Monthly Context Report - April 2023
19 May 2023
Cover photo: April 2022, Lviv, Ukraine. This building used to be a cultural center but now offers 40 displaced Ukrainian women with children a safe place to stay. It is one of 350 shelters in Lviv. Some displaced women stay a few days and move on, while others have stayed for two months. People register at the railway station when they arrive in Lviv and get directed to whichever shelter has space. Many of those who work in the shelter are refugees themselves.
Summary
Security Updates: While Russia advanced in and around Bakhmut, the frontline did not significantly change. Russia’s air strikes in April primarily targeted military and critical infrastructure, likely to disrupt a potential Ukrainian counteroffensive. The intensification of drone and missile attacks inside Russia and the destruction of Russian electronic warfare equipment may indicate intense preparations for a large-scale Ukrainian military operation. Both Ukrainian and Russian governments strengthened conscription regulations.
Political & Legal Updates: New high-profile appointments within the Ukrainian government follow a series of dismissals in a large-scale anticorruption shake-up. U.S. intelligence leaks suggest Ukraine may lose its air defense capacity in late May. Zelenskyi speaks to Xi Jinping for the first time since February 2022. The Ukrainian parliament established a mechanism for compensating damaged and destroyed property.
Economic & Development Updates: The blockade of Ukrainian agriculture imports by neighboring E.U. countries has hit small and medium producers in Ukraine. Russia has strongly signaled that it would not agree to extend the Grain Deal expiring on May 18. With the end of regular attacks against energy infrastructure, Ukraine has restored electricity export to neighboring countries. Ukraine is set to terminate tax benefits starting July 1 to meet the International Monetary Fund’s requirements for assistance. Ukraine plans to nationalize one of the key banks with links to Russia.
Social & Environmental Trends: Large urban centers of the east and the south see an increase in displaced populations. New reports of mistreatment and execution of prisoners could jeopardize prisoners of war swaps. Tensions build up around the Ukrainian Orthodox Church of the Moscow Patriarchate. Environmental damage across the country, particularly in frontline regions, incrementally increases risks to flora, fauna and public health.
Poland: Polish fall elections are unpredictable due to increasing polarization and radicalization. The Prosecutor’s Office opened an investigation into the abuse of power by former Polish P.M. and opposition leader Donald Tusk. The European Commission announced that Poland now “has largely implemented the steps required” by the European Court of Justice in the judiciary dispute.
Moldova: European Parliament calls for E.U.–Moldova accession talks to begin. Gagauz elections cause fears of another Russian interference in Moldova’s internal affairs. State carrier Air Moldova is on the verge of bankruptcy, with flights being canceled daily.
Trends to Watch
Security & Access: Russian forces could capture Bakhmut soon, opening the route to advance toward Sloviansk and Kramatorsk. Mobilization efforts in Ukraine and Russia continue. Ukraine might launch counteroffensive operations. Intensification of Russian aerial strikes targeting military and critical infrastructure.
Political & Legal: Governmental anticorruption efforts continue. China might play a more significant role in the peace negotiations, especially if the Ukrainian counteroffensive does not lead to significant achievements. Due to domestic political pressure in key supporting countries, Western support for Ukraine could be increasingly difficult to sustain on the same high level after 2023. Risks of misuse of public funds and corruption while implementing mechanisms for compensating damaged and destroyed property.
Economy & Development: Free trade deals and additional exceptions affect the Ukrainian agriculture, economy and social cohesion in neighboring countries. Agreements and concessions over the Black Sea Grain Deal expansion after May 18. Elections in Turkey will define Turkey’s political, economic and geopolitical trajectory. Inflation and prices of essential goods, including fuel. Business environment and upcoming termination of taxation benefits. The G7 summit on May 19–21 might result in an almost complete ban on exports to Russia.
Social & Environmental: Tensions between the two Orthodox denominations are likely to continue throughout May. Environmental damage across the country, particularly in frontline regions, incrementally increases environmental risks, flora, fauna, and public health risks. Potential chemical poisoning from the depleted uranium shells.
Poland: The result of the fall elections is far from certain. The right-wing ruling party and its biggest center-right rival have both been losing support in favor of social democrats and far-right. The high cost of living and unprecedented inflation continue to affect polls. A group of Polish judges does not recognize the current Constitutional Tribunal as legitimate. If they refuse to convene, Poland may not be able to receive the long-awaited E.U. funds.
Moldova: Western engagement with Moldova has been increasing, including security support. A Russia-backed head of Gagauzia can become an influential figure in Moldova’s internal pro-Russia vs. pro-E.U. dispute. New tensions in Transnistria or developments in the peace process can significantly impact Moldovan politics.
Security & Access
Summary
Russia advanced in and around Bakhmut with only minor changes to the main frontline directions.
Different indicators hint at Ukrainian counteroffensive preparations, such as troop deployments in the southern regions of Ukraine, an intensification of drone and missile attacks inside Russia to potentially test Russian air defense capacities, and the destruction of Russian electronic warfare equipment.
Russia prioritized aerial strikes against military and dual-use infrastructure objects, such as oil depots and industrial facilities, likely aiming to disrupt military supply chains for the Ukrainian counteroffensive.
Both Ukrainian and Russian governments strengthened conscription regulations. Going way beyond its regular annual recruitment practice, the Russian Ministry of Defense seeks to increase its military troop contingent by more than 500,000 people by the end of 2023.
Military Developments
While eastern and southern frontlines have barely moved throughout April, rumors, allusions and visible concrete preparations by Russian and Ukrainian Forces indicate the launch of large-scale Ukrainian offensives, potentially in late spring. Russian aerial attacks switched from targeting the energy infrastructure objects to focusing on military or dual-use facilities.
