The Telugu... ...podcasts. I'm David Nols and this is Ukraine, the latest. Today, we bring you the latest updates from Ukraine. Discuss the news that Ukraine has been formally recommended for EU membership and we do a deep dive with an expert into the country's wartime budget. Bravery takes you through the most unimaginable hardships to finally reward you with victory. If we give President Zelensky the tools the Ukrainians will finish the job. Slava Ukraine!
We're strong. We're Ukrainians. Every weekday afternoon we sit down with leading journalists from the Telugu-Ukrainian Newsroom and our team is reporting on the ground to bring you the latest news and analysis on the war in Ukraine. It's Wednesday, the 8th of November, one year and 257 days since the full-scale invasion began and joining me today are Associate Editor Dominic Nichols, Brussels correspondent Joe Barnes, and Assistant comment editor Frances Dernley.
And our guest is Yuri Gai-Dai, a senior economist at the Centre for Economic Strategy. I started by asking Dom for the latest news from Ukraine. Hi everybody, let's start down on our blast, the left bank of the Danipa River. I'll have to do left and right again. I love it. We talk about rivers in the way they travel. If you're floating down the river, going downstream, the left bank is obviously to your left bank. Without taking my shoes off.
In this context, the left bank is the east bank that's currently under been held by, or primarily held by Russia. I say primarily because Russian sources are saying that Ukraine has managed to transfer a small number of armored vehicles to that left bank, to the east bank of Herzognoblass, across the Danipa River, and are continuing larger than usual ground operations there with a light infantry grouping of roughly battalion size. Very roughly, we think, therefore, about 600 soldiers.
Depending on the mission, a battalion, an infantry, light-roll infantry battalion, about 600 soldiers. It may be different depending if it's an armored infantry or what have you. But you're talking some hundreds, low hundreds. So there's thought to be in the Khrinki area, and Russian sources are continuing to claim that Ukraine maintains positions in the centre of the town there and nearby areas.
Now, other Russian mill bloggers refer into a picture that was apparently taken on Monday, purporting to show a Ukrainian tract amphibious transport vehicle that itself was carrying an infantry-fighting vehicle. So a lot of different things happening here, but basically a tract amphibious transport vehicle that can swim, can get across water, but carrying stores. In this case, carrying an infantry-fighting vehicle.
So a vehicle that's designed not just to survive armored personnel carriers are designed to put up with small arms fire and shell fragments, as long as it's not within roughly 10 metres-ish. But armored personnel carriers are designed to get you to the fight safely. Infantry-fighting vehicles are designed to be used in the fight.
So this thing, this thing that was able to swim across the river, was seen to be carrying an infantry-fighting vehicle over to the East Bank near Khrinki, so just as a reminder, so we're about 30k northeast of Hezon City and a couple of kays across the river. So are other Russian mill bloggers, so we're still on the Russian sources here, all the usual carry-out supply.
Are the Russian mill bloggers claiming yesterday, or claimed yesterday, that Ukrainian amphibious fighting vehicle did cross the river on its own and used, they referring to separate footage, also thought to have been taken yesterday, purporting to Sherry, destroyed western amphibious armored personnel carrier in an unspecified location on the East Bank. So we've been talking for some time about elements of Ukrainian forces on that East Bank.
Don't quite know if it was, we were positing the idea that it was reconnaissance or reconnaissance in force. We didn't know if it was an attempt to actually get across and hold ground or whatever.
If the Ukrainian forces are going across with armor, particularly infantry-fighting vehicles, which implies you're then going to push on rather than just look after yourselves for whatever your mission is, IFE is generally less expendable than armor personnel carriers, they're more complex, they're the fear of them. Then that is significant.
So the Institute for the Study of War, US Think Tank, they say Ukrainian forces are likely to have conducted initial company-sized assaults across the Dnipro river, company circa 120 people, across the Dnipro river, on to that left bank in late October or mid to late October.
Now this reported, they are saying this reported battalion-sized Ukrainian force on the East Bank suggests that the recent heavy Russian interdiction efforts along that river, mainly artillery, have not prevented Ukrainian forces from transferring additional personnel and material to positions across the East Bank. Now ISW then say, they ISW will not speculate on the prospects of ongoing Ukrainian activity on the East Bank of Hez on Oblast.
However, ISW very, very, very rarely comment on Ukrainian dispositions activity for operational security reasons. So the fact they've said what they have and make the point they're not going to speculate, I'm reading that as what they've said before, they are pretty solid on. They're pretty certain that has happened. So when they're talking about battalion-sized Ukrainian force on the East Bank, then I think that's, we should take that as a pretty accurate.
So if something's going on down there, something has been going on for quite some time, maybe what we were reporting a couple of weeks ago, there was the reconnaissance in force and then this is now the effort to do something. We think Ukraine has been massing air defense elements in the area, which would provide a bubble across the other side of the river.
The air defense elements have been on the right bank, on the West Bank, the Ukrainian held bank, but obviously their bubble of protection will extend across onto the Russian held side. So as ever, we will continue to watch that area, but it looks like it's more than we thought a couple of weeks ago. Now elsewhere, Ukraine is bracing for a renewed assault on Avdivka. So just to remind you, we're about 5K North of Donetsk city now.
This follows the recent unsuccessful attempts, numerous unsuccessful attempts by Russia to take the town. This is Vitaly Barabash, who's the head of the Avdivka military administration. And speaking yesterday, said the third wave will definitely happen, the enemy is regrouping after a second wave of unsuccessful attacks. He said that Russia was likely to be ready to launch its next full scale assault on the city, but that weather conditions were currently unfavorable.
I think it's still quite warm, but starting to get wet down there. Anyone's near the area, I appreciate an update there. Dika, just to bring us up to speed, almost completely destroyed by nine years of fighting. It's been right in the front for four years since the invasion in 2014. But only around 1500 of the city's 30,000 pre-war residents remain there, living mainly in basements, bombshells and so on.
