Satellites of stagnation

Pavel Luzin discusses Russia’s military space programme during wartime

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By Pavel Luzin

15 March 2023

Photo: Scanpix

Russia’s full-scale war against Ukraine has been going on for a year now, and the Russian army’s space systems have not been given sufficient attention during this period. At the same time, we see that Ukrainian armed forces are using commercial satellite services from SpaceX, Planet Labs, Maxar and ICEYE for communication and operational target detection. Paradoxically, in doing so, they have a qualitative advantage over Russia, which has more than 160 satellites in orbit, of which more than 100 are military. This new role of commercial systems as well as their architecture has already outlined the prospect for the USA to rethink its approach to space reconnaissance. Meanwhile, both belligerent armies use the commercial GPS signal for navigation, even though the Russian army has its own GLONASS satellites. Hence, it is a good moment to assess the status of the Russian military space programme, with characteristic trends within it, as of early 2023.

Is there growth in financing?

Almost three years ago, I already made an attempt to estimate Russia’s expenditures on military activities in outer space towards the late 2010s. At that time, according to a conservative estimate, the figure exceeded 100bn roubles (about USD 1.6bn) a year. Of these, approximately 30bn roubles (about USD 400−430m) went to GLONASS, 6−10bn roubles (USD 100−150m) to the Plesetsk military space launching site, and over 60bn roubles (about USD 1bn) to other military projects in outer space. We can increase these estimates by adding some amount for the maintenance and development of other ground infrastructure such as space control systems.

One should expect an increase in spending in this sphere taking into account, for example, that Russia has a shortage of intelligence satellites and that it has announced an increase in funding for the GLONASS programme: 480bn roubles for 2021−2030 (approx. USD 6.5bn at the 2021 average exchange rate). In comparison, the GLONASS programme for 2012−2020 cost almost 270bn roubles (USD 5bn). In practice, however, there has not been an increase in funding for military space effort despite major changes in the budget planning structure.

Following a change in the management of state programmes in 2021, the funding for military space activities turned out to be partly embedded into the federal space programme (which had previously funded only civilian space activities), the spaceport development programme, as well as federal projects aiming to modernise the space industry and to sustain GLONASS. In addition, it is likely that part of the funding for the federal Sphere project, dedicated to the comprehensive advancement of space information technology, has been also allocated for military purposes. Otherwise, there is no explanation as to why the Deputy Prime Minister, who is also a minister in the Russian government, says that Sphere involves 7bn roubles of annual spending in 2022−2024, while the amounts allocated to this project during these three years have reached 14 bn, 17.7 bn and 18.6 bn roubles respectively.

All these items, taken together, produce an expenditure figure corresponding to 100bn roubles per year (or slightly higher). The total expenses on the state-operated Russia Space Programme, including all target programmes and projects in this field till 2023, steadily exceeded the initial budgetary plan by 50−60bn roubles, totalling 251−264bn roubles a year. This surplus can also be considered as an indicator of the sums spent on purely military satellite constellations in addition to GLONASS. Starting from this year, they are planned at this level right from the outset (which will continue into 2025). Accordingly, if a serious increase in spending on military space activities does occur in 2023, it will not become apparent until autumn. Assuming, of course, that access to data is not completely barred by that time.

Military satellite constellations

Today, Russian military satellites orbiting the Earth include 25 GLONASS satellites, 47 communications satellites, 6 satellites of the ECS missile warning system, 7 satellites of the Liana marine electronic reconnaissance system, 3 Bars-M topographic satellites, 2 radar-location satellites, 2 Persona optical reconnaissance satellites and several experimental devices or technology demonstrators. However, three attempts to launch a new generation of optical reconnaissance satellites in 2021−2022 were unsuccessful, and each of the launched satellites quickly became unserviceable.

Throughout recent years, Russia has tried to increase its space surveillance capabilities. Thus, compared to the spring of 2020, the number of missile warning satellites has increased by three, and three Liana satellites were added, including one Pion-NCS with active radar, and one Neutron radar-location satellite, in addition to the Condor satellite launched back in 2013. Nevertheless, some obvious overstretching and inertia in goal-setting are visible.

For example, the deployment of the ECS system is still not completed: to achieve global coverage, the entire system must consist of 10 elements, and its full deployment was scheduled for completion by 2022. Against the background of Russia’s network of ground-based, long-range detection radars virtually all along its perimeter, the ECS is redundant as a way to provide nuclear deterrence. In the worst case scenario, purely hypothetical, the available radars should be able to detect missiles and warheads located several thousand kilometres away—this is enough for the so-called ‘retaliatory strike’ and for the operation of a missile defence system around Moscow.

However, such a satellite system is necessary for an advanced missile defence system deployed not only around the capital city. The problem is that Russia does not have such a system today, either. A practical test of an anti-missile interceptor targeting an old Soviet satellite in late 2021 is only part of a large and costly programme that is now hardly feasible for Russia after it has started a full-scale war. Whether or not it was necessary for such a programme to have emerged is a separate question, beyond the scope of this article. However, it turns out that the ECS seems to exist largely because the USSR used to have a similar system.

Almost the same applies to Liana. A separate maritime electronic reconnaissance system only makes sense in the logic of the country getting ready to confront leading maritime powers such as the USA, the UK and China. However, given that Russia is not a major maritime power in terms of conventional forces, and will certainly not become one in the foreseeable future, the objective value of the information supplied by Liana seems dubious. Moreover, even the hypothetical use of Liana to use torpedoes and cruise missiles on submarines to target US aircraft carriers is based on the assumption of a possible war between Russia and NATO. Indeed, such a task seems absurd for an economically, demographically and technologically weak country.

And even if we consider the Kremlin’s military plans regarding Ukraine, we can see that Russia has spent a decade on something that simply has no use and is unlikely to become useful in practice. In addition, it has not addressed the need to create space surveillance systems that would be suitable for the land army. The Ukrainian army can use commercial systems to obtain images of any area in high detail at least twice a day in favourable weather conditions, whereas the Russian army can get an image of the same area approximately once in two weeks. We should also add that the existing Russian satellites provide seriously inferior quality of imagery vis-à-vis American and European commercial satellites.

