising food prices exemplify that Russia is prioritising the war over improving living standards in the country. Extensive government spending fuels the war effort, but is dependent on commodity exports, leaving it susceptible to shocks to global markets. After the loss of the European market, crucial state-owned companies are making a recovery, mainly due to an increase of gas exports to China. Alongside a reorientation of gas exports towards LNG, this stabilises the government budget. Despite Ukraine’s control over the gas measuring station in Sudzha, gas transit from Russia through Ukraine to Central and Eastern Europe (CEE) has continued.
During the ongoing fighting in Kursk, the Kremlin is attempting to project an image of normality, holding scheduled regional elections which confirmed incumbent Alexei Smirnov as governor of Kursk.
Domestic Stability in Ukraine
Ukraine’s economy is heavily dependent on the provision of financial support by Western allies, which has significantly increased compared to the summer months. It faces persistent labour shortages due to migration, further complicating the conduct of the war and diminishing the pace of economic recovery. The continued Russian attacks on energy infrastructure complicate manufacturing and worsen the labour shortage as a lack of available electricity increases the pressure on people to relocate.
Ukraine recently underwent an extensive cabinet reshuffle, which most prominently replaced foreign minister Dmytro Kuleba with his deputy Andriy Sybiha. This constitutes the largest change of high- ranking officials since the start of the war including multiple resignations without any accusations of wrongdoing.
Looking forward:
KSG assesses that there is a high likelihood that Ukraine will be able to maintain its position in Kursk as long as Russia’s primary objective remains its military campaign in Eastern Ukraine.
KSG also assesses that there is a high likelihood that the US will permit Ukraine to use long-range missiles to strike deeper into Russian territory in the coming two to three months due to the absence of an escalatory response to the Kursk incursion. The past two years have shown that eventually Washington succumbs to the lobbying of European NATO Allies, and KSG expects this to happen again. This would strengthen Ukraine’s position in Kursk and disrupt Russia’s logistical support for its offensive in the Donbas.
KSG assesses that over the winter of 2024-2025, and Spring of 2025, it is highly likely that Ukraine and Russia will engage in the most significant peace negotiations since the early months of the war. Domestic political developments in Europe and a potential Trump victory will most likely diminish support for Ukraine which will likely be further driven towards negotiations by a shortage of soldiers. KSG wargaming has shown that the ability of Ukraine to succeed in negotiations, or militarily, is highly dependent on whether or not Trump is elected.
The recent changes to Zelenskyy’s cabinet are unlikely to have an effect on the conduct of the war, as they mostly reshuffled offices, suggesting continuity in policy. However, replacing the foreign minister holds potential to disrupt existing communication channels and might complicate convincing Western leaders of Ukraine’s ability to win the war.
KSG continues to assess that Western defence companies as well as adjacent industries will continue to experience a high demand for their products until the end of 2024 as governments continue to provide military equipment to Ukraine and aim to upgrade their own.
In the case Russia should return to a strategy of targeting Ukraine’s capacity for agricultural exports, this could trigger famine and instability in Africa, likely leading to increased migration into NATO/EU countries. However, KSG assesses that a significant dependence on such a strategy is unlikely given Putin’s recent attempts to strengthen relations in Africa.
KSG assesses that gas transit through Ukraine is likely to continue despite the fighting in Kursk. At the end of the year, a restructuring of the CEE gas market due to the termination of the Russia-Ukraine transit agreement is highly likely to increase gas prices in Europe as pipeline supply would be replaced with LNG. This restructuring is likely to facilitate Türkiye’s and Italy’s role as gas hubs.