Separately, Ukraine has deployed new Western air defense systems as we're bracing for this second winter of Russian attacks on the enemy grid, so President Zelensky, speaking on social media, he's hailed the deployment of additional nasams, mobile surface air launches, Norwegian American surface-to-weird launches. He said that I received reports on the receipt of ammunition, hardware and equipment over the past day.
Additional nasam systems from partners have been put on combat duty, timely reinforcement of our air defense before winter. A few more Russian-backed politicians have been killed in a car bomb in annexed eastern region of Luhansk, or temporarily occupied eastern region of Luhansk, this is according to local media. So Mikhail Filiponenko, who was formed ahead of Luhansk local militia, the Russia-backed separatist army in verticomers and a very small A,
that's been fighting since 2014. His son told the Luhansk information center as a result of an explosive device that detonated in Mikhail Filiponenko's car, the People's Council deputy received injuries incompatible with life. So Russian media have posted photos of a destroyed vehicle saying that it was the aftermath of the attack. A Russian state media task said it was not the first time there had been an attempt on Filiponenko's life. His car was previously blown up in February this year.
But he survived that one. Now several high-profile Kremlin backers and Moscow installed officials across the occupied territories have been attacked and some assassinated since the start of the full-scale invasion. You'll remember last month Oleg Syarov, who's a pro-Kremlin politician that Moscow, we think, were lining up to lead some kind of puppet government in Kiev if it had all worked out. He survived being shot in a hotel in Crimea, but of course there have been others.
Now on this, you may see other reports of, if this was an assassination, but you may see other reports linked to Ukrainian forces, and just to clear this up, which we've not covered before. But a senior Ukrainian military aid was killed on Monday. It was celebrated as a birthday present, exploded. There was some suggestion because this chap, Major Ganadi, Chastchenakov, was an aid to General Zalizny.
So there was some thought that maybe it was because of those links. However, Interior Minister Igor Klinenko has come out today and said, no, it wasn't an assassination. It was just a tragic incident. He said yesterday that Major Chastchenakov died at his home in the village of Cheyke, which is just on the western outskirts of Kiev, said to have been showing his family six grenades that a colleague had given him as a 39th birthday present when his son took one and began twisting the ring.
Mr Klinenko said the servicemen took the grenade from the child, pulled the ring, leading to the tragic explosion. I mean, it's silly, but a terrible story. His son was seriously injured in the incident and police are investigating it. But you might hear the two stories conflated, which is why I wanted to clear that one up. And that's it for now, David. Thank you very much, Tom, for all of that. Let's, because there's big news from the EU this morning. So let's go to Joe Barnes, Joe.
Hi folks, sitting here in the European Commission's Burleighmont headquarters to sort of fresh out of the Ursel of Undoleian press conference where she invoked a call to history, or call of history, sorry, as she announced the European Commission had officially recommended Ukraine to start formal membership talks to join the EU.
So that's sort of a huge, huge moment that so last year Ukraine was considered as a candidate, but was told no, you've got more to do in terms of these pro European reforms meeting our standards. But today is the point where the Commission says, look, we think you've done enough and you deserve to start these formal membership talks.
So, as the London M was clear in saying this was historic because it comes almost a decade after the Maidan revolution when protesters wearing European flags was shot by the authorities trying to cramp down on anti-Russian and pro Western movements in Kiev. And so speaking to Ukrainian journalists or friends in the press room, just there they were saying, look, this is massive for us because we've reached this point and it's been paid with the blood of our people.
But obviously lots of caveats when it comes to the European Union and how long it takes for things to happen. It's not going to be plain sailing for the Ukraine. This is simply a recommendation from the Commission from Ursel of Undoleian who has been to her credit a staunch backer of Ukraine often going further than member states with her backing.
So, Ukraine will still need the endorsement and this recommendation to be signed off by the EU's 27 member states that will likely be done in December at the last European Council summit of the year. So, according to the Commission, Ukraine had worked through, or has worked through 90% of the seven recommended reforms that Kiev was set when it was granted, Canada states and that's the way.
The main kind of thing is this, are your standards for environment, for safety of goods, democratic, judicial, are you basically good enough to be a European democracy, is what the EU is challenging to do. And so, this is what Ursel of Undoleian had to say. So, Ukraine continues to face tremendous hardships and tragedies provoked by Russia's war of aggression. And yet, the Ukrainians are deeply reforming their country even as they are fighting a war that is existential for them.
So, what is left in that remaining 10% that isn't done yet? So, Ukraine will still need to bring itself closer to European standards on fighting corruption, reducing the influence of oligarchs on politicians and the protection of minorities. And there's also a sort of another area, I guess, matches in with corruption, is they need to create political lobbying laws that are represented basically in line with Europe standards.
But so, let's go back to the protection of minorities, because that's interesting and often not spoken about. But it is a big concern for Hungary, which is one of Russia's closest allies in Europe, or its close ally in the European Union for sure. And Hungary will probably look to try and fraught make this process as hard as possible over the treatment of what it sees as ethnic Hungarians living in Ukraine.
So, around that transcarpathian area, which where Hungary and Ukraine both share a border in, I believe it's sort of in the southwest, if my geography is correct. But there are also ethnic Bulgarians and Romanian minorities also living in Ukraine, so that's to overcome. So, the concerns basically refer to language. Can these ethnic Hungarians, Bulgarians, Romanian, speak their native language if it isn't Ukrainian?
Have they got access to education that is in line with their native country, if it's not Ukraine? And do they have access to media that would be considered Hungarian, Bulgarian, or Romanian, so similar vein? But let's move on. So, the plan from this point is, if EU states adopt the commission's recommendation in December, Ukraine is going to expect to be working on those string of reforms that stay in Ukraine.