Source: U.K. Ministry of Defense, April 21, 2023
Russian ground assaults in East Ukraine resulted in limited gains in the Donetsk Oblast, particularly around Bakhmut, Avdiivka and Marinka, and Oskil-Kremina direction at the crossover between Kharkiv and Luhansk oblasts. Russia pressed on Bakhmut the most, as Ukraine reportedly controls about 12% of the town. To protect the defense line, possibly in preparation for the anticipated counteroffensive, Ukrainian officials remain determined to continue defending the town.
Ukrainian Counteroffensive Preparations
Various trends, news and troop movements signaled an ongoing Ukrainian counteroffensive preparation throughout April, mainly focused on the country’s south. On April 4, Ukraine’s Deputy P.M. Iryna Vereshchuk asked civilians in a cryptic Telegram post to flee Russian-held territories. The following day, Vladimir Rogov, from the Russian-installed military-civilian administration in the Russian-held part of the Zaporizhzhia Oblast, mentioned that the Ukrainian army had accumulated reserves of personnel, armored vehicles and ammunition for an offensive in Zaporizhzhia Oblast. Furthermore, Russian sources reported that Ukraine conducted several reconnaissance operations along the frontline in the Zaporizhzhia Oblast throughout the month.
Ukrainian forces on the western side of the Dnipro River started to frequently conduct amphibious raids — attacks launched from water — to push out Russian troops from the eastern bank near Kherson. Think tanks and geolocated footage show that the Ukrainian military likely strengthened positions on the Russian-controlled left bank of the Kherson Oblast, though Russian sources deny Ukrainian advances.
The Ukrainian operations in Zaporizhzhia and Kherson oblasts might also be driven by the urgency to improve the security situation in these frontline areas. Both southern regions remained major hotspots of Russian attacks throughout April. They were mentioned as such regularly by Ukrainian media, such as on April 9, when Russian troops shelled the Kherson Oblast 71 times. The same day, Russian forces struck a Zaporizhzhia city neighborhood at night, killing two civilians and injuring one. Even if the counteroffensive is postponed, incremental movements around Kherson city might seek to stabilize the situation in this strategically, politically and economically significant frontline location.
OSINT data illustrates that the Ukrainian Armed Forces set a record in destroying Russian electronic warfare (EW) equipment in March 2023. An increase of about six times was recorded in comparison to February 2023. This is a striking indicator of a looming assault. The highest numbers of EWs and radars were previously destroyed before the Ukrainian forces’ counteroffensives in the Kyiv, Kharkiv and Kherson directions in 2022.
Source: Molfar OSINT, April 14, 2023
In possible expectation of offensive operations, Russian troops fortified their positions along the frontline. Investigative media revealed how thousands of Russian defensive positions would likely complicate Ukraine’s south movements. The open-source research illustrated how the Kremlin prioritized the construction of new trenches and anti-vehicle barriers for equipment in both southwest Ukraine and the Crimean Peninsula after the first successful Ukrainian counteroffensives in autumn 2022 and accelerated the buildup and strengthening of these defense lines in March 2023.
Meanwhile, increased mobilization and military recruitment efforts made headlines on both sides of the conflict line. Ukraine reportedly finished training about 40,000 recruits, staffing eight new assault brigades. On April 11, the Ukrainian government introduced changes to the regulation of conscription, legalizing the disposal of summons to civilians regardless of their place of military registration. The same day, the Russian Parliament adopted a law prohibiting citizens who had received a summon from leaving the country before they visited the military registration and enlistment office. Moreover, summons can now be delivered in written or electronic form in Russia. Additionally, Russian authorities actively urge their compatriots to join the army voluntarily through social media campaigns. Media estimates that the Kremlin will try to recruit at least 400,000 contract soldiers and conscript 147,000 more men throughout 2023.
Notable attacks inside Russia and Russian-held territories, likely conducted by Ukrainian or pro-Ukrainian sabotage groups, targeted military and critical infrastructure objects to test the Russian air defense capabilities and complicate military supply chains for the looming Ukrainian counteroffensive. Loitering munitions targeted at least two military enlistment offices in the Bryansk Oblast on April 3 and 18. On April 5, two Ukrainian civilian light aircraft crossed 50km deep into Russian territory and dropped bombs at a factory linked to Russian security services. In the second half of April UAVs struck energy infrastructure in Belgorod and Kursk oblasts at least three times.
A missile launched from Ukraine was intercepted over Crimea, first in Feodosiia on April 8 and over Kerch on April 22, possibly targeting the Crimean bridge. The bridge is crucial for Russian military supply chains and a highly symbolic target. The Russian prestige project was designed quickly after Russia’s unlawful annexation of Crimea in 2014 to connect mainland Russia with the peninsula physically. Therefore, every hit against the bridge boosts Ukrainian public and military morale.
Russia accused Ukraine of using Hrіm-2 short-range (up to 500 km) ballistic missile systems. The first reported use of Hrim-2 dates to March 30. Ukrainian Armed Forces never confirmed that this weapon was part of their military arsenal. On April 24, the Russian Black Sea Fleet in Sevastopol was attacked by three surface drones. As a reaction, Russia threatened to end the Grain Deal, blaming Ukraine for using the grain transport corridor to attack their fleet. More details on the Grain Deal follow in the Economy and Development Updates section.
Aerial Attacks
Between April 27–28, Russia launched two waves of cruise missiles targeting several oblasts. Ukrainian air defense intercepted 21 out of the 27 Kalibers, h-101/h-555s and Iskander-Ks. The missile hits and debris killed at least 23 civilians, injuring more than 44, mainly in Mykolaiv and Uman. This was the first mass missile attack since March 9. The attacks in March killed at least six civilians and injured four.
Judging from the nature of most Russian targets in April, Russian aerial attacks switched from focusing on Ukrainian energy infrastructure objects to attacks on military or dual-use facilities, such as oil depots and industrial facilities. Two military infrastructure objects were attacked in the Odesa Oblast with UAVs on April 4 and 19. On the night of April 21, Russian forces shelled two oil depots with UAVs in Poltava and Vinnytsia oblasts. Two civilians were killed by an aerial bomb in the town of Vovchansk, Kharkiv Oblast, on April 18.