At the same time, Russia is going to great lengths to preserve the GLONASS system. In 2022, two new-generation GLONASS-K navigation satellites were launched into orbit and the last spare GLONASS‑M satellite from the previous generation was also launched. Meanwhile, three satellites were removed from the system in the same year. All in all, 14 out of 25 satellites are out of date (sometimes serving more than twice their useful life) and this number will only grow in the next few years. According to the officially declared plans, up to 15 GLONASS-K satellites were to be launched during 2022−2030, but this will not replace all the retired satellites anyway. Furthermore, it is not certain whether the architecture of the entire GLONASS system can actually be changed thanks to addition of high-orbit satellites for the sake of navigation in and around Russia using a smaller number of such devices. Similarly unclear are the prospects of a possible transition of GLONASS to small, low-orbit navigation satellites modelled on China’s Beidou, which would make the system cheaper.

One year of war has also shown that the Russian army has serious problems with space communications, despite 47 military satellites (formally 52 in March 2020) and the possibility to use the state civilian satellite systems Gonets and Express, as well as Gazprom’s satellite communications system. The main reason underlying these problems is not clear. Possibly, this is due to the low quality and poor condition of most military satellites, except for the four Blagovest satellites which have been built with European components. There is also more certainty that there are problems with the ground equipment as well as errors in the architecture of the communications and control system of the Russian troops.

Nevertheless, it is worth bearing in mind that the stalemate in the development of civilian satellite communications systems since the beginning of the war will also have a major impact on Russia’s military programme. Even the latest plans to multiply satellite production in the country are unlikely to reverse the situation in any serious way: there is even less certainty here than with the future of GLONASS.

Ultimately, even if spending on the military space programme increases in 2023 (and there are no signs of this yet), there is no reason to believe that it can become more effective without a radical effort to reengineer its entire structure. Moreover, its key idea, i.e. the confrontation with the USA and NATO, has been slowing the programme in recent years, leading to dissipation of resources. And yet, this idea cannot be abandoned before the end of Russia’s war against Ukraine, and before a thorough revision of the entire system of power in the country, together with its priorities in foreign policy and the military sphere.

By Pavel Luzin
Specialist in international relations, expert on the Russian Armed Forces. Political scientist (PhD).

Russia’s leverage in Moldova

Denis Cenusa assesses three main non-military vectors that pose a threat to Moldovan national security

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By Denis Cenusa

21 February 2023

Photo: Scanpix

Since Russia’s Ukraine invasion began in February 2022, Moldova’s security has been under extra strain. There are many vulnerabilities that Russia can exploit there, spanning from energy supplies to guaranteeing public order. And Moldova was all too aware of this before Ukrainian President Volodymyr Zelensky public warned Moldova from Brussels on February 9 about Russia’s intention to carry out subversive actions there.

Zelensky is not the first to see Moldova as a Russian target, a perception that has its grains of truth. However, such views require more nuance. It is not easy to say how much the ongoing tension in Moldova has been the result of direct Russian pressure, or simply collateral damage due to Moldova’s economic interconnectedness with Ukraine. Understanding that balance is of key importance to explain the baseline risks and novel types of threats that Moldova now faces.

The return of old threats

The harsh reality is that Moldova now has multiple crises on its hands. Fuelling its political implosion are a legacy of poor governance and low living standards, compounded by supply chains severed by months of war. Chisinău’s relations with its Russia-backed breakaway region of Transnistria have reached new lows, while its electricity sources are intertwined with Ukraine’s war torn grid and its gas supply requires Russian goodwill. The country has, meanwhile, also been struggling to house and feed tens of thousands of refugees pouring in from Ukraine.

Considering how other countries are feeling a deep impact from this war too, it should come as no surprise that Moldova is easy collateral damage. However, this does not mean that Russia is not interested in exploiting the situation further. To do this, hybrid warfare is being used, much of which is familiar to local observers. Russia is using hybrid warfare to undermine the positions of pro-EU forces in a way that is tailored to the idiosyncrasies of the local Moldovan context. Russian strategy follows three main vectors: 1) internal power struggles and personal-political survival instincts; 2) the impoverishing effects of the energy crisis; and 3) the distorted public perception of Russia’s aggression against Ukraine.

Domestic power dynamics and political-personal survival

First of all, Russia tries to weaponize internal political animosities. Pro-Russian populist forces, made up of fugitive oligarchs and organized criminal groups, are seeking to regain power or simply avoid jail. Their interest in hampering the fight against corruption by pro-EU forces at all costs overlaps with Russian interests in weakening the Western-oriented government.

The most feared pro-Russian political force in Moldova is the Șor Party. The leader of this party, Ilan Șor, is currently hiding in Israel from Moldovan justice. The court had sentenced Ilan Șor to 7 years in prison for his involvement in a 2014 bank fraud where billions of euros went missing; but the final decision is still pending due to judicial and bureaucratic bottlenecks since 2017. Șor’s partner is considered to be the fugitive oligarch Vladimir Plahotniuc, who allegedly found refuge in Northern Cyprus. Then again, the aggressive anti-Russian policy used by Plahotniuc during his political reign in Moldova (2015−2019) makes him quite incompatible with current Russian plans in Moldova.

In October 2022, the US designated sanctions on Șor for his and his own party’s involvement in supporting Russian malign influence in Moldova. The Moldovan authorities did not so far report on the efficiency of preventing the flow of money from offshore jurisdictions or through crypto platforms to facilitators in Moldova. Yet despite US sanctions, Șor manages to be active on social media, where he has more than 100,000 followers. Meta-owned Facebook was slow to block Șor’s political ads inviting people to join the anti-government protest on February 19.

The ruling party is seeking to ban Ilan Șor’s party, which has more than 10% of public approval. This will not solve much of the problem for the government because there are other pro-Russian forces in parliament, such as the Bloc of Socialists and Communists, which have gained popularity in the face of public criticism of the government’s handling of the energy and socioeconomic crises rippling through Moldova.