Of reforms that still to be completed. From then on, there will be a review in March of next year. And then if the member states are happy with how the reforms are going, they're adopt what is called a negotiating framework. So, that will be sort of where does Ukraine go next? Is it a road map, as it's often spoken about in NATO circles? But basically, what does Ukraine have to do next to satisfy European member states enough that it is worthy of being a European member state?
So, Charles Michel has said he wants this process, basically the EU's eastward expansion to happen by 2030. So, let's kind of talk about how long this could take, because the answer is potentially decades rather than Charles Michel's ambitious seven years. So, if you look at Turkey's application, that came in 1987. They were granted candidate status, which is basically, we think you're good enough to join, but we're not going to let you start formal membership talks in 1999.
In 2005, those a session talks started. In 2018, due to what the European Council described as a backsliding in reforms linked to membership, that process was frozen. So, that is from start to finish, from start to now is 36 years. So, Ukraine isn't going to be any EU member of overnight. It will probably be closer to seven years, and it will be 36 years, but it's still a long process. Albania, I believe, is 15, 16 years in the line.
And then, I think the one thing that many people haven't answered, and I tried asking, sort of, on the land, but unfortunately, being a British journalist, it's harder to get a question than if I would say European Union journalists these days. There is questions over how much of Ukraine can be considered for EU membership. So, part of the country has been occupied since 2014, when Russian back proxies entered the Donbas and seized part of the Net, part of Ruhansk.
And then there is the false gall invasion of last February, and still questions over how much land is occupied by Russia. So, will Ukraine be allowed to join the EU in its entirety? Or will the European Commission have to draw lines, essentially choosing what part of Ukraine can benefit from single market access, and where would the external border of that single market be in Ukraine?
I'm still waiting on answers on that, so I won't speculate too much, but the genuine consensus around, or to speaking, to people involved previously, is that only parts of Ukraine that are under the full control of Ukraine will be allowed into the single market. So, that will exclude, sort of, large parts of the country, which Ukraine deems to be Ukrainian, but doesn't have four military control over.
So, an EU official insists the membership process is moving forward at an incredible speed, which could actually be quicker than the end of the war itself, because we've heard about lots of stalemates now, people speaking about a long, slow, drawn-out conflict as Ukraine struggles to expel its Russian invader.
So, there will have to be a decision. Will part of Ukraine be allowed to join the EU? Or will they hive off, say, a large chunk, which is still occupied by Russia, and Ukraine is still fighting back control for? So, will that bit be excluded from EU membership? Or will the EU tell Ukraine it is not allowed to join until the conflict is fully resolved? Has there been some sort of peace agreement, peace talks to end that?
But that's still open for debate. If we look at what happened with Ukraine's NATO membership ambitions, they were basically told it's a hard no until the war is over, so we're still waiting on that EU decision. But what I can say is, and I've previously written pieces on this, is that a lot of people in Europe now see Ukraine's EU membership as the four runner for achieving peace.
So, can you potentially convince President Zelensky to go to the table and negotiate for peace with promises of single-market access if we draw a line and have an uncontested zone or something like that? That's all speculation, but that's sort of questions that are going to have to be overcome. And then also on the EU accession process, while we're there, it wasn't just about Ukraine today, Moldova was also granted the same conditional, even though the EU calls it non-conditional.
Membership ambitions for accession talks, Georgia was offered conditional, but candidate status and in Bosnia was also told that if you meet certain conditions, you will be allowed to start at some point. When a degree of compliance is reached there, so that is what is launched today is the EU's potential expansion into the Western Balkans, and it will be the biggest expansion since Eastern Europe was allowed in, and I'll stop there.
Well, thank you very much, Joe. I thought that was excellent talking us through all the implications and speculations around the announcement today. Can I ask you just a bit more about your experience in the room? You were there as Fondelae and Moussanglis. What was the atmosphere like? How did she come across? Yes, she was kind of picturing this as a big sort of historic moment. As I said, she described it as a call of history.
She was absolutely, resolutely behind Ukraine. She couldn't have been praising enough of how Ukraine is managing to fight a war against this Russian invader, but also trying to reform itself on a European path away from its sort of Soviet legacies of sort of a country that's seen as being deeply corrupt, with the control of Olyogarts over the politicians etc.
She was praising the movement towards a more European-esque country. But it's obviously you get a lot of excitement from moments like this. So, like for our British listeners, some of you may have been happy to have left the European Union with Brexit, others not so much. But for the journalism smaller countries, so there was a Georgian journalist who couldn't help but, when she was drawn to the question, couldn't help but thank Ursula von Delayen for this decision.
There were Ukrainians in the room, as I said, who were saying this is a big moment for us. This is what we've been fighting for. This is what we've paid for with our blood, blood of our countrymen and women. It's a big moment. And again, then you had obviously disappointment. You had say, Serbian journalists in the room asking questions about why they were excluded from this and the answer is basically Serbian is seen as a country that doesn't want to join the European Union anymore.
So, it's close knit with Russia. It's signed a trade agreement recently with China. So, it's lots of joy in the room. It's an exciting moment. It's a big moment for those countries involved in this. Because it's seen as a time of, they're promised sort of big booms to their GDP and their economies as part of the single market. It gives people the right to go and work wherever they want. It gives people the right to go and work wherever they want. So, it's an exciting moment for lots of people.
And yeah, it's nice to sort of share their enthusiasm with them, especially the Ukrainians who have said have been calling for this for a long time. Thank you very much, Joe. We'll come back to you later because I know you've been doing a lot of other reporting as well, not just EU stuff. Let's go to Francis Dunley then.
Well, thanks David. I think the most extraordinary thing about this EU announcement from the perspective here in London is how unsurprising it is. A testament to the way this war has changed perceptions of Ukraine and fostered a close relationship between Kiev and Brussels. We haven't had the reaction from President Zelensky yet, but it will no doubt, Carmers, Joe has been explaining as an immense relief, though I'm sure he was aware of the direction of travel some time in advance.