On April 14, the frontline town of Orikhiv, Zaporizhzhia Oblast, was attacked, most likely with a UPAB1500—the most destructive modification of a guided aerial bomb. Russian troops used the FAB-500 bombs in the frontline and Ukraine’s border areas in April with a higher intensity than in March 2023.
Alarm Statistics
The following graph shows the number of air alerts turning into actual attacks in different regions (oblasts) of Ukraine
The selection reflects current main bases from where international organizations are conducting their humanitarian operations: The graph illustrates that air raids in Kharkiv and Zaporizhzhia oblasts most often led to recorded explosions in the month of April.
Trends to Watch
While Russian advances and assaults on Bakhmut continue, they have declined in intensity. Ukrainian positions going into May appear more solid than in the previous month. However, the risk remains of Russia finalizing its capture of the city. This advance would open the route to further assaults toward the neighboring towns of Sloviansk and Kramatorsk.
Mobilization and voluntary recruitment in Ukraine and Russia continue.
Ukraine might launch counteroffensive operations.
Intensification of Russian aerial strikes targeting military and critical infrastructure.
Drone and missile strikes inside Russia and in Russian-controlled territories
Political & Legal Updates
Summary
New high-profile appointments follow a series of dismissals in a large-scale anticorruption shake-up. Ukraine has been praised for progress, but corruption remains “endemic.”
U.S. intelligence leaks suggest Ukraine may lose its air defense capacity in late May.
Zelenskyi speaks to Xi Jinping for the first time since the beginning of the full-scale invasion.
Ukrainian parliament establishes a mechanism for compensating damaged and destroyed property to people affected by the full-scale invasion.
Political Developments inside Ukraine
Government Reshuffle amid the Anticorruption Cleanup
To boost public trust in authorities, the government of Ukraine continues to appoint officials with either military or law enforcement backgrounds or with links to the security services, as these institutions enjoy a considerably high trust in the society. While high public confidence in the military was reported before, a poll from April 8 shows that about 75% of Ukrainians also perceive the work of the SBU as more efficient since the full-scale invasion.
On April 11, the Cabinet of Ministers dismissed Vadym Melnyk from the post of director of the Bureau of Economic Security (BEB), potentially due to reputational concerns and potential implications of corruption. His deputy, Eduard Fedorov, will perform the BEB head’s duties. Before joining the BEB, Fedorov headed the Ukrainian Security Services (SBU) in the Sumy Oblast.
Following the wave of mass dismissals of various heads of civil-military administration since the beginning of the year, the Ukrainian government continued filling vacant positions in April. On April 7, the Ukrainian Cabinet of Ministers confirmed Ruslan Kravchenko’s appointment as a regional governor of the Kyiv Oblast. On April 11, the appointments of Artem Lysohor and Volodymyr Artiukh as the heads of Luhansk’s and Sumy’s Regional Military Administrations were confirmed. Ruslan Kravchenko worked in the military prosecutor’s office and was the head of the Bucha District Prosecutor’s Office from March 2021.
Artem Lysohor has a decades-long background in law enforcement, starting his career in 1999 and climbing up the ranks to the deputy chief of the National Police in the Zhytomyr Oblast in 2016. With the beginning of the full-scale invasion, he was deployed to the Luhansk region, where he became involved in defense operations around Sievierodonetsk. Volodymyr Artiukh worked for about 37 years with the army. Among his previous jobs, he served as deputy chief of the Ukrainian Armed Forces General Staff in 2009.
Transparency and Corruption
The Group of States against Corruption (GRECO) noted a positive development in its reform efforts, stating that Ukraine has implemented 15 out of 31 recommendations. The previous report assessed the level of compliance with its recommendations as “globally unsatisfactory.” A notable success highlighted by GRECO is the new process of identifying conflicts of interest, particularly related to restrictions on entrepreneurial activities for members of parliament.
Experts, however, characterize corruption in Ukraine as still endemic despite notable progress. A recent representative poll from April 22 shows that about 56% of Ukrainians believe that corruption in the country increased since the beginning of the full-scale invasion. However, anticorruption raids on high-ranking state officials highlight the government’s effort to address the problem. Ukraine’s National Anticorruption Bureau (NABU) conducted a search targeting the head of the Kharkiv Regional Civil-Military Administration, Oleh Syniehubov and his deputy Vita Kovalska. Media reported that the raid concerned the alleged embezzlement of state-provided humanitarian aid. On April 25, officials discovered several warehouses filled with stolen humanitarian in the Lviv Oblast.
On April 4, the Specialized Anticorruption Prosecutor’s Office found the mayor of Poltava, Oleksandr Mamai, guilty of misappropriating state funds. Mamai was dismissed on April 12. On April 19, Specialized Anticorruption Prosecutor’s Office (SAP) and NABU completed a pre-trial investigation of Serhii Chukhrii from Odesa‘s Regional Military Administration. The deputy head of the Land Relations Development Department has been charged with receiving a bribe of about $40,000 for permitting a businessperson to lease a land plot in the Odesa Oblast.
International Context
American Intelligence Leaks
A series of American intelligence data leaks indicated the limited Ukrainian capacity to conduct the counteroffensive. While Ukrainian officials reacted publicly fairly calmly and downplayed the value of military information released, unnamed sources close to the Ukrainian administration reported that Kyiv altered their counteroffensive plans since the leak.
The sheer scope of the leaks suggested it was internal. On April 13, the FBI arrested 21-year-old Jack Teixeira, a Massachusetts Air National Guard member. He allegedly first leaked secret documents 48 hours into Russia’s full-scale invasion. Even though some information was altered, the leaks appear to be the most significant intelligence scandal since Wikileaks in 2013.