Impoverishing effects of the energy crisis

The deteriorating living conditions of the population, exacerbated by the energy crisis, is an important ingredient of instability in Moldova. The impact of inflation of approximately 30% on average in 2022 is due to the increase in electricity and gas rates, which oscillate between 5 and 7 times, respectively. These shocks were understood differently by the population depending on their political opinions and the information they consume.

The pro-government segments tolerated the socioeconomic decline; others were galvanized by it and did not accept the geopolitical causes, particularly the destructiveness of the Russian factor invoked by the ruling elites. Moldova managed to remain governable thanks to loans and grants worth up to € 250 million from the EU and other international partners to pay up to half of energy bills. However, the majority of the population is still feeling the socio-economic consequences in 2023.

The optimistic forecasts of the Moldovan Central Banks about the stabilization of prices below 20% annual inflation in 2023 do not help either. This creates a perfect ground for the justified public discontent that is being used by pro-Russian forces to undermine the legitimacy of the central authorities. With a higher incidence of poverty, socially vulnerable people accepted payment from the Șor Party to participate in anti-government protests in the country’s capital. Moldovan intelligence services reported that not more than € 300,000 (in Moldovan lei, euros and dollars) were identified as cash transferred from abroad to Șor Party affiliates in 2022−23. However, the capital’s population consisting of pro-EU voters has been reluctant to join the protest.

The most desperate segment of society outside of Chișinău, the capital, is likely to ignore the Șor Party’s criminal record and the government’s rigid position that any anti-government protest could have imminent links to Russia. The stigmatization of the protest as something that could serve Russian interests pushes the pro-EU opposition parties towards self-censorship and political hibernation.

Distorted public perception of the Russian aggression against Ukraine

It must be admitted that the Moldovan public has its agency and the more disconnected it is from Moldovan or regional reality, the more difficult it is for the ruling party to maintain legitimacy. There is a wide understanding that Russian propaganda still leaves deep marks on collective thinking in Moldova. As explained above, Russian disinformation would be less efficient and impermeable if the pro-Russian opposition could not weaponize local poverty.

Vulnerability to Russian misrepresentation of the war in Ukraine correlates strongly with the purchasing power of Moldovans, who traditionally look to the ruling party for scapegoats. In other words, Russia can reach and/or form a loyal audience much more easily in Moldova than in a Western country due to its low household incomes. This does not mean that Moldova does not have a pocket of pro-Russian communities in the Russian-speaking Gagauz Autonomy or in the Transnistria region.

The key triggers that favor the Russian narratives in Moldova are based on two main tensions: 1) joining NATO versus neutrality; 2) sovereignty versus external control; and 3) entry into the EU versus the strategic association with Russia (CIS). A less prominent clivage exploited by Russia and the pro-Russian opposition is that of religious conservatism versus liberal values that revolve around protecting the LGBTQI+ community.

The latest polls (CBS-Research) show a high presence of Russian narratives in the minds of Moldovans. Thus, 34% believe that Crimea belongs to Russia compared to 42% who recognize the peninsula as Ukrainian territory. The seizure of parts of Luhansk and Donetsk by Russia in 2022 is approved by 23%, while almost 50% argue that it is an illegal act. Only 36% believe that Ukraine is right in the ongoing war and almost 19% of Moldovans are on the side of Russia. An important feature of the surveys is that the Russian worldview is more widespread among Russian-speakers in 30−50% of cases. However, up to 20% of the Romanian-speaking population is also biting Russian propaganda. The fact that the reach of Russian propaganda is high in all language groups shows that the socio-economic situation plays an important role in the predisposition of citizens to become pro-Russian supporters.

Internal vulnerabilities to focus on in 2023 and beyond

Unlike the obvious military component of the aggression against Ukraine, Russia is using other tools and tactics in Moldova. Nor can surgical interventions be ruled out through subversive actions. They can be organized with the participation of the Russian forces in Transnistria and the political elites within the country, without waiting for Russian intelligence from abroad. However, that scenario was more actionable last year in the midst of the energy crisis than it was in 2023.

With external support, Moldova has diversified its energy supply and is less affected by Russian attacks on Ukraine’s critical infrastructure. In addition, the EU has established a security center in Moldova and Frontex is operating on the border with Ukraine.

While keeping a close eye on Russia’s subversive plans in Moldova that have a lower probability, the Moldovan authorities must properly monitor and manage internal socio-economic stability. That is the weakest point exploited by pro-Russian forces, and one that Moscow managed to inflame in 2022. If Russia fails with short-term tactics, it could succeed with longer-term strategies involving democratic means taking into account Moldova’s local elections in 2023, the presidential ones in 2024 and the legislative ones in 2025.

By Denis Cenusa
Political analyst, associated expert at Eastern Europe Studies Centre (Lithuania) and Expert-Grup (Moldova)

UN aviation council votes to hear MH17 case against Russia

A part of the wreckage is seen at the crash site of the Malaysia Airlines Flight MH17 near the village of Hrabove (Grabovo), in the Donetsk region July 21, 2014. (Reuters)

Reuters
Published: 18 March ,2023: 

The United Nations aviation council on Friday voted to hear a case against Russia over the 2014 downing of Malaysia Airlines Flight MH17, the foreign ministers of Australia and the Netherlands said.

Australia and the Netherlands initiated the action over MH17 last year at the International Civil Aviation Organization (ICAO). The passenger jet was struck over rebel-held eastern Ukraine by what international investigators and prosecutors say was a Russian-made surface-to-air missile, killing all 298 people on board.

Australia has said Russia was responsible under international law and that taking the matter to ICAO would be a step forward in the fight for victims who included 38 Australians.

The ICAO upheld its jurisdiction to hear the matter during a session on Friday, Australian Foreign Minister Penny Wong said in a written statement.

“This decision is an important step in our collective efforts to hold to account those responsible for this horrific act of violence,” Wong said.

Dutch Foreign Minister Wopke Hoekstra called the decision to hear the case “an important step towards establishing the truth, justice and accountability”.