Opening negotiations with Moldova and granting candidates status to Georgia are also noteworthy. Two territories Russia has seen as countries under its own sphere of influence, of course. Indeed, one should see this geopolitically as a major blow to Moscow. Imagine how we would be responding to this if these nations were becoming closer to a union led from Moscow. It underlines the degree to which this war remains a significant blow to Putin's objectives for the continent on the whole.
But in other political developments, in a, well, frustration to Zelensky's outreach objectives, he has been forced to cancel a visit to Israel planned for this week. After the trip was leaked to an Israel TV channel, he was set to visit the country yesterday we learn until news of his plans were briefed to Israel's channel 12 news. Israeli officials insisted that the trip had only been postponed, but no date has been set yet.
A Ukrainian diplomat told the Times of Israel that Zelensky was very disappointed by said leak. I'm sure that's true for all the reasons we've discussed in previous episodes. Zelensky has been keen to show support for Israel and the Western powers efforts to defeat terrorism that he sees as supported by Moscow, as well as keeping the plight of Ukraine, of course, in the headlines.
But there's plenty for him to be getting on with at home. He has proposed to extend Ukraine's ban on exporting domestically produced natural gas until the end of 2024. First introduced in February last year, the ban has already been extended once to cover 2023. Kiev's energy minister had previously stressed the importance of its gas for domestic power generation because of the impact of the war on coal production.
I mention this not only to make reference to the energy front, something we haven't talked about for a while, but because it is yet another indicator of the fact that this war is set to last beyond what many initially expected. And in that vein, it perhaps comes as no surprise that officials from the US government have written to congressional leaders today to back a further $11.8 billion in new funding to Ukraine.
In that letter, Secretary of State Anthony Blinken, defense secretary Lloyd Austin and secretary of the Treasury Janet Yellen, wrote that the multi-billion dollar package is the minimum amount needed to help cover Ukraine's baseline needs. This said Ukraine is spending more than 100 percent of its total tax revenue on the war, and that it is entirely dependent on outside support to keep the government and economy functioning.
They then also sought to reassure Congress that the package will come with an unprecedented level of robust oversight and transparency, and will be conditioned on Ukraine making essential reforms. Now, those explanatory notes and justifications are very telling, I think, and something I'll return to in my final thought.
But lastly, since we're on the matter of funding in the context of Ukraine, the Ministry of Health has announced it has fully repaired 421 medical facilities and partly restored a further 413 damaged in the war. Since the beginning of the conflict, the Ministry states that Russia has damaged 1468 medical facilities in Ukraine and completely destroyed an additional 193.
The most significant rebuildings we've seen are in the cities of Nipro, Kiev, Harkiv, Chernehev and Milikolayev, notably the Nikolayev Regional Children's Clinical Hospital, which was damaged at the beginning of the war, indeed I remember is reporting on it, has now been fully repaired. Welcome news and representative of where money from Washington and other Western capitals is going.
Thank you very much, Frances Stanley. We've talked a little bit about Ukraine news there and EU news, but there's also lots of news also coming out of Russia today. Can you talk us through that? Sure, well it's just worth mentioning. Russia has placed on its wanted list another judge from the International Criminal Court, which of course issued that arrest warrant for Putin earlier this year.
So the Russian Interior Ministry has said that Sergio Gordon Eze cost a recon judge at the Hague-based court was wanted in the framework of a criminal investigation. Now it didn't provide any more details of what the allegations against him are. Russia of course has previously issued arrest warrant for Karyum Khan and ICC prosecutor and several judges. In September Moscow also revealed that it was seeking the arrest of Hofmansky, the ICC president.
Does this come as any surprise? No. Does it show that the ICC arrest warrant issued to Putin has upset the Kremlin? Absolutely. But since I referenced the energy front a few moments ago, an interesting intervention from Sergey Lavrov in other news, Russia's foreign minister who has accused the West of provoking crises on the global oil and gas market by rushing to switch to green energy and imposing pressure on other countries to do the same.
So to quote from him, in fact the reasons for the negative phenomena in the energy sector were the irresponsible actions of the collective West when it decided to force the cream transition for itself and impose the same green transition on other countries that were simply not economically ready for it.
He then added that Western boycotts of Russian energy in response to the war in Ukraine had dealt a serious blow to global energy security. These steps led to the rupture of historical value chains, costly redistribution of global energy flows and rising transaction and logistics costs. He then went on and said that the blowing up of the Lord's dream gas pipelines had deprived the continent of cheap gas and made it more reliant on expensive imports from elsewhere including the United States.
Now it's true to say that energy security has become an increasingly important subject. Though I think the idea that it means an inevitable drift to green energy as part of some sort of shady western scheme is, well simply inaccurate. In fact, what's happened is that there has been a renewed anxiety in countries like Britain about what green policies might mean in the context of not having access to Russian oil and gas and broader questions about energy security.
It has sparked conversations about the need to produce more of our own oil and gas as well as sourcing that energy, so not green energy but iron gas specifically from elsewhere including the Gulf from Middle East. I would argue, perhaps controversially, that this war has slowed down rather than accelerated the greener agenda or be it not in a way that is necessarily favorable to Moscow. So need for far more nuance than Mr Lavrov has offered there, I would argue.
Now lastly, the military context, Sergei Shogy, Russia's Defence Minister has hosted a top Chinese general and Defence delegation in Moscow today for talks to Deepen, Military Corporation. Shogy welcomed a high ranking general and vice chairman of Beijing Central Military Commission in a red carpet ceremony in Moscow.
We, unlike some aggressive western countries, are not creating a military block, he said. Relations between Russia and China are an example of strategic cooperation based on trust and respect. I'm sure that today's meeting will be another step to deepen the multi-profile links between our two countries and military departments.
Russia and Myanmar are also conducting joint naval exercises in the Andaman Sea over the next three days. Admiral Yevmanov, head of the Russian Navy, met the country's Yuntar leader yesterday. Just for some context there, the two countries are of course close allies. The Yuntar had described the invasion of Ukraine as justified and imported $406 million worth of arms and equipment from Russia since seizing power in February 2021.