The allegedly fading Ukrainian air defense capacities have been a significant concern in the humanitarian community. While Ukrainian officials have disputed this assessment, the leaks claimed the Ukrainian air defense might run short of ammunition as early as May 23. If true, Ukraine could withstand only two or three more Russian missile and drone mass strikes.
Ukraine’s NATO allies renewed their calls to provide Ukraine with jet fighters and other modern military equipment as soon as possible, indicating there might be some truth to the leaks. The urgent need for substituting Ukraine’s Soviet-era air equipment with NATO systems is primarily known—and was most recently stressed as a NATO priority during NATO Secretary General Jens Stoltenberg’s first visit to Kyiv since the full-scale invasion on April 20.
The Russian use of balloons and empty missile shells as fake military targets in February–March, aiming to exhaust Ukrainian air defense capacities, seemed to play into this shortage. Moreover, Russia could start increasingly using its extensive fixed-wing bomber capabilities, gaining air superiority and potentially conducting widespread medium-altitude strategic bombing missions over Ukrainian targets, something Russia’s aircraft carried out across several cities in Syria in 2019. Therefore, new waves of Russian mass air attacks in the coming weeks remain likely.
Continuing Western Weapons Supply to Ukraine
Ukraine’s Western allies have accelerated the delivery of weapons to Ukraine amid Ukrainian criticism of Western capacity to deliver sufficient assistance timely. Among other deliveries, Polish and Slovak officials confirmed the transfer of their Soviet-era MiG-29 fighter jets and announced more. (Some are reportedly not in the best shape and could be used only for spare parts.) Germany handed over the American Patriot systems and the second of four promised IRIS-T air defense systems. On April 18–19, the U.S. confirmed the arrival of the first Bradley Infantry Fighting vehicles to Ukraine and announced a military support package worth about $325 million.
As Germany’s arms producer Rheinmetall prepares to launch a military maintenance and logistics hub in the Romanian border city of Satu Mare, Western governments seem to be preparing for the war continuing beyond the year 2023. A second maintenance hub in Poland was announced during the NATO meeting at the Ramstein Military Airbase in Germany on April 21.
Zelenskyi on a Diplomatic Offensive
On April 5, Ukrainian President Volodymyr Zelenskyi paid his first formal visit to Poland since the start of Russia’s full-scale invasion. In a display of support, Polish President Andrzej Duda awarded Zelenskyi with Poland’s highest honor, the Order of the White Eagle. Since February 2022, Poland has taken in more than a million Ukrainian refugees and urged NATO partners to provide Kyiv with more military supplies.
To sustain American support, Zelenskyi met with a U.S. Senate bipartisan delegation on April 12 and discussed an accountable and transparent use of American aid and weaponry to Ukraine. The 2024 U.S. presidential election will decide on the scale of political, humanitarian and military support to Ukraine.
Polls illustrate that the share of Republicans who say the U.S. provides too much support to Ukraine has steadily increased since March 2022. Shortly after the delegation visit, 19 Republican lawmakers published an open letter to the American president demanding a stop to the “unrestrained” aid and weapons for Ukraine.
Western leaders, including the U.S., welcomed the one-hour call between Zelenskyi and Chinese Head of State Xi Jinping on April 26. It was the first call between the leaders since February 2022 and followed several high-ranking French, German and E.U. visits to Beijing and Xi’s visit to Moscow over the previous weeks. The official Chinese position on the war has been articulated as “neutral”, even though Western analysts have highlighted the strengthened Chinese political and strategic alliance with Russia. China has refused to condemn Russia and has blamed the West for the invasion. China’s leadership has emphasized that it wouldn’t provide any side with military support and offered itself as a mediator. On the first anniversary of the invasion, China released a peace plan, which has been dismissed by the Ukrainian government and its Western allies.
Legal Updates
At the end of March, the Ukrainian Parliament established a legal mechanism for compensating damaged and destroyed property during the full-scale invasion. The mechanism enters into force on May 22. If the original owners are deceased, their heirs also qualify for the compensation. Applications can be submitted digitally through the Diia platform or in person at administrative service centers or other entities in charge of social protection matters. The vulnerable population will be prioritized for compensation: families with three or more children, persons with disabilities, families of fallen Ukrainian soldiers, participants of military actions and persons mobilized after February 24, 2022.
Trends to Watch
Governmental anticorruption efforts continue.
China might play a more significant role in the peace negotiations, especially if the Ukrainian counteroffensive does not lead to significant achievements.
Western support for Ukraine will be increasingly difficult to sustain on the same high level after 2023 due to domestic political pressure in key supporting countries.
Risks of misuse of public funds and corruption while implementing mechanisms for compensating damaged and destroyed property.
Economic & Development Updates
Summary
Blockade of Ukrainian agriculture imports by neighboring E.U. countries has hit small and medium producers before winter crops harvest.
Russia has strongly signaled that it would not agree to extend the Grain Deal expiring on May 18, because the demands to facilitate its own grain and fertilizer exports have not been met.
With the end of regular attacks against energy infrastructure, Ukraine has restored electricity export to the neighboring countries.
Ukraine will terminate tax benefits starting July 1 to meet International Monetary Fund’s assistance requirements, hurting the country’s business community.
Ukraine plans to nationalize one of the key banks with links to Russia.
Key Sectors
Agriculture
The E.U. Countries’ Ban on Ukrainian Agriculture Products
Ukrainian grain is now blocked on two fronts, with Russia halting the Black Sea shipments and the E.U. neighbors not allowing cargo import anymore—even though last year, the E.U. suspended customs duties for Ukrainian agriculture production and eased access to the common market.