“Together with Australia, we will continue to do everything in our power to find closure for the loved ones of the 298 victims of flight #MH17,” Hoekstra said on Twitter.

Russia has denied any involvement in the incident, and Russia’s ICAO delegation was not immediately available for comment. While the outcome at ICAO is uncertain, experts said the move may be seen as a further way to force Russia into negotiations over the incident.

The technical talks by ICAO’s 36-member governing council come as Moscow is facing mounting rebukes over aviation-related actions following its invasion of Ukraine.

In October, Russia failed to win enough votes at ICAO’s triennial assembly to keep its council seat. The council also called out Russia for the dual registration of commercial aircraft, which the body argued is at odds with parts of a key agreement that sets out core principles for global aviation.

Montreal-based ICAO lacks regulatory power but holds moral suasion and sets global aviation standards overwhelmingly adopted by its 193-member states, even as it operates across political barriers.

The war in Ukraine has created more refugees than the world has seen since WWII, according to a new UN report
Katherine Tangalakis-Lippert
Mar 17, 2023

Ukraine flag over rubble. Getty Images

The UN has released a new report describing crimes committed during the Russian invasion of Ukraine.
The report details war crimes including torture and rape of civilians, and deportation of children.
The invasion has created more refugees and displaced more people than the world has seen since WWII.

More than a year after Russia launched its full-scale invasion of Ukraine, a new report released by the United Nations Independent Commission of Inquiry on Ukraine found evidence of war crimes including the systemic rape, torture, and murder of civilians and indiscriminate attacks on infrastructure that have left millions displaced.

More people have fled Ukraine or been displaced within the country since the start of the war than the world has seen since WWII, according to the United Nations.

The United Nations High Commissioner for Refugees reports that, as of February 21, about eight million refugees from Ukraine have been displaced across Europe — of which around 90 percent are women and children. In addition, there are about 5.4 million people currently displaced across Ukraine who remain in the country.

"Nearly 18 million people in Ukraine are in need of humanitarian assistance and faced particularly harsh conditions during winter months," the report reads. "The conflict has impacted people's right to health, education, adequate housing, food, and water. Some vulnerable groups, such as older persons, children, persons with disabilities, and persons belonging to minorities, have been particularly affected. No region of the country has been spared by the conflict."

As of February 15, OHCHR had recorded 8,006 civilians killed and 13,287 injured in Ukraine since the invasion began on February 24 last year, though the report indicates officials believe the actual figures are "considerably higher."

To complete its report, members of the United Nations commission visited 56 communities impacted by Russia's invasion of Ukraine and completed interviews with 348 women and 247 men. Investigators reported seeing "sites of destruction, graves, places of detention and torture, as well as weapon remnants," according to a statement from the UN emailed to Insider.

The report noted that two instances of alleged war crimes committed by Ukrainian forces were investigated, but evidence suggests that "Russian authorities have committed a wide range of violations of international human rights law and international humanitarian law in many regions of Ukraine and in the Russian Federation," according to the report, including "willful killings, attacks on civilians, unlawful confinement, torture, rape, and forced transfers and deportations of children."

"They punished innocent people; now those who are guilty, if they are still alive, need to be punished to the fullest extent," A man, whose father was executed by Russian armed forces in the Izium region, told members of the commission, according to a statement from the UN emailed to Insider.

The International Criminal Court, a tribunal based in The Hague, Netherlands, issued an international arrest warrant for Vladimir Putin on Friday, accusing Russia's leader of war crimes and calling for him to stand trial — though it is unlikely he will do so, as Russia, like the US, does not recognize the authority of the ICC.

Due to his failure to control the military members who committed the acts, Putin is allegedly responsible for the war crime of forcibly deporting children from occupied areas of Ukraine to the Russian Federation, the ICC said in a Friday statement.

A State Department spokesperson told Insider "there is no doubt that Russia is committing war crimes and atrocities in Ukraine, and we have been clear that those responsible must be held accountable."

Representatives for the ICC and State Department did not immediately respond to Insider's requests for comment.

A Donbas Diary: Looking Back At The Early Stages Of The Conflict In Ukraine – OpEd

War memorial marking the liberation of the Donbass region from Nazi invaders in the Second World War.

 March 17, 2023  Eurasia Review  

By Fergie Chambers

It is evening in Bucharest, the capital of Romania, one of NATO’s easternmost members. I am waiting at the edge of Izvor Park in the city center to meet with a young friend who has fled Ukraine. In the backdrop of the park is the Palace of the Parliament, the brutalist architectural crown jewel of the Ceaușescu era, and the heaviest building on earth.

When my friend Pyotr arrives, we sit for beers and share our recent stories; it is late March 2022, just one month since Russia’s “special military operation” in Ukraine began. I have been maneuvering a bureaucratic maze as I try to gain entry into the Russian Federation and the separatist republics of the Donbas; I am awaiting a call back from consulates in Romania and Moldova. Pyotr has just arrived from Kiev by train. A number of his comrades in communist, socialist, and union organizations around Ukraine have been detained.

Recently, the Kononovich brothers, notable Ukrainian communists, had been arrested and disappeared (following their imprisonment, they are now under house arrest). Over a few days of conversation, I learn more from Pyotr than I could ever put into writing; he says to me at one point: “if there is one thing to understand, it is that sovereignty in Ukraine and Eastern Europe has been stolen by the West not through any military invasion or political party, but through the infiltration of Ukrainian civil society by Western interests, NGOs, and right-wing nationalists. Everyone in Ukraine knows that Washington directs this process, whether they support it or not.”

After a week in Bucharest, I head for the consulate in neighboring Moldova, where I have just spent nearly a month reporting on the refugee influx from Ukraine. I have been advised that it is my only option for obtaining a visa to Russia. The divide between pro-Western and pro-Russian civilians is palpable where the Moldovan government is led by Maia Sandu, a graduate of Harvard University’s John F. Kennedy School of Government, and former staffer for the World Bank.