It's the first time the two countries have done combined drills, but I think it comes as no surprise given that context there. So just further examples, David, of the Allies, Russia is drawing upon as we approach two years of war. Well, thank you very much, Francis. Let's go back to Joe Barnes. Yesterday, this is what I've heard an interview I did with Alicia Kurns,
chair of the Foreign Affairs Select Committee, Conservative MP here, who was talking about the continued threat and evolution of the Wagner Group. Not a group we've talked about much in the past few months since really the death of Yufgeny Progosian in August. There's been some interesting footage coming out of Sudan. We've got to be careful obviously, caveat supply, but it potentially involves the Wagner Group and also Ukrainian special forces. Can you tell us what you've seen Joe?
Yeah, so let's start off with West African country Sudan is a known sort of hub and destination for Wagner fighters. And that's been firmed by Western officials and Ukrainian officials, but so last week Ukrainian special forces were allegedly filmed fighting Wagner mercenaries in Sudan. So there was a two-minute clip that was published by the key post newspaper and that reported to show an elite unit of Ukraine's military intelligence service surrounding a building at the ground level.
Improrred footage, say shot from what appeared to be like a spotted drone, the footage was seemingly shot at night, showed at least two figures, so believed to be Wagner fighters, standing in a second floor room by the window. And then the video shows several what looked like rocket-procane could be smaller mortar style, weapons are then fired into the building where the men were spotted.
And then at one point some of the men in the window begin to fire back towards where the Ukrainians were spotted or were apparent Ukrainians and others can be seen escaping into what is a dense urban area.
A say that actually showed what people that looked like dressed like how I have seen Ukraine special forces dressed in Ukraine, so the same uniform, but it's harder to tell is it's grainy footage, as I said it was shot at night, it was infrared, so you can only see the silhouettes of these people.
There's a second drone video, the Keith Post shared, and it appears to be shot during a day this time, and it shows a number of men running through the streets of another sort of populated dense urban environment as explosions ring out around the area. The source of the blasts are unclear, but some of the strikes trigger fireballs that stretch the length of these low rise apartment buildings in the area and others hell plumes of smoke and dust into the sky.
There are no visible casualties in this video and there are no Ukrainian operatives to be seen. So what do we know? The Ukrainian government has not officially acknowledged the deployment of its special forces to Sudan or operations targeting Wagner fighters in Africa, but I was speaking to a Ukrainian intelligence source, and they told me that the videos, it was correct to assume that these were Ukrainian strikes on Wagner in the West Africa.
So a security source told the Keith Post, the footage probably shows the work of special units of the main intelligence directorate of the Ministry of Defense of Ukraine, so that's the HQR, the Girl, Girl, her, that we often speak about that's led by it, budenov.
So the source added that the footage had been filmed in the last two weeks, so we could not independently verify these claims, but it does come after Ukrainian special forces were reported to have been behind this series of strikes against Wagner-backed militias in Sudan in September.
So going back to September, remember reporting on this, it was a CNN report, a source told CNN that a non-Soudnese military had carried out a series of drone strikes and a ground assault on the rapid support forces, which is the sort of Wagner-backed militias in Sudan, near the North African countries capital.
So he's obviously hard to stand these up, but what we do know is Major General Krillabudnoff, who's the head of Ukraine's military intelligence, is known to favor strikes that demonstrate Keith's international reach and show that Russian targets are not safe anywhere. So look, he's like mastermind did apparently this car bombing that Don was speaking about in Donbass, his team are often behind Russian strikes deep inside Russia, inside Crimea, and possibly in Africa.
And he's spokesman, Andre Yusif, said we can neither confirm nor deny his attacks, but you can also recall the words of General Boonov that Ukraine will destroy Russian war criminals anywhere in the world wherever they are. So it's hard to tell, but it could possibly be a small group of Ukrainian soldiers, special forces, operatives that have taken the fight to Russian targets, Wagner targets in Africa.
While Africa is still a prime target for Russia and Wagner itself, even though it's not the state entity as much as it was pre-Pregosians mutiny, and I'll stop there on that one. Thank you very much, Joe, that's fascinating. Let's move, I think, then, to our final thoughts, Dominicels. Thanks, Joe, I'd like to take us back to the left bank, the east bank of the Deepa River down in the Hezon Oblast, not only because of what may or may not be happening down there, but also how to interpret it.
And I think it offers us a lesson about how everything is connected in this war, what on earth am I talking about? So I think what's going on down there, before we even get to the level of thinking, what do we think about it? We need to get through the model that we're going to build for ourselves of how to think about this. And what I mean by that is, we think there's armed vehicles, Ukrainian armed vehicles on the east bank.
We think there is air defense on the west bank providing some sort of bubble of protection. Now, if we just take that, that, okay, fine, that could still be some kind of reconnaissance in force. As I said, you don't want to lose equipment, but actually some of it, you're prepared to put into harm's way to see what the return is you get.
Now, if Ukraine are staying not just looking, we should expect to see things like arm and engineer equipment, another specialized equipment, the real key bits and pieces that you look for in the enemy to destroy. You look for the bridging equipment, you look for the mind breaching equipment, you look for the very specialist kit because without that, it's very, very difficult to go and do all the other stuff.
So if Ukraine, really serious about pushing on down in that area and trying to try to perhaps open up another flank, we should expect to see some specialized equipment and I've singled out engineering, armored engineering equipment there, which I don't think we've seen yet on the, on the east bank. That really would be a statement of intent because you do not want to lose that stuff. So, you've got to have a willingness to take risk in war.
But before we could even think about trying to interpret what we're seeing down there, we have to get through the lens of this whole process is made harder by the process of external military support for Ukraine. Again, please stick with me at the back, I'm sorry if it's a bit rambly. As a military commander, you have to expect losses, right? You try to minimize them, of course you do. I'm talking both personnel and equipment, you try to minimize them, but you have to accept risk.