Following March protests by Polish farmers, who struggle to compete with cheaper Ukrainian grain, on April 15, Poland banned both the import and transit of agricultural products from Ukraine. The ban applied, among others, to grains, dairy products, fruit, vegetables, honey, meat and sugar and was supposed to be in force until the end of June, coinciding with the winter crops harvest. A few days later, Ukraine and Poland agreed on the resumption of transit only. Hungary, Slovakia and Bulgaria announced a suppression of import (but not transit). The Hungarian Grain Association criticized the ban, saying it would lead to shortages and increased inflation, as the country needs to import corn after a poor harvest last year. The Union of Polish Dairy Associations recommended excluding milk and dairy products from the ban as they were worried about retaliatory measures by Ukraine—its largest export market. The unilateral restrictions are in possible breach of E.U. laws.
Romania, one of Europe’s most significant producers of oilseeds and grains, will not ban Ukrainian grain imports unilaterally and is waiting for the European Commission to enforce measures. Still, customs authorities will begin sealing vehicles transporting Ukrainian goods.
In March, Brussels approved a total compensation package of €56.3 million: nearly €30 million for Poland, €16.7 million for Bulgaria and €10 million for Romania. Farmers and national governments said the offer wasn’t sufficient given total losses estimated at €417 million. In April, the E.U. Commission offered an additional €100 million in compensation for farmers in the five countries bordering Ukraine on the condition that their unilateral bans are lifted.
Ukrainian authorities and experts argue that Poland authorities use farmers’ protests instrumentally for internal political struggles and to obtain additional funds from the E.U. amid a general decline in world wheat prices. Observers note that conservative farmers’ votes will be necessary for the ruling Law and Justice party in this fall’s upcoming parliamentary elections. In Poland, there are speculations on whether companies owned by people associated with the ruling political party earned money from selling Ukrainian grain on the local market.
With 10% of Ukraine’s total food export shipped to and through Poland and another 6% to and through Hungary, the blockade will likely affect small and medium farmers (SMEs) the most.
From May 1, Turkey will impose a new 130% tariff instead of the current 0%, which will apply to certain grains, including wheat and corn, for Ukrainian goods. Turkey is the largest buyer of Ukrainian wheat (18%) and barley (42%). This measure aims to protect domestic producers on the eve of the new season, as Turkey’s wheat and barley harvest starts in May. Some traders think this might also aim to gain popular support before the upcoming May 14 presidential elections.
The Black Sea Grain Corridor
Problems with the Black Sea grain corridor may have a more significant negative impact on Ukraine’s budget and foreign exchange market, given that Ukraine exports about 80% of grain via sea routes.
Russia has strongly signaled that it wouldn’t agree to extend the deal expiring on May 18 because a list of demands to facilitate its own grain and fertilizer exports has not been met. It will also not approve any new vessels unless their operators guarantee the transits will be done by the end date of May 18. G7 countries will meet on May 19–21 to decide on expanding sanctions against the Russian Federation, including a ban on almost all exports. Japanese Prime Minister Fumio Kishida invited President Zelenskyi to join the meeting online.
Since April 10, the Russian side has unilaterally stopped registering vessels that Ukrainian ports submit to form an inspection plan. For example, since April 14, Russians have refused to register three vessels (two of them heading to China) without any explanation. The vessels were already waiting for cargo in the port of Pivdennyi. Russia blames Ukraine and the U.N. for corrupt practices in forming the lists. It argues that cheap Ukrainian grain is stored in E.U. granaries instead of going to developing African countries.
Direct losses caused to the agro-industrial complex of Ukraine have reached $8.7 billion, mainly due to the destruction and damage of agricultural machinery, destruction and theft of harvest and destroyed granaries.
The profitability of agricultural companies decreased more than four times because of the war. Among the reasons are the increase in the costs (fuel, fertilizers), decrease in prices for agricultural products and difficulties of logistics and sales, which are expected to continue throughout the year. The Verkhovna Rada exempted farmers from paying tax obligations for agricultural lands in the war zone and temporarily occupied or mined areas.
Energy: Restored Electricity Exports
This month, Ukraine restored electricity exports to Moldova, Poland and Slovakia. The resumption of electricity exports is allowed only if there is a surplus of generating capacity. With a capacity reserve, the Ukrainian energy system has operated without consumer restrictions for almost two months. The current surplus comes from hydroelectric power plants and reduced consumption after the end of the heating season.
Export at interstate crossings is open only briefly through daily auctions. The restoration of the damaged network infrastructure due to enemy shelling is ongoing. It will cost about $2 billion to restore the power system at a moderately basic level by 2024. The government does not intend to fully restore all the destroyed objects, as they would like to build a carbon-neutral, more ecological and more efficient system, which will take around five–seven years.
Business
Termination of Tax Benefits
IMF cooperation requires Ukraine to terminate various tax benefits adopted since the beginning of the Russian invasion. From July 1, the VAT on gasoline will be increased from 7% to 20%, which will cause fuel prices to rise by ₴5–₴7 ($0.20) per liter.
A uniform tax rate of 2% for large companies, tax exemptions for SMEs, absence of fines for non-use of cash registers, the moratorium on documentary checks and lack of penalties for violation of tax legislation will also be revoked. Many SMEs can survive due to tax relief. The government’s decision to terminate tax benefits in July 2023 will leave many firms struggling.
Deteriorating Investment Climate
Ukraine’s investment attractiveness has decreased, according to the European Business Association. Of the 102 general directors surveyed, 87% assessed the investment climate in Ukraine as unfavorable, and 38% expected its further deterioration this year. Among the main factors besides the Russian invasion are corruption, a weak judicial system and a reduced purchasing power.
The interference of local authorities and law enforcement agencies in private businesses complicates the situation. Observers note an example of a private oil and gas production company, which under the guise of “de-oligarchization,” can be taken from one owner and given to another closer to the ruling party.
Banking: Alfa Bank Gets Ready for Privatization
The Verkhovna Rada voted in favor of a draft law allowing the National Bank of Ukraine (NBU) to initiate the nationalization of the strategically important Sens Bank (formerly Alfa Bank). Ukraine and the E.U. introduced sanctions against key owners of Alfa Bank, Russian citizens. The bill will prohibit a sanctioned person from acquiring or increasing a significant stake in a bank. This means that the NBU will be against its obligations to declare a bank insolvent and withdraw it if Ukrainian and international sanctions are applied to the owners of such an institution.