Just as in Ukraine, there is a push in Moldova by pro-West factions to limit public use of the Russian language, despite Russian being the native tongue of hundreds of thousands of Moldovans. One man I speak to there, who is the head of a Ukrainian diaspora NGO, and a former candidate for vice mayor of Chișinău, the capital city, happily informs me that Ukrainians are European, while Russians have “Mongol blood.”

At last, the visa materializes. I leave Moldova and travel to Russia, and then I make my way through Russia to Rostov-on-Don, the last stop on Russian Federation turf before the border with the breakaway Donetsk and Lugansk People’s republics (DPR/LPR). There, in the Donbas, a region that became a mining powerhouse in the USSR, war has been raging for eight years. I am questioned for hours at every border crossing, even in Saint Petersburg, because of my U.S. passport and my tattoos (of which I have many). I am never violated or intimidated, just thoroughly questioned and checked. Mostly, it seems to me, the border officials are looking for swastikas, or evidence of Ukrainian nationalist affiliations, the markers of an individual likely to be hostile to Russia’s advances.

My final crossing into DPR happens in the evening. I emerge from a forest into the capital city of Donetsk. I arrived ready to accept any reality that I witnessed. What I saw was a people who had been through hell, and had adjusted to it, all the while unwavering in their commitment to what they see as a fight for self-determination against the reach of the United States and its vassals, especially NATO.

I see Russian, Soviet, and DPR flags everywhere, along with large signs and billboards: “To Victory,” “We Take Care of Our Own,” “We are Russia.” Victory Day, the anniversary of the defeat of Nazi Germany by Soviet forces on May 9, 1945, perhaps still the most significant day on the Russian calendar, is fast approaching.

I am brought by an official escort to the Central Hotel, about 300 meters from an enormous statue of Lenin that overlooks the main square of Donetsk. There is no active plumbing in the city for about 20-22 hours each day, and no hot water at all; Ukrainian armed forces had blown out the water supply. For the first time in my life, I can hear live artillery going off in relative proximity.

The next morning, I walk to the “fancy” hotel in town, where journalists congregate to have coffee and use fast Wi-Fi (that hotel has since been leveled by Ukrainian munitions; a friend of mine was injured in the attack). I strike up a conversation with a Moscow-based Canadian journalist, who sees on a Donetsk Telegram feed that the Sokol market in the Kirovsky District of Donetsk has just been hit by shelling and that there are fatalities. We rush to a cab and head there.

When we pull up to the marketplace, smoke is everywhere, and many stalls have been burned to a crisp. Shelling continues nearby, close enough to shake the earth beneath our feet. We are brought to a member of the neighborhood safety commission, Gennady Andreevich, who walks us through the wreckage, down side alleys into the food market. An old woman’s body is lying on the ground in a pool of blood. “She came to buy vegetables,” he tells us. “There was also a local teacher who came to buy supplies for his mechanics class; his body was not left in recognizable condition. They never target military positions, you know? Always the markets, where the people go to socialize, to work, to get the things they need to live… or the residential buildings. See? Over there? That is where our neighborhood office is. They hit that last month. My colleague was killed.” He points to a large concrete building.

He is steely, but not without emotion. “There is absolutely no military reason to strike places like this,” he tells us. “They do it to strike fear in our hearts, but it does not work.” This is just my first day, and I am already seeing that the things we’ve been hearing about Donbas are anything but the common NATO refrain of “Kremlin fabrications.”

The following night, a residential building behind a school is hit, and we discover an elderly couple arranging some of the wreckage at the entrance to their building. The woman, who will only give her first name, Elena, is eager to speak with a Western reporter. She tells us that their block has been hit almost weekly for eight years, as they live on the outskirts, near the front. Most of the younger people have abandoned the area, she says, but she has had to stay to care for her bedridden father. “He served as a miner in the Ukrainian army in the USSR. He received many distinguished medals,” she tells us. “They attack us, simply because we did not want to follow a government that betrayed our heritage. We in the Donbas did not support Euromaidan. We are Ukrainian, but we are Russian.” I ask if the Minsk accords, which previously negotiated ceasefires between the separatists and Ukraine, had helped at all. “When Minsk was signed, the shelling here on the edge of the city only got worse.” We pass through their apartment, where their grandchildren left just that morning. She credits an Eastern Orthodox icon painting of Mary for protecting them.

“What would you have to say to anyone reading or watching this in the West?” I ask her.

“I want to repeat to America and to Europe: You send weapons to Ukraine. Ukraine kills… I’m not sure who they consider us to be now, but we are Ukrainian. We all have Ukrainian passports. You aggravate and escalate the situation even more. You should sit at the negotiation table, and not try to solve this by sending more arms.”

I spend some of April, all of May, and some of June in the Donbas. I tour front-line cities, alone and with military transports; I meet with people everywhere: there is Alexei Aybu in Lugansk, a member of “Borotba,” (Struggle), a Ukrainian communist party, who fled Odessa after he barely survived the May 2014 Ukrainian nationalist massacre of more than 40 of his comrades in the trade union building. There is “Aurora,” a Donetsk-based Marxist women’s collective comprised of a mix of locals from the Donbas and refugees from western Ukraine, who have especially harsh words for Western “socialists” who are largely backing their attackers in Kiev.

In Mariupol, we see destruction on an inhuman level. Over and over, the locals there tell us that the Ukrainian Azov battalion, who at the time of my visit are still in the Azovstal bunker, has occupied the city for years with an iron fist; they tell us that when the Russians came nearer, Azov laid waste to the city, not allowing civilians any safe escape corridors, and threatening them with death should they attempt to flee.

Everywhere this narrative is repeated, as is the theme of Kiev as an occupier, and Moscow as the liberator. We see the huge influx of reconstruction and humanitarian aid brought in from Russia, while all Western organizations seem to have abandoned Donbas. I tour the peripheral districts at length; everywhere is another memorial for the dead, a list of names, and stuffed animals to remember the children. It is estimated that between 2014-2022, 15,000 people lost their lives in the Donbas, the vast majority in these extremely poor residential areas, forgotten casualties in a war hidden from the view of the West, who seem to believe that Russian President Vladimir Putin awoke one morning in February and decided he wanted some of Ukraine.