You shouldn't allow the prospect of equipment loss to be the main driver when you're designing operational plans. But if you are not sure of the pipeline of support, if for example you've been gifted 14 Challenger 2 by Britain and we think one's been knocked out already, possibly repaired, but let's say one knocked out already.
31 Abrams from the US and maybe nothing more, then you can forgive, I think, Ukrainian commanders for allowing considerations such as equipment losses to be forefront of the planning. So, take that back to the users today. I don't really know how to think about what we're seeing down there yet because I don't know if they would be willing to risk armored engineering equipment, I'm using for this example, for the fear of losing it.
And so, I can't even get through that bit before I think about what is this, is it reconnaissance in force, is it opening up another flank, is this just a diversion? So, we've got to sort of take everything in the mix and it does take us back to this idea that the Western support has been very good in some places excellent, in some places less good.
But offering stuff without the promise of more to come, really, I know it could possibly go into the bucket of a nice problem to have, but it is still a problem. You know, if you've only got 14 Challenger, do you risk them on this? If you know you've got more coming up behind it, then that is one thing, that is one worry off your mind.
But I think this is another example where the peace meal support in terms of equipment from the West into Ukraine, this is a very real, I think, operational example, the effect on the ground here, I think you can trace right back to the policies of external supporters for Ukraine in their gifting of weapons.
So, I'm not saying this is going to, the whole thing is going to collapse because of the gifting has not been as the pledging of equipment through Ramstein and elsewhere has not been constant in forthcoming, of course, there's been huge efforts in that regard. I'm just saying that these big strategic policy choices that we see generally from politicians and sitting around tables and all that kind of stuff really does have an effect on the ground.
And I'm just wondering if this is one of those times where we can see that. And as I said, right at the start of this, so I don't even know, I can't get to what do I think about what's happening yet, because I can't yet work out how to think about it. And if any of those bigger issues are in play here about what may or may not be happening.
Sorry if that's a little bit rambley, we'll probably return to this because I don't see that situation changing down south anytime soon or the intent. So we will come back to this again, but hopefully that's clear. Thank you very much, Dom.
Yeah, and I'm going to keep my shorts and sweets and give you the response that Vladimir Zelensky in short gave to the news of Ukraine's recommendation by the European Council for membership talks. He said this is a strong and historic step that paved the way to a stronger EU with Ukraine as its member.
I think the EU and personally, Ursula Von Delaen for supporting Ukraine on our road to the EU. Ukraine continues on its reform path and looks forward to the European Council's decision in December. And then there's a company by video where he basically speaks a lot about sort of the European values that Ukraine's been fighting for in its war against Russia.
And he said that he's going to keep his promise, the institutions of Ukraine's promise that they will be reforms in line with European standards for them to join. And then he said today the history of Ukraine and the whole of Europe has taken the right step. So yes, it's good news for Ukraine and good news from Zelensky. And I'll stop there and thanks for listening folks. Frances Stanley, would you like the very final words?
Thanks David, I mentioned earlier on some of those explanatory notes that were in the letter to leaders in Congress basically trying to say, don't worry there will be a lot of scrutiny about this money that's going to keep. And of course, the reason for that is there is this narrative now that has been particularly propagated by certain candidates in the Republican leadership contest that the money that is going to Ukraine is being funneled into corrupt projects in some way.
And Luke Koffe of the Hudson Institute has just published a report on this challenging some of these narratives and misconceptions about the war in Ukraine, which is being used to undermine support for Kiev not only within that very specific Republican election context, but also more widely across the United States by those who are opposed to Ukraine, but also it's being propagated on social media by Russia and also those who support the right way.
So I think this is a timely report and I can't go into it in all of its nuances and details, but it talks about how blank checks this idea of Ukraine getting a blank check from America isn't true. So that every dollar spent in support of Ukraine is authorized by Congress and is used for a very specific purpose, approximately $70 billion of aid never leaves the US instead it goes to support the defense industry, which then of course provides certain weapons to Ukraine.
It says there's plenty of oversight for Ukraine aid that there is a working group that has 160 officials across 20 agencies monitoring the aid and investigations have not yet substantiated significant waste fraud or abuse. So again, challenging that misconception. Europe's stability matters to the US economy, it underlines that point and talks about the importance of that.
Lessons from Ukraine is making our military stronger. Another point that one here is quite often is this idea of undermining Western military capacity, the war in Ukraine and for that reason that there should be less sent to Kiev and saying that actually that is, again, very contestable, that the performance of US made hardware gets real world combat test experience as a result of Ukraine something that matters very much in the context of an increasingly february world and international
situation. Also challenges as idea of Ukraine being America's new forever war. We've heard that a lot recently in recent years, just stresses the point. You know US troops are fighting against Russia inside Ukraine. Ukraine is not asking for nor do they want US troops to help them fight in Russia. This is not a proxy war. A proxy war is a war fought by states at the time of the war. The US has never instigated Ukraine to fight. The US is not forcing the Ukrainians to fight on its own.
It is choosing to support them. An important nuance when we're talking about that term of proxy war. Finally, it challenges this figure that sometimes banded around that the war in Ukraine is costing $900 per American household. The most important to stress that income tax is not levied evenly across households. The top 1% of earners pay 42% of all federal income tax. Quite an extraordinary statistic that.
And so this idea that every American is having to pay extensive amounts of money to support Kiev is inaccurate. I would say that's just very much some of the top line points in this report will put the link in the description. But I think as I say it's timely and interesting in terms of puncturing some of those narratives that too often go uncontested. Thanks so much, Dom, Joe and Francis.
Today, Ukrainian politicians are voting on the country's wartime budget. I wanted to understand where Ukraine's money comes from, what it spends it on. And the political and social tensions are associated with difficult decisions made in wartime. I spoke to Yuri Gidey, a senior economist at the Centre for Economic Strategy, a Ukrainian non-governmental research body, to get his views on Ukraine's wartime budget. Here's our conversation.