Trends to Watch
Free trade agreements and their effects on the Ukrainian economy and social cohesion in neighboring countries.
Debates over the Grain Deal extension and expansion after May 18.
Inflation and prices of essential goods, including fuel.
Business environment and changes in taxation.
G7 summit on May 19–21 to consider an almost complete ban on exports to Russia.
Effects of May Presidential elections in Turkey for the Grain Deal
Social & Environmental Trends
Summary
With decreased number of civilian casualties and a currently stable overall number of internally displaced people, large urban centers of the east and the south see an increase in displaced population.
New reports of mistreatment and execution of prisoners could jeopardize prisoners of war swaps.
Tensions build up around the Ukrainian Orthodox Church of the Moscow Patriarchate.
Environmental damage across the country, particularly in frontline regions, increases flora,
fauna, and public health risks.
Social Trends
Civilian Casualties and Displacement
The Office of the United Nations High Commissioner for Human Rights (OHCHR) verified 104 civilians killed and 301 wounded between April 1–23, a significant decrease compared to March, when 159 were killed and 644 wounded. The OHCHR specified that actual figures could be higher. The highest number of casualties was reported after a missile strike at a multistory residential building in Uman, Cherkasy Oblast, on April 28, killing 23 and injuring 18 civilians.
Russian sources also reported civilian casualties in Russian-held areas, yet independent verification remains impossible. On April 6, Donetsk city was reportedly shelled with artillery and MLRSs, killing nine civilians and injuring seven. On April 14, four civilians were reportedly killed, and ten were wounded in a Ukrainian artillery attack in Russian-held Yasynuvata.
Although the overall number of Internally Displaced People (IDPs) remains almost unchanged – 3.6 million people – International Organization for Migration (IOM) recorded an increase in registered IDPs in southern and eastern large urban ages, especially in Mykolaiv, Odesa, Zaporizhzhia and Kharkiv oblasts.
Mistreatment of Prisoners of War
Throughout April, at least four significant exchanges of more than 600 prisoners of war (POWs) happened. Notably, Ukraine also exchanged two priests from the Ukrainian Orthodox Church of the Moscow Patriarchate for 28 Ukrainian soldiers—particularly striking considering the ongoing crises around this Orthodox denomination in Ukraine.
Mistreatment and potential killing of POWs, especially by the Wagner Group, have been broadly reported. In April, the chief of Wagner, Yevgeny Prigozhin, called his fighters to “kill everyone on the battlefield. Take no more prisoners of war!” as a response to an alleged recording of two Ukrainians deciding to shoot a Russian POW. On April 11, Russian Telegram channels spread a video showing a Russian combatant beheading a Ukrainian soldier—a gross violation of the Geneva Convention. The video was likely taken last summer, potentially in or around Bakhmut. Similar instances were reported in Bakhmut and Popasna, Luhansk Oblast, where Wagner troops were operating in the spring and summer of 2022. Such cases might further alienate the fighting parties and make it harder to agree on new POW swaps.
No Easter Truce between Ukraine’s Two Orthodox Churches
Following last month’s court order to vacate all premises of the historical Pechersk Lavra in Kyiv city center by the end of March, clerics of the Ukrainian Orthodox Church of the Moscow Patriarchate (UOC-MP) refused to leave and continued their protest throughout April.
On April 1, the Security Service of Ukraine (SBU) searched the house of metropolitan bishop Pavel of the UOC-MP. He is accused of “igniting religious conflicts” and “justifying the actions of the Russian Federation”. He has been put under round-the-clock house arrest until May 30. The Russian Ministry of Foreign Affairs demanded his immediate release. The UOC-MP Metropolitan Onufrii Berezovskyi violated the order and held a Sunday service in the Lavra right on April 2. On April 7, Ukrainian media revealed that Onufrii and over 20 other UOC-MP clerics had Russian citizenships.
The SBU has been conducting mass searches in churches and monasteries of the UOC-MP, Ukraine’s most prominent religious organization, since late 2022. Several religious clerics have been charged with treason or deprived of Ukrainian citizenship. Ukrainian authorities and law enforcement persistently emphasize that the raids against the Church do not violate religious freedom—something organizations like OHCHR doubt—while some observers believe the secular authorities sided with a competing Orthodox group, the autocephalous Orthodox Church of Ukraine (OCU), established in 2019. In a highly symbolic move, the Orthodox Easter service on April 16 in the Pechersk Lavra was held by Archimandrite Avraamii—the acting vicar of the Lavra from OCU. Ukrainian media celebrated that the worship was held in the Ukrainian language for the first time in about 300 years. The UOC-MP organized their service in parallel close by. On April 19–20, clashes between priests and police broke out again, and parishioners of the UOC-MP tried to break into the monastery’s territory.
Historically, UOC-MP’s position in the west of Ukraine is not strong, except in the Volyn Oblast. Between April 4–11, city and regional councils in the western Khmelnytskyi, Rivne, Zhytomyr and Volyn oblasts banned the activities of UOC-MP on their territories, with some churches being transferred to OCU. The Khmelnytskyi ban followed a physical altercation between a former military medic and a cleric on April 2. The video went viral through Ukrainian media, fueling the already heated debate. The Ministry of Culture is considering terminating the lease on the country’s second biggest monastery, 16th-century Pochaiv Lavra in western Ternopil Oblast, forcing UOC-MP to vacate it. OCU and The Ukrainian Greek Catholic Church pretend to occupy the premise.
