President Volodymyr Zelensky may dismiss the head of Ukraine’s armed forces, Valeriy Zaluzhnyi, within days, CNN said, citing a person familiar with the matter.  

Russian industry expanded for the third consecutive year in 2023 as the government’s spending on its prolonged war on Ukraine helped counter the impact of sanctions imposed by the US and its allies.

Ukraine has warned its allies that it is facing a “critical” shortage of artillery shells with Russia deploying three times as much firepower on the frontlines each day. 

EU breaks deadlock on €50bn aid for Ukraine after Orbán caves

European Union leaders clinched a deal on a €50-billion financial aid package for Ukraine after Hungarian Prime Minister Viktor Orbán caved in to their demands and lifted his veto.

The agreement proves “that we stand by Ukraine and I think it will be an encouragement for the US also to do their fair share”, Ursula von der Leyen, the European Commission president, said after the meeting in Brussels as US funding remained stalled in Congress.

As part of the accord, the member states agreed to debate the implementation of the Ukraine aid package every year and, “if needed”, the commission, the bloc’s executive body, could be asked to propose a review in two years. Orbán’s demand for a veto was dropped. 

The agreement was salvaged in a morning gathering Orbán had with Chancellor Olaf Scholz, French President Emmanuel Macron and Italian Prime Minister Giorgia Meloni, according to people familiar with the meeting. Leaders at the extraordinary summit — some of whom accused Orbán of “blackmail” — had braced for a deadlock after weeks of negotiations produced no result. 

The moment is crucial for Ukraine, which has warned that its coffers are emptying as it grapples with a shortage of weapons to fend off the Russian military campaign. Kyiv is still awaiting more than $60-billion in assistance from the US, yet to be backed by Congress.

“We negotiated a review mechanism that guarantees that the money will be used rationally,” Orbán said in a Facebook video after the agreement was reached. He also hailed the positive market reaction to the deal.

Thursday’s breakthrough avoided a messy split within the EU, papering over mounting concern that Western support for Kyiv is splintering. It also marks a significant boost for Zelensky. The bloc’s leaders said the breakthrough should send a signal to Washington, where funds proposed by President Joe Biden are being held up over a fight with Republican lawmakers.

Ukraine’s war struggle:

• Russia degrades Ukraine defences as Zelensky spars with general
• EU acknowledges months of delay for Ukraine ammunition pledge
• Ukraine tells allies troops are outgunned three-to-one by Russia

 Zelensky may dismiss army chief this week, CNN reports

Zelensky may dismiss the head of Ukraine’s armed forces, Valeriy Zaluzhnyi, within days, CNN said, citing a person familiar with the matter. 

While Zaluzhnyi refused an invitation to resign during a meeting on Monday, CNN said that Zelensky may push him out anyway, using a presidential decree.  

Two potential candidates are being considered as possible replacements, CNN said: Kyrylo Budanov, the head of Ukraine’s military intelligence and Oleksandr Syrskyi, who commands the country’s land forces.

Zelensky and Zaluzhnyi have been at odds over military strategy and the general’s popularity with soldiers and citizens is seen as a political threat by the president and his team. Zaluzhnyi’s dismissal would constitute the biggest shakeup in the Ukrainian military since the start of the war and pose questions about the leadership of the war effort and Ukraine’s relationships with its key allies.

Furious farmers, football and fatigue make Orbán cave in on Ukraine

Angry farmers robbed Hungarian Prime Minister Viktor Orbán of a good night’s sleep and, in the process, may have helped unlock the funds Ukraine says it needs to keep its war-torn economy going.

In Brussels on Thursday morning, Orbán complained to German Chancellor Olaf Scholz and European Council President Charles Michel that he’d had a restless night.

Protesters had rolled their tractors into the city overnight, blocking traffic and honking their horns to contest burdensome EU regulations. Just a day earlier Orbán, the self-styled scourge of the