On May 9 (the aforementioned Victory Day of the Soviets over Germany in World War II), I join a caravan of reporters (I’m the only U.S. journalist in sight) to Mellitopol, a city in the Zaporozhye region, next to Mariupol. Mellitopol had also been occupied by Kiev-friendly forces until February 2022, but the city was abandoned by Ukraine without a fight. We have come to witness the festivities for Victory Day; for seven years of what the locals we spoke with there called “occupation” by the Kiev regime, any celebrations of the Soviet victory in World War II have been made illegal, so this will be the first one. Most of us assume that given the instability of the political climate, the curfews, and the closeness of the ongoing battles, it will be a fairly subdued affair.

Instead, at least 10,000 people take the streets, in a procession led by a column of Red Army veterans, many of whom fought in the World War II Battle of Stalingrad. The jubilation is contagious; tears stream down the eyes of people of all ages, including both those who lived through World War II, and those who have only lived through this one. It is an experience unlike any other.

A woman sees me capturing footage of the procession, and beckons me over. She says, “You tell them over there, we are Russian, and we have always been Russian. We defeated fascism then, and we will do it again.”

I asked many people there if they had criticisms of the Russian government, or of Putin’s decisions. There is one refrain that I heard, over and over, maybe best articulated by Svetlana Valkovich, of the aforementioned “Aurora” group: “Putin, yes, made many mistakes. Most of all, he waited far too long to come to help us here in Donbas. We begged Russia to come for years, but at least they have come now.” 

This article was produced by Globetrotter.

Fergie Chambers is a freelance writer and Marxist organizer. He can be found on Twitter/Instagram at @jccfergie and at combatliberalism.substack.com.

Bitcoin And Geopolitical Rivalry – Analysis

 March 17, 2023 

By Geopolitical Monitor

By Jose Miguel Alonso-Trabanco

Bitcoin, the flagship stateless cryptocurrency, is a double-edged sword that can either strengthen or harm national power. As financial warfare becomes increasingly complex, this decentralized cybercurrency is acting as a versatile strategic instrument of statecraft that can play various roles under confrontational geopolitical circumstances.

This under-researched subject matter needs to be clarified because it entails meaningful implications for national security, strategic intelligence, foreign policy and grand strategy, but also for the domain of high finance. In order to provide a sharper sense of situational awareness, the following article integrates strategic forecasts that attempt to predict the hypothetical usefulness of Bitcoin for conflicts with scrutiny of illustrative contemporary examples that point in a similar direction.

Analysis of Hypothetical Applications

BTC circuits as conduits to bypass sanctions

Bitcoin can offer a potential lifeline for states under sanctions that need to ensure the continuity of their international economic exchanges. Since the BTC grid cannot be controlled by the coercive or restrictive power of national states, its borderless circuitry provides secondary financial arteries worth harnessing to bypass sanctions that limit the ability to carry out cross-border transactions and transfer wealth through more conventional platforms ‒ anchored to major reserve currencies ‒ that enable international payments. An additional advantage of decentralized virtual currencies for sanctioned states is their discretion. They offer covert gateways to engage formal financial systems or even to avoid them altogether if necessary. In other words, it is difficult to determine if sanctions are being neutralized through cryptocurrencies like BTC.

Furthermore, despite their drawbacks ‒ including wildly volatile exchange rates ‒ nonstate cryptocurrencies like BTC are helpful to evade sanctions thanks to their growing transnational projection, their unsupervised channels, and their lack of centralized nerve centers that could be politically threatened, co-opted, or influenced. An academic essay written by US military officer Deane Konowicz for the US Naval War College identifies three strategies to use unofficial virtual currencies as asymmetric equalizers to diminish or overcome sanctions imposed by an enemy with superior financial firepower. Yet, the implementation of each comes with challenging caveats.

• The theft of wealth through acts of cybercrime against cryptocurrency exchanges or ransomware attacks to demand payments denominated in cryptocurrency. This approach requires sophisticated cyberwarfare know-how.
• Cryptocurrency mining on a large scale as an industrial activity which generates profits that do not flow through traditional financial networks. This pursuit demands investment, technological infrastructure, advanced hardware, vast amounts of energy, and technical expertise.
• The encouragement of the sanctioned state’s population and business community to freely carry out all sorts of transactions through cryptocurrencies. Said possibility comes with the risks of weakening the position of the country’s official currency and the prospect of widespread economic instability, a phenomenon that could lead in turn to political turmoil.

Some statesmen have also identified the potential usefulness of cryptocurrencies like Bitcoin to diminish the impact of sanctions through arteries that bypass the US dollar. For example, according to a report published by the Russian newspaper Kommersant, Sergei Glazyev ‒ one of the Kremlin’s chief geoeconomic masterminds ‒ argues that the Russian Federation has an “objective need” to rely on unofficial cryptocurrencies to circumvent Western sanctions. Nevertheless, BTC is no “silver bullet” that can completely defuse enemy sanctions. Its limitations are also being acknowledged. In a 2021 interview with CNBC, Russian President Vladimir Putin admitted that Bitcoin is a valid means of payment, but he also mentioned that, even though Russia has been seeking alternatives to the dollar in international economic exchanges as a result of its weaponization by Washington, it was still too soon to anchor the exports of Russian energy and commodities to such cryptocurrency.

Yet, as a result of the Western backlash against the Russian invasion of Ukraine, Moscow is seemingly reassessing its position and deliberating about the eventual pertinence of embracing BTC in several sectors to carry out international transactions that deflect American and European sanctions. In this context, Moscow is reportedly considering the possibility of accepting Bitcoin as payment for its energy exports. Since crypto-assets cannot be frozen or seized, they represent potentially attractive financial vehicles for states that seek to contest the interests of Western powers. According to the New York Times, in order to gather stockpiles of unofficial cryptocurrencies to carry out undetected international transactions, the Russians could even engage in ransomware cyberattacks and develop technical tools designed to mask the involvement of Russian entities in said transactions throughout blockchain-based financial environments.