Environmental Trends
Impact of Hostilities on the Agricultural Sector and Environment in Ukraine
Research by the INGO PAX from April 2023 paints a devastating picture of how active hostiles across Ukraine have damaged Ukraine’s environment and agricultural industry and negatively impacted national and global food security. Hazardous substances from industrial facilities poison the air, groundwater and soil across Ukraine. Exemplifying the situation in 8 Ukrainian regions, the report warns that the shelling of fertilizer production plants, storage silos, and farms has likely caused long-lasting environmental threats, with hardly predictable consequences for the environment, human health, flora and fauna. The report estimates that about 300,000 pigs have been killed by the shelling of various livestock industries, and hits against the critical infrastructure led to millions of dead chickens. According to the PAX report, hostilities led to an estimated reduction of arable farmlands by about 40% due to environmental hazards and contamination with mines, UXO/ERW.
The Ukrainian government tracks environmental damage on a platform created by the Ukrainian Ministry of Environmental Protection and Natural Resources. As of April 28, the Ministry recorded almost 2,400 reports on military incidents causing environmental harm, damaging agricultural industries and harming food security, estimating damage of about ₴441 billion (about $12 billion).
Environmental Risks by Depleted Uranium Shells
On 26 April, the U.K. Ministry of Defense said it had already sent Ukraine ammunition for Challenger 2 tanks, including thousands of depleted uranium shells. Such shells were reportedly used in both Gulf wars, Bosnia and Herzegovina, Kosovo and Serbia and Montenegro. According to a report by the U.N. Environment Program, the chemical toxicity of depleted uranium is considered a more significant issue than the possible impacts of its radioactivity. As of April 28, no cases of Challenger 2 tanks used were reported during this war.
Trends To Watch
Tensions between the two Orthodox denominations are likely to continue.
Environmental damage across the country, particularly in frontline regions, incrementally increases environmental risks to flora, fauna, and public health.
Potential chemical poisoning of groundwater and soil by the use of depleted uranium shells and other weapons used across Ukraine
Neighboring countries
Summary
Polish fall elections are unpredictable due to increasing polarization and radicalization.
The Prosecutor’s Office opened an investigation into abuse of power by former P.M. and opposition leader Donald Tusk.
The European Commission announced that Poland now “has largely implemented the steps required” by the European Court of Justice in the judiciary dispute.
European Parliament calls for E.U.–Moldova accession talks to begin.
Gagauz elections cause fears of another Russian interference in Moldova’s internal affairs.
State carrier Air Moldova is on the verge of bankruptcy.
Poland
Increasing Polarization and Uncertainty ahead of Fall Elections
Polls show that the result of the fall parliamentary elections is still unpredictable. Support for the ruling right-wing party (Law and Justice (PiS) and the center-liberal opposition (2050 party) has been fading in favor of more radical parties, with PiS has been leaking supporters, especially in light of the latest Ukrainian grain controversy (see above in Economy & Development). One poll says the Left, scattered and marginalized until recently, has become the third most popular party with 11.1%.
The success of the far-right Confederacy party in recent polls has brought much scrutiny to the party’s program and connections. Controversial pro-Russian and antivax M.P. Grzegorz Braun, who’s influential in far-right circles, allegedly received an ultimatum from his colleagues to prevent him from nominating the most pro-Russian candidates for their voting lists.
On April 11, the Polish Prosecutor’s Office opened an investigation into the abuse of power by former Polish P.M. and the president of the European Council, Donald Tusk, during his time in office. Tusk leads the Civic Coalition, a leading opposition force, and is suspected of personally profiting from the import of Russian coal. The Sejm voted to establish a commission to investigate Russian influence in the country since 2007—when Tusk’s government came to power. The opposition has claimed the commission’s real goal is to mount political attacks before the elections.
Source: Pollster survey for Super Express, April 14–16, 2023.
Jarosław Kaczyński’s right-wing PiS and Donald Tusk’s center-right Civic Coalition (PO) have long accused each other of acting in Russia’s interest. PO has accused PiS’s government of building alliances with far-right and pro-Kremlin forces in Europe as well as increasing coal imports from Russia during their time in power. PiS has accused PO of continued reliance of the Polish energy sector on Russia and has promoted a conspiracy theory claiming that PO colluded with Russia to cause or cover up the 2010 Smolensk plane crash that killed President Lech Kaczyński, the identical twin brother of the PiS chairman, along with 95 other high-profile passengers.
European Commission Praises Poland for Progress in Judiciary Dispute
On April 21, the European Court of Justice (ECJ) halved the daily fine imposed on Poland due to its controversial judiciary reform. From July 14, 2021, Poland was obliged to pay €1 million ($1.1 million) for every day it did not fully implement the previous verdict obliging Poland to suspend the new mechanism of disciplining judges. The European Commission said that Poland now “has largely implemented the steps required” by the ECJ.
Now, Poland’s Constitutional Tribunal needs to assess the measures’ constitutionality. Since March, however, it has been paralyzed by an internal dispute over the legitimacy of government-appointed chief justice Julia Przyłębska. The rebel judges warned they wouldn’t allow a hearing on the new disciplining mechanism before Przyłębska resigns.
The ECJ ruling in the European Commission vs. Poland case concerning Poland’s disciplinary procedure against judges is set for June 5. The Polish government hopes the E.U. will unlock billions of euros of funds frozen due to concern over the rule of law. Poland has lost more than €500 million ($551 million) due to the dispute, partially deducted from various E.U. funds for Poland.
Core Inflation has risen to Its Highest since 1998
Core inflation rises to a new high of 12.3%, the highest since 1998. In contrast, the main inflation figure fell from its 26-year-high peak of 18.4% in February to 16.1% in March and is forecast to continue decreasing in the coming months. Core inflation is the change in the costs of goods and services, but it does not include the food and energy sectors, as their prices are the most volatile. The high inflation rate has influenced consumer prices. In January–March 2023, food was 24% more expensive than a year before.