Well, Yuri, thank you so much for your time today. Would you start by just introducing yourself to our listeners and telling us about your work? Yeah, I do. I very much appreciate the invitation as I am an avid listener of your podcast. And I work in a Kiev-based Sanktank Centre for Economic Strategy. And my focus on the senior economist is on taxation, also budget, general fiscal issues, regulation and the bit of macroeconomy.
Well, let's start with a rather broad question. What can you tell us about the state of Ukraine's finances, its fiscal position in November 2023? Where does the money come from, that it spends and how is it spent? Where is it spent? David, I would start just saying that since 2015, Ukraine exercised quite a responsible fiscal policy. So it was a average budget deficit, it was 2.5%, and state expenses were moderate.
And it positively impacted the economy of Ukraine. It was macroeconomics stability, it was a single-digit inflation. But of course, after Russian invasion, the defense spending increased by more than 10 times. So total expenses doubled. We basically have now half of the budget spent on defense, and another half of the budget spent on everything else.
Social security, public order, education, healthcare governance, and the deficit this year is estimated to be $44 billion, which would be 26% of GDP, that's a huge number. So capital expenses like road construction and infrastructure spending, they decreased significantly, and they were expected to decrease more next year. Healthcare education also decreased in real terms, like most of other items.
How does the government fund it? Own revenues now cover about 40% of the expenses. So roughly half of it comes from value-added tax, and other main sources are taxation of personal income, corporate income, and some 10% come from exercises of pretty usual mix. It's important to keep in mind that beside the direct impact of war on Ukrainian economy, there is factor which is very important is that our trade is very limited because the trade is blocked mostly by Russia, the southern ports.
So now our exports are like half the volumes they were before the invasion in natural in in tones, yes. And by the way, the action by Polish lawry drivers, which they launched a few days ago, it's in control at far the strain to Ukrainian trade logistics. So there is like a significant limit to what Ukrainian economy can produce and how much taxes it can pay. So Ukraine is very much reliant on external financing now.
Funding comes from grants, from loans, and the government also issues domestic bonds selling them, and it makes up the remainder about 60% of the revenues of the funding. In your view, what are the differences between the first war budget back in 2022 and today, how is spending changed or shifted across the years? Well, I would say that it's the same wartime budget. So 41 billion dollars would be allocated for defense and public order and safety.
And it would be barely covered by a country's own projected revenues. And roughly the same amount will be spent on civil needs, but including large chunk for the debt service. The main difference I think will be the next year government plans to further decrease all possible capital expenditure. So they will be reduced by about 40% more.
And they will be just 2% of GDP. So basically only essential spending will be next year. And there are basically no expenses envisioned for reconstruction from the war, except from what will be received from external funding. So sort of put that really simply does that mean to keep the money flowing into the armed forces. It means the roads will not be repaired. That's absolutely. Absolutely. The dilemma we are facing and discussing for the last time for the last one and half of two years.
Yuri, in your earlier answer you talked about how Ukraine is relying on external partners for around 60% of its funding and spending. Could you talk a bit more about who these groups, these countries are, how much they're giving, where it goes to. And the big question of course is what happens if this funding is reduced in the future?
Last year in 2022 the main donor of Ukraine budget was where United States. But this year the station has changed. So the financing from United States is quite on par. We received like 11 billion dollars from them this year. But financing from EU increased significantly. So now they are the main donor of Ukraine and budget was like 16 billion dollars.
But it is important to mention that the financing from EU comes in form of loans as well as financing from IMF and Canada who are also significant donors. While US, United States they provide the financing in form of direct grants to Ukrainian budget. So EU, United States, IMF, Canada and Japan, slightly less, which was about 600 billion dollars was received from United Kingdom. But also another significant portion is financed by the sale of domestic bonds by Ukrainian government.
And these are doing well especially in last months. So about 13 billion dollars were received from domestic bonds. And there is expectation, government anticipate that the borrowing will be needed at roughly the same level next year. So about 50 billion dollars to cover all the funding needs. Budget gap plus needs to service our debt. And 80% of it roughly is expected to come from external donors US and EU also loans from IMF and IBEERD and also local borrowings.
So I know it is a bit of a hypothetical at the moment. But could you talk a bit about what it would mean for the country if this support was reduced or cancelled? I mean I asked this because over the past few months we have been asking a lot of questions about support from the West towards Ukraine and how that might change in the future given the political situation changing in various countries.
Could you sketch out for us what it would mean for the Ukraine if this external funding on which it's so reliant changed or was reduced? So government would have to cut on expenses but there is no big room for further reductions. So it means monetary financing. Basically it means that the national bank would buy domestic bonds from the government via a mission of our local currency.
It was used last year at the beginning of invasion in April, May to June extensively and through the year. And of course as any monetary financing which is not based on the economy growth, it led to significant spike in inflation and to change in foreign exchange rate. As the financing in 2023 was steady, national bank managed to time inflation and there was no need to print a ribbon.
I am very much hope that it would be the same next year because there is a limit to the monetary financing which is not severely damaging to the economy. There are no exact estimates as it's hard for the economy to do good calculations when the environment is so volatile. But I would say that the limit of monetary financing which would not damage the economy is severely about $700 million amounts which is much less than the financing needs.
So if there will be need to print more, it would eventually lead to collapse of Ukrainian macro stability and it would damage business which still operates in Ukraine despite all the war pressures. It would significantly increase poverty rates and I am afraid it would drive another way of immigration from Ukraine at least temporary immigration.
Our local investment analyst estimated that government still may enter 2024 with a small liquidity cushion of like $5-6 billion given it some room for maneuver in early 2024. But if our partners would not deliver on the commitments which they previously made and you know that there are significant political risks in the United States for example and there is still no final approval from EU.
