Russian special military operation in Ukraine #41

Working enterprises of Ukraine are sold for a penny, by Evgeny Pozdnyakov for VZGLYAD. 04.20.2023.

Kyiv is looking for a way to attract Western businessmen to the war with Russia.

The government of Ukraine has announced its readiness to sell the state-owned enterprises it owns. At the same time, Kyiv asks absolutely ridiculous money for operating factories, mining and processing plants and pharmacological enterprises. Why did Ukraine start selling off its industry and will there be businessmen in the West who are ready to buy a plant in a country whose borders are changing before our eyes?

Ukraine is looking for investors willing to invest in the purchase of local state-owned enterprises, Bloomberg reports . According to the publication, such a decision by the office of Vladimir Zelensky is aimed at attracting Western capital to the country and strengthening the economy of the “fighting in the war” state.

It is emphasized that the government of Ukraine deliberately sets lower prices as part of the sale of the country's property. If the authorities agree on the proposed changes, then at best they will be able to earn $400 million through the sale of enterprises and another $190 million will go to the budget from the lease of agricultural land.

It is noted that Ukraine needs money as soon as possible for several reasons. First, at the moment, Zelensky's office is experiencing difficulties with the financing of military operations. Second, infusions of Western investment will help heal a shattered economy and overcome a legacy of corruption.

“If we don’t sell the fund’s positions this year, then next year only real estate will be of value, and later only the land on which it stands,” emphasizes Rustem Umerov, chairman of the State Property Fund of Ukraine. He notes that the government is aware of the risks of such investments, but hopes for "brave" investors.

According to preliminary estimates, if the plan is implemented in the near future, Zelensky's office will be able to receive $162 million this year. At the same time, Umerov emphasizes that the potential income could be four times greater, but at the moment everything depends on the parliamentarians, who will have to approve the law on the privatization of large companies.

If the legislators decide to meet the initiators of this project halfway, then by the third quarter of this year, such enterprises as the Odessa portside plant, the Zaporozhye titanium and magnesium plant, Indar (insulin production), the Centrenergo company and the mining enrichment plants.

Earlier, NATO Secretary General Jens Stoltenberg said that support for Zelensky's office from members of the alliance exceeded 150 billion euros. Thus, the income that the government of Ukraine promises to Western investors (400 million) is not able to in any way affect the current state of affairs in the country's economy.

“The amount of finance that Zelensky’s office wants to raise is negligible. The monthly expenses of the Ukrainian budget are several times higher than the amounts announced by Umerov. Spending colossal - there is a total deficit. Thus, the sale of these enterprises will not solve the country's economic problems,” said political scientist Larisa Shesler.

“Accordingly, the logic of this decision is different. In my opinion, the Ukrainian authorities want to involve Western industrialists and investors in a senseless struggle with Russia, drawing their capital into Ukrainian enterprises. Now in the United States there is a rather serious problem: many businessmen do not want to continue the conflict, because military operations affect their profits,” the expert notes.

“Thus, Zelensky’s office wants to make American and European entrepreneurs have a vested interest in Ukraine's victory. Here, a simple logic comes into play: if someone in the West invests in factories, for example, in the Mykolaiv region, then the victory of the Armed Forces of Ukraine will become a guarantee of capital preservation for them,” Shesler emphasizes.

“This will significantly change the position of business representatives. They will start running around, fussing, trying to influence Washington and lobbying their interests in Congress so that military assistance to the Armed Forces of Ukraine not only continues, but also increases. This explains such low prices for enterprises: everyone understands that the conflict zone can gradually expand, but when else can you buy an enterprise for a penny? - emphasizes the interlocutor.

“In principle, it seems to me that such investors can be found. Of course, there are very few working enterprises left in Ukraine anyway. Even fewer of those that still belong to the state. However, the Zelensky administration will find something to offer them. The main thing for them is not to provide profit to the Americans, but to create a model that works on the principle of mutual responsibility,” Shesler emphasizes.

Economist Ivan Lizan adheres to a slightly different point of view. “The motive of the Ukrainian authorities is simple: everyone is well aware of the state of the local industry, and they are aware of the lack of intelligent personnel capable of managing it. Accordingly, the natural logic turns on: sell what is left, but quickly, in order to get at least some profit,” said Lizan.

“However, I don’t think that Zelensky’s office will be able to find any investors. Even after 2014, Western businessmen realized that the Ukrainian market is extremely unreliable and somewhat explosive. Actually, then the situation in the country was many times calmer, but no one was particularly eager to invest in local production,” the expert emphasizes.

“Most likely, all the money will flow into local companies. For example, let's take the sphere of titanium mining, in particular, let's talk about the Velta company. Even before the CBO, she supplied raw materials to the USA. With the beginning of the conflict, the company even decided to build a plant in the States. That is, Western capital will not enter the country directly, legally everything will look different,” the interlocutor notes.

“They will act through local enterprises: they will simply buy them out and integrate them into the lower levels of cooperation. This is the maximum that Zelensky's office should count on. There can be no talk of any colossal capital inflows,” the expert emphasizes.