Education Ministry Cuts Research Funding after Holocaust Quarrel
Education minister announces no funding for historians “who offend Poles.” Przemysław Czarnek’s comment came after the director of the Polish Center for Holocaust Research, which is part of the Polish Academy of Sciences (PAN), historian Barbara Engelking said that Poles did not do enough to help Jews during the war. Prime Minister Mateusz Morawiecki condemned Engelking’s remark, and Poland’s broadcasting regulator launched proceedings against the pro-opposition TVN channel that aired it. Polish scientists called for the independence of scientific research and an end to blackmail.
Critics have accused Czarnek of imposing a conservative agenda in education. The Polish–Jewish relations during World War II remain a sensitive topic in Poland. Many are wary of examining instances of szmalcownictwo (blackmailing of hiding Jews for profit) or other crimes against the Jewish population under the Nazi occupation. Three million ethnic Poles were killed in Poland in World War II, in addition to three million Polish Jews, or 98% of their pre-war population. Yad Vashem recognized the citizens of Poland as having the highest number of individuals who saved Jews from extermination and were thus awarded the title of Polish Righteous Among the Nations during World War II.
Trends to Watch in Poland
The result of the fall elections is far from certain. The right-wing ruling party and its biggest center-right rival have both been losing support in favor of social democrats and far-right.
The high cost of living and unprecedented inflation continue to affect polls.
A group of Polish judges does not recognize the current Constitutional Tribunal as legitimate. If they refuse to convene, Poland may not be able to receive the long-awaited E.U. funds.
Moldova
European Parliament Calls for E.U. Accession Talks Begin
On April 19, the European Parliament in Strasbourg called for the E.U. membership negotiations with Moldova to start before the end of the year, given that requirements are met. Earlier this month, during his visit to Moldova, Polish Prime Minister Mateusz Morawiecki suggested a fast-track route for Moldova’s E.U. membership was possible.
On April 24, E.U. foreign ministers approved launching a new civilian mission to Moldova to help the country counter foreign interference and “hybrid threats.” The mission is considered helpful in bringing Moldova closer to E.U. standards. After the European Political Community summit in Chișinău on June 1, Moldova is expected to receive further military support, including radar surveillance modernization. The Netherlands opened an embassy in Chișinău in another display of an increased Western engagement.
Tensions over Moldova’s E.U. integration path remain high. President Maia Sandu called her supporters to rally on May 21 to support the country’s “E.U. future.” Another antigovernment rally is scheduled for May 7—the first one since earlier this month, opposition leader Ilan Șor was sentenced to 15 years in absentia on graft changes and had his M.P. title revoked. Șor is likely hiding in Israel, where he holds second citizenship.
Tensions ahead of Gagauzia Elections
Moldova barred a Russian delegation headed by Tatarstan’s Head Rustam Minnikhanov from entering the country on April 17, asking not to meddle in its internal affairs. The delegation planned to visit a forum in Moldova’s autonomous Gagauzia region before its gubernatorial elections on April 30. Moldovan police argued that Minnikhanov’s visit aimed to boost support for a candidate in local elections, which wasn’t “a valid reason” to enter the country. The current Gagauz başkan (governor), Irina Vlah, criticized the incident and argued that Gagauzia had maintained close ties with Tatarstan—its ethnic and linguistic kin—for more than 25 years. On April 27, Moldovan President Maia Sandu said that many election candidates were “agents of Russia”.
The traditionally pro-Russian region will face a change of power as Vlah is not eligible for a third term. Polls give a solid lead to Russia-favored local P.M. Victor Petrov, although none of the eight registered candidates harbors a pro-Western sentiment. At the beginning of the full-scale invasion of Ukraine, Moldovan authorities blocked the news website GagauzNews.md, owned by Petrov, for disinformation and “inciting hatred.” He gained prominence as the anti-government Gagauz People’s Union leader, founded in July 2022 and campaigning for cheaper gas prices for Gagauzia through closer links with Russia.
Russian Troop Movements in Transnistria
The Moldovan government condemned unannounced military maneuvers conducted by Russian troops in Moldova’s breakaway region of Transnistria on April 21. The movements included armored vehicles, and the Moldovan government said they violated the Security Zone regime. The Russian contingent argued that they were checking the equipment. There are about 1,500 unmandated Russian troops in Transnistria and a peacekeeping mission comprising Moldovan, Russian and Transnistrian soldiers.
In an April 24 interview with Russian state TV channel Rossiya-24, the leader of the Moldovan Socialist Party and former president with pro-Russian sentiments, Igor Dodon, accused the Moldovan government of unwillingness to engage with Transnistria’s de facto authorities, implying that Moldovan authorities weren’t interested in a peaceful resolution of the conflict. Moldovan officials repeatedly reiterated their commitment to such while calling for withdrawing the Russian military from the breakaway republic.
Moldova’s increased cooperation with NATO and Ukraine has remained a bone of contention. On April 12–13, Moldova participated in a trilateral conference with Romania and Ukraine to discuss shared defense and security issues.
Air Moldova on the Verge of Bankruptcy
The Chișinău-based carrier announced on April 21 that it was forced to stop operating flights until April 25 “due to lack of financial resources”. The company eventually carried out three return flights to Bologna, Tbilisi and Verona. Another three flights were canceled on April 27. Earlier this month, on April 12, Air Moldova canceled three flights due to blocked bank accounts.
The airline belongs to wanted businessman and politician Ilan Șor and has over 2 billion lei ($111 million) in debts, including assets seized in a criminal probe into the 2018 privatization. It does not own any aircraft anymore. The company’s employees launched a petition to President Maia Sandu to intervene. The Moldovan state aviation authority conducted an inspection on April 24, fined the airline for not complying with its previous corrective measures request and prescribed another inspection.
Trends to Watch in Moldova
Western engagement with Moldova has been increasing, including security support.
A Russia-backed başkan of Gagauzia can become an influential figure in Moldova’s internal pro-Russia vs. pro-E.U. dispute.
New tensions in Transnistria or developments in the peace process can significantly impact Moldovan politics.