It would have their consequences for Ukrainian economy and also for ability to keep the financing and supply of the army of the military. One thing to explore then I think is of course the Ukrainian government has been on the hunt for other sources of revenue, creative and how it's trying to raise money for the war effort and for its own finances.
Could you tell us about what they've been looking at and what have they implemented so far. I realize we might get a little bit into local Ukrainian politics here but I think it would be interesting for a listeners to understand the kind of discussions and the plans on the ground. Yeah so first steps which were taken previously are the government revoked most of the tax breaks which were initially introduced at the beginning of the invasion to support Ukrainian business.
So all of these tax breaks or most of the tax breaks were revoked and exercises were returned to the previous levels for which were previously decreased to address the full shortage which is not the problem now. Also government suggests to increase taxes on banks income for the next year and well the other options are just significant reduction of an essential state funded expenses because basically there is no big room to increase taxation further as the companies which are strained by the war.
They would just go out of business or will try to avoid taxes in like more hard-core mode. So another option which government is looking now into and which includes into project project for the next year is to take part of taxes which go to local budgets to recall them hermendas. And there are now extensive discussions around it.
And we've been talking about economics for all of this time but how politically is this going down? What do you think the reaction of the population to things like tax breaks being revoked, the government potentially taking money from local budgets? How is the population reacting to that? Yeah, so the population let's say active part of population it continues demanding that the government directs all available funding to the military and it demands the same from the local governance.
We see that in major cities there was bigger budgets, there regular protests despite the wartime people gather with demands to cut down on any expenses for reconstruction of streets or beautification and demands that these funds be redirected for military needs. One of the recent examples was that some journalists noted that the procurement was announced for capital repairs of Sofia, Kayska, Golden Domes which would cost around 1.5 million pounds if converted.
And it raised a lot of discussions and outcry that it's despite one of the most important charges in Ukraine and it has symbolic significance and historical significance. And the time to repair this Golden Domes which are frankly in quite a bad state and the public outcry was stamed by the explanations that only small fraction of this procurement would be spent now just for some critical safety based actions and all the most of the expenses will be made later.
Speaking of I would need to dive deeper on how the local budgets are financed if you allow me. So local budgets are roughly a quarter of the state budget now in terms of volume and the decentralization reform which was started in 2015 was one of most successful reforms in Ukraine which shifted financing and power significantly to local level. The primary funding source for local budgets is personal income tax.
So it is collected on central level but two thirds of it are allocated to her mother's design problems are that it is allocated based on where employers are registered not the employees citizens but employers. And the many large employers are registered in major cities like which increases economical disparities here so to level it up government collects part of the surplus of the richer.
And the other is the local resources and transfers it to those who are economically weaker. And since the invasion local authorities were military personnel are stationed where there are military units they have received a windfall income tax revenue. And the military expenditure for military salaries increased significantly was the salaries were increased and the number of service men increased significantly. And this led to well unprecedented increase of revenues for some hermades.
Some hermades use use this taxes wisely and they direct some amount of this revenues to support the military units which are stationed in this hermades or just register there if they are on the close to battlefields and to support the temporarily displaced persons etc. But this spending is not always efficient and there is significant accumulated surplus of local budgets which is now measuring like over two billion pounds which is basically amounts of central budgets revenues.
And the suggestion of government is to take this personal income tax which is received from military and not distributed to local authorities but to spend it directly on the military spending for production of artillery shells of drones. And the discussion is rather not special in terms of the public view of public opinion of citizens is not should we choose between local budgets and the military.
But rather is it more efficient to spend this money via local budgets who can be quicker to address some issues to who can directly contact the military units and respond to their needs or we need to direct everything through centralized budget and in accordance to strategic planning and having in having minds that Ministry of Defense.
But it knows the needs of particular units so the most of discussion is about this and while local authorities say that they will lose significant amount of their finance and they will not be able to fulfill the commitments for public services. And the Ministry of Finance argues that the overall local budgets will remain in aggregate surplus even without this military related revenues.
And the Ministry of Finance suggests that the loss of income for less developed raw mothers will be compensated by additional subsidies. They may estimate for how much it will be needed for these direct grounds. And basically all this discussion is now going around parliament which needs to vote the budget code and which needs to vote towards the low on budget for the next year. Thank you very much for that absolute deep dive into local and national Ukrainian fiscal spending there.
What do you think the fiscal picture for Ukraine looks like then for the year ahead? We've spoken about the macro the micro. Let's go back to the macro. To sum up Ukraine is crucially dependent on external financing so if the commitments which were made by our partners first of all the you and United States will be kept Ukraine is fine for the next year because their own revenues are collected.
It is functional both while they they are increasing compared to last year and increasing far quick quicker than inflation. So if the support is steady and timely Ukraine is able to sustain the macro stability and the inflation is returning back to single digits which is very good news for Ukrainian economy and also for Ukrainian business.
So overall well this is what we will keep on ice on the political processes and the decision making in the in the western countries because we totally depend on on on on this another half of the budget now. Any final thoughts for you? Yeah for our listeners just to to give them the scale of like the financing needs of Ukraine I just had the fresh figures of revenues for October central budget received 2.7 billion dollars of own revenues in Ukraine.
And at the same time I checked the UK central budget revenues in September last available figures as I understand are about 95 billion dollars. It's 77 billion pounds. So the scale of Ukrainian financing needs every month or year.
If we compare them with the volume of western economy we understand that it's not the significant amount. If this is like 4 billion dollars monthly which Ukraine needs are spread evenly between the EU, United States, Finance and from IMF as the International Financial Institutions.
It's really not significant amount of course keeping in mind that it's always the money of western taxpayers but still the impact for Ukraine which it will which it has or the absence of the financing will make I think it's not comparable to to the scale of it in the western economy. Well thank you very very much for your time. Ukraine the latest is an original podcast from the telegraph to stay on top of all of our Ukraine news analysis and dispatches from the ground subscribe to the telegraph.
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