These possibilities indicate that Bitcoin and similar cryptocurrencies can hypothetically operate as protective shields for states under sanctions. As such, they pose game-changing challenges for the effective implementation of sanctions as a tool of diplomatic coercion by the US and its allies, especially considering that such measures have become an increasingly common staple of Western foreign policy. Nevertheless, some analysts believe that measures like better regulations, collaborative information-sharing partnerships between governmental agencies and private entities, international cooperation, and increased oversight can prevent the evasion of sanctions through Bitcoin and similar cryptocurrencies.

BTC as a potential asset to hedge the financial risk of geopolitical tensions

Bitcoin has been identified as an unconventional asset that could be helpful to hedge financial risks in case of conflicts or heightened geopolitical tensions. Some scholars hold that BTC can operate as some sort of “digital gold” because it represents a potential safe haven that provides shelter from exposure to rising systemic geopolitical tensions. In fact, the value of Bitcoin seems to be positively influenced by the incidence of phenomena which trigger a perception of geopolitical turmoil, such as Brexit, the rivalry between Iran and the US in the Middle East, and the so-called “trade war” between Washington and Beijing. These attributes make BTC attractive for national states, private companies and individuals.

An important advantage of Bitcoin as an alternative asset is its high resilience from both volatile market fluctuations and potentially hostile manipulations not motivated by economic interests. Plus, the horizontal Bitcoin system cannot be destroyed. As the American financier James Rickards explains, even though some of its material or digital nodes can be attacked, the dispersed structure of BTC organic networks contains no center of gravity. BTC also lacks centralized systemic records kept in physical servers which could be hit. The ability of the Bitcoin environment to withstand the impact of disruptions from external sources was demonstrated when China followed a heavy-handed approach towards said cybercurrency. Even though the ‘Middle Kingdom’ managed to evict Bitcoin from Chinese soil, the whole BTC ecosystem was not undermined, and China-based mining operations simply relocated to other countries with more flexible frameworks.

However, a nuanced perspective shows that, despite its advantages, Bitcoin is far from being a suitable replacement for hard assets with intrinsic worth like precious metals. As Refk Selmi and other researchers point out, there are major differences that need to be highlighted: 1) Bitcoin’s markets are smaller and less structured; 2) its supply is artificially limited by design; 3) the volatility of this cryptocurrency makes it convenient for short-term speculative purposes rather than as a long-term store of value; 4) whereas BTC is a nascent monetary item, the traditional role of gold as stable store of value is supported by the weight of history since the dawn of civilization; 5) Bitcoin’s legal status is unclear in many jurisdictions.

Potential weaponization of BTC

Bitcoin can also hypothetically act as a weaponized instrument that can be wielded in the practice of statecraft. Ironically, its anti-state properties mean that it can be employed by states against their rivals in offensive acts of hybrid warfare. As an article in the Small Wars Journal argues, The BTC landscape offers 1) asymmetric advantages to instigate monetary disruption in small nations with weak currencies, 2) covert channels to fund terrorist, insurgent, separatist, guerrilla or dissident groups whose militant activities fuel destabilization behind enemy lines and 3) subtle gateways to increase the resonance of psychological warfare, “soft power,” and propagandistic influence through the undisclosed purchase of an active presence in the overlapping platforms that undergird the transnational info-sphere. Potentially, BTC can even be engaged to hit heavier targets. Interestingly, Silicon Valley entrepreneur Peter Thiel, himself a strong supporter of BTC, has expressed his concerns about the potential weaponization of Bitcoin by Beijing against the US: “I do wonder whether at this point [if] Bitcoin should also be thought [of] in part of as a Chinese financial weapon against the US where it threatens fiat money, but it especially threatens the US dollar.” Paradoxically, the fact that China despises Bitcoin at home does not mean that it cannot be useful abroad as a spearhead against major strategic competitors.

Analysis of Empirical Realities 

Involvement of BTC in predatory acts of cyber-financial warfare committed by North Korea

BTC offers opportunities to engage in unconventional forms of economic predation. According to a report prepared by a panel of experts for the UN Security Council (2019), the North Korean military intelligence agency, the Reconnaissance General Bureau, has been responsible for acts of cyber financial warfare and cybercrime ‒including malware and ransomware attacks against foreign corporate targets in South Korea and elsewhere ‒ involving Bitcoin and other decentralized cryptocurrencies. Said source claims that Pyongyang’s presence in the cryptocurrency ecosystem also includes mining. It is estimated that the profits made by North Korea through these measures were worth $2 billion over a couple of years. The official report indicates that the resulting stolen wealth can then be used to undertake unsupervised international transactions, evade sanctions, and fund North Korean military expenditures, including its nuclear weapons programme. The American blockchain research firm Chainanalysis calculates that, in 2022 alone, North Korean entities stole $1.7 billion worth of cryptocurrencies through hacking. This aggressive behavior shows the problematic overtones of state-sponsored criminal activities related to crypto assets.

Bitcoin is more than a weapon for North Korean statecraft. It also helps Pyongyang compensate its lack of access to mainstream international financial channels and provides money to purchase food. According to a work of investigative journalism, North Korean policymakers regard cryptocurrency as a vital gateway to enhance the country’s financial infrastructure and, despite Bitcoin’s libertarian theoretical underpinnings, its adoption by this communist state is compatible with the strong emphasis of Juche ideology on the pursuit of self-sufficiency. Yet, tricky measures are needed to maximize its usefulness. As a report published by the National Committee on North Korea explains, the volatility of Bitcoin and similar cryptocurrencies makes them unsuitable as permanent vehicles for international payments. Some North Korean partners might accept Bitcoin, but it would make more sense to exchange cryptocurrency for conventional hard cash ‒ whose liquidity is much higher ‒ first and then use it to pay for goods and services later.