“It's funny that the chairman of the State Property Fund of Ukraine, Rustem Umerov, in his interview refers to the solidarity factor, which should encourage entrepreneurs to invest in local enterprises. Business is business, and there can be no emotional attachment here. People in the West are used to receiving dividends from shares, and no one can guarantee that what they buy will not go to Russia in a month or two,” Lizan sums up.

https://vz.ru/economy/2023/4/20/1208482.html

Where the Ukraine war stands now
The current situation around the conflict in Ukraine could be described as follows:The stalemate continues with active operations at only a few points on the front, such as Bakhmut. Ukrainian forces are hobbled by a lack of trained personnel, bottlenecks in assigning personnel to new units, and problems with the supply chains for new Western weapons systems, especially a shortage of ammunition. Russian forces have a steady supply of armaments and a growing degree of air superiority, but the Russian military command lacks large-scale forces that can exploit breakthroughs. Meanwhile, the Kremlin remains wary of additional mass mobilization plans that would provoke unrest and further dislocate the Russian economy. The Russian plan seems to be to goad the Ukrainians into starting offensive operations which can be mitigated and then neutralized by Russian forces and thus suggest to the West that the war is “unwinnable” for Ukraine. This would prepare the ground for negotiations on a settlement. Smaller-scale Russian operations designed to eliminate Ukrainian artillery positions which have shelled Russian-controlled areas will continue.There will be extensive new collaboration between the Russian and the Chinese defense ministries and their respective industrial bases. Russia has demonstrated that it retains the capacity to assemble weapons as long as it has uninterrupted access to key components, which China can supply. The Chinese want to assess the performance of Russian equipment and to expand and extend defense cooperation while also continuing to drain the stocks of the United States and its allies, including South Korea and Japan, of equipment and ammunition for Ukraine – and to extend delays in delivery of orders to Taiwan. Moscow believes that it has reached a new survivable equilibrium where the economy can limp along even under Western sanctions because of offsets in increased prices for energy and other commodities.
Stalemate at the Front
Stalemate at the frontlines in Ukraine continues. Apparently, the Russians continue to use Bakhmut as a "meat grinder” for the Ukrainian troops because, according to some reliable sources, it costs Kiev up to 400 lives a day. Moscow believes that such losses will seriously impede any attempts to stage a full-fledged counteroffensive in the foreseeable future.
Wagner Group detachments have been taking their time to storm the western blocks of Bakhmut. The Ukrainians are losing approximately two city blocks daily, especially in the northwest part of the city. Some sources claim that part of the Ukrainian force there is under operational encirclement.
There were no significant changes in the area of Avdeyevka. Heavy fighting is taking place north to Vodyanoy and in Pervomaysk, and also west toward Krasnogorovka. In Ugledar, the Ukrainians have been probing Russian defenses but without visible results. In the southern flank, the Russians are observing a concentration of Ukrainian troops in the areas of Zaporozhe, Orehovo and Gulyaypole.
Implications of document leaks: A Ukrainian offensive in Bakhmut?
The leak of classified documents has changed the situation and around the long-advertised Ukrainian counteroffensive. In fact, the leak gives officials in Kiev an excellent opportunity to indefinitely postpone their maneuver. Yesterday, Secretary of the National Security Council Oleksiy Danilov said, “We will start the offensive when we are good and ready,” meaning that Kiev is not ready to start now.
Well-informed observers point out that at present Kiev is amassing up to 80,000 troops north and south of Bakhmut. Some of these observers (including the Russias) believe that the Ukrainians may try to launch an offensive against the group of the Russian troops in Bakhmut, to encircle them and then thrust in the general direction of Donetsk. Given that the whole Russian army group in Ukraine comprises no more than 150,000 troops (plus 160,000 in reserve) this attempt might have some chances for success. The Russians do not have well-prepared defensive positions in this area.
In light of the leaks, the Kremlin is becoming more concerned about the general development of the situation in Ukraine. Russian intelligence estimates claim that at present, the Ukrainians have very little chance of success in a major offensive due to a lack of modern armaments, ammunition, and long-range artillery/missiles, as well as total Russian air superiority. The Russians are worried that NATO, and the United States in particular, may deliver long-range missile systems and modern aircraft to Ukraine. They also worry that NATO, and especially Poland as a loose cannon of the alliance, may send its troops to Ukraine. This would lead to an unprecedented escalation of the confrontation with unpredictable consequences.
Internal political risk rises with the ascent of Wagner’s Prigozhin and Chechen President Kadyrov
At the same time, according to some well-informed sources in Moscow, prospects for long-term political instability in Russia are increasing. The war is empowering figures like Chechen President Ramadan Kadyrov and Wagner CEO Yevgeny Prigozhin, given their roles in recruiting, training and deploying forces in Ukraine. Both are personally loyal to Putin. But in the event of his death or incapacitation, they are not part of the inner Kremlin circle and have no ties of loyalty to other Kremlin figures. Both are at odds with the Defense Ministry and the security services.
Both are currently attempting to carve out broad spheres of autonomy for their political and business activities and would resist efforts by a post-Putin figure to try and rein them in. In addition, Kadyrov is emerging as a key figure for Russia’s Muslims, while Prigozhin has become the de facto leader of an energized Russian ultra-nationalist constituency.
The fact that both control armed forces and also have the ability to mobilize large segments of the population makes them dangerous. Some Kremlin figures like former president Dmitry Medvedev seem interested in forging closer ties to help bolster his position, which could set up conditions for a damaging split in the Kremlin should other figures seek to eliminate Prigozhin or Kadyrov as factors in Russian politics. (James Davis)

Belgorod experienced a powerful explosion

But in the event of his death or incapacitation, they are not part of the inner Kremlin circle and have no ties of loyalty to other Kremlin figures. Both are at odds with the Defense Ministry and the security services.