Bracing for a decisive fifth winter
American envoys of Donald Trump — Steve Witkoff and Jared Kushner — are visiting Kyiv for what is being billed as a new round of negotiations. No one expects a breakthrough in these "peace talks," but the visit serves as a gesture of courtesy by the U.S. president, keeping up the appearance that talks are still underway. To some extent, this visit resembles the ritual exchange between seconds moments before the resumption of a duel to the death. Everyone understands that no peace settlement is possible, but the formalities still must be observed.
Meanwhile, everything around us is being prepared for a decisive autumn and winter. Russia is hoping to finally break Ukraine's will to resist, while Ukraine is preparing to respond to the new push as forcefully as it can. Russia is in a rush, as the cost of this war of attrition is threatening its internal stability, and so may be looking for an opportunity to force a decisive battle. Ukraine understands that Russia will try to turn the coming months into a kind of scorched-earth campaign around Kyiv, and is preparing accordingly, hoping that Russia will eventually exhaust itself.
Within this broader preparation for a decisive fight, one small fraction of the battlefield -- the blockade of Black Sea seaports – has delivered a Ukrainian advantage. Unlike in 2022, Ukraine can now respond in kind. There is ample evidence that Ukrainian forces hold a stranglehold over Russian logistics in the Black Sea, with next to nothing leaving Russia's southern seaports. Russia and Ukraine together account for 27.8% of global wheat exports, 12.2% of maize exports, and as much as 63.5% of sunflower oil exports. If the mutual blockade persists, many regions will face food shortages, and prices are already climbing — likely without yet reflecting the prospect that a large share of Russian grain will fail to reach the market this year.
These developments are unfolding against the backdrop of an increasingly fraught internal political situation in Ukraine. President Volodymyr Zelensky ignored former Defense Minister Mykhailo Fedorov's demand to be reinstated, and in response Fedorov released a video effectively accusing Zelensky of corruption and inefficiency. This was nothing new. But coming from Fedorov, the message landed like a political bomb, and talk of elections flared up again. To make matters worse, NABU and SAPO revealed several more episodes of top-level corruption, with links leading back to the Office of the President. For now, Zelensky is not under threat — his legitimacy as the leader fighting off the aggressor remains indisputable — but his political outlook is clearly fading, with every new episode revealed to the public.
There’s growing talk of additional funding needs. Zelensky stated on August 24th that Ukraine faces a $27 billion shortfall in its defense budget, and Minister of Finance Serhiy Marchenko followed with an estimated $32.6 billion funding gap for 2027. The situation does not look overly severe, but export disruptions, sustained strikes on Ukrainian businesses and the need to cover Zelensky's unbudgeted military pay raise initiative for soldiers are creating pressure. We consider it very unlikely that the EU will agree to provide additional funding to secure a pay increase for the military, given generous funding to date. What's more, the European Commission seems quite unhappy with the slow pace of reforms, including further anti-corruption measures. A firmer EU stance on the stalled reform agenda adds further tension, with officials now openly signaling that funding will be delayed if there is no progress.
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