BTC donations to bankroll the military defense of Ukraine 

Bitcoin can be used to bolster the military defense of a state in conventional conflicts.  In the Ukraine War, it has been used by Kiev to prepare for the clash and to mitigate its consequences. Thanks to crowdfunding campaigns organized by both the Ukrainian government and private networks of volunteers through virtual platforms, Ukraine received donations denominated in cryptocurrency from foreign supporters. This digital war chest was helpful to increase Kiev’s pool of resources before and during the 2022 Russian invasion. According to open sources, said funds were invested in the purchase of military equipment, unmanned aerial vehicles, medical supplies, and even facial recognition software to identify Russian soldiers, spies, and mercenaries.

Although Kiev has received far larger sums of money through more traditional financial systems, the BTC grid turned out to be convenient channel for the direct reception of donations from overseas because it does not require the permission of institutional facilitators or intermediaries. Hence, this flow of money completely bypasses the formal paperwork and ‒ perhaps more importantly ‒ the restrictions of conventional financial channels that prevent remittances whose purpose is to fund military activities. Ironically, the specialized consulting firm Elliptic Intel notes that this course of action was inspired by the preceding crypto-asset fundraising undertaken for years by pro-Russian separatist militias in the Donbass.

This reality indicates that cryptocurrency has become not only a mainstream financial phenomenon, but also an instrumental digital asset in contemporary conventional warfighting. Considering that both Moscow and Kiev are actively resorting to decentralized cybercurrencies to gain an upper hand in this ongoing conflict, an article published by the Washington Post metaphorically described such confrontation as the world’s first “crypto war.” Yet, it is still unknown if cryptocurrencies will represent a game-changer that can decisively alter the facts on the ground in favor of either side.

In order to increase its war chest of crypto-assets, the Ukrainian government even courted the participation of large private cryptocurrency trading platforms, including FTX, Kuna, and Everstake. This involvement generated unexpected externalities. Specifically, the revelations that have uncovered the fraudulent criminal behavior of private cryptocurrency exchange FTX under the leadership of Sam Bankman-Fried ‒ involving cyclical transfers of wealth as a scheme that was facilitated by powerful political and corporate connections ‒ demonstrates that that these initiatives can also offer opportunities that encourage acts of corruption. The resulting fallout is problematic because it harms the public legitimacy of the crowdfunding efforts due to the fear of misappropriation of funds and also because at least some of the money sent by donors might not have reached its intended destination.

In the context of the Ukraine War, BTC has not just been used to optimize the defensive capabilities of Kiev’s military forces in the operational theatres of engagement. The cryptocurrency has also helped civilians caught in the crossfire. As a response to the destruction of infrastructure, Ukraine’s worsening macroeconomic trouble, the intermittent occupation of large urban areas by Russian forces, the exodus of millions of refugees, and the unreliability or unavailability of traditional financial services under such chaotic conditions, Ukrainian citizens are turning to BTC as a non-traditional monetary item to carry out safe and quick transactions whose purpose is to cover essential needs.

Iranian engagement in the BTC ecosystem to deflect the impact of sanctions

The Islamic Republic of Iran has harnessed the Bitcoin landscape in an effort to deflect Western sanctions through unorthodox measures. According to the consulting firm Elliptic ‒ involved in the scrutiny of blockchain analytics ‒ Teheran is encouraging BTC mining in order to use the resulting profits to pay for imports, overcoming the coercive restrictions that limit its ability to participate in economic exchanges carried out through ordinary platforms. Since the process involves the ‘alchemical’ transformation of energy into cryptocurrency ‒ a borderless monetary asset that circulates in an almost unrestricted way ‒ on an industrial scale, it offers the Iranian state an opportunity to monetize its energy resources (oil and natural gas), an important advantage for an economy deprived of hard cash and access to conventional financial services in international capital markets.  Furthermore, Teheran is engaged in negotiations with other states ‒ including Austria, Bosnia-Herzegovina, England, France, Germany, Russia, South Africa, Switzerland ‒ over the development of collaborative frameworks for the use of cryptocurrencies in cross-border financial transactions. Therefore, for Iran, Bitcoin represents a backdoor to access the world economy. As such, it bolsters its counter-hegemonic policy of “economic resistance.”

Nevertheless, Iran’s position towards stateless cryptocurrencies has zigzagged as the balance between costs and benefits has changed. Iranian authorities reversed their permissiveness towards Bitcoin mining due to rising electricity consumption, shortages of natural gas supplies as a result of the sanctions, Bitcoin’s falling value, and the incidence of droughts which have diminished the operational capacity to generate hydropower. Tehran even launched a clampdown due to concerns over the prospect that widespread BTC mining could overload the country’s power grid and provoke blackouts, a problem which could unleash socio-political unrest. Yet, there are signs which indicate that Tehran is revisiting its position once more. In August 2022, the Iranian Ministry of Industry, Mining, and Trade announced on social media that the Middle Eastern country had completed its first import order denominated in an unnamed stateless cryptocurrency, a transaction worth $10 million, adding that more operations like this will continue in Iran’s international economic exchanges. Although still worried about the problematic consequences of mining for energy security, Iran has released hardware for BTC mining that had been previously seized.

Concluding Remarks

Both strategic forecast and analytical assessments reveal that, in the strategic chessboards of 21st century “connectivity wars,” the leading cryptocurrency can be wielded as a high-tech financial sword or shield by innovative practitioners of economic statecraft. Some predictions have already come true. Others anticipate conceivable possibilities that might come to fruition in the near future. In turn, reality itself has brought some unexpected, but not surprising, developments that had not been foreseen. The unchartered waters of the cryptocurrency ecosystem might bring even more exotic applications of Bitcoin and similar virtual currencies for economic warfare worth exploring that have not been identified yet.

The increasing weaponization of Bitcoin in conventional and unconventional battlefields is consistent with the transformational character of “hybrid warfare.” A century ago, the historiographical German thinker Oswald Spengler explained that rather than an item that flows from one hand to another in economic exchanges, money is ‒ for modern Faustian civilizations that favor the march of technological development, the pursuit of worldly power and economic dynamism in the quest for wealth ‒ also an organic impersonal lifeform whose strength can be harnessed to project political force. The ongoing and eventual involvement of Bitcoin in several expressions of conflict shows that such an axiom is certainly valid in the digital age of FinTech.

This article was published by Geopolitical Monitor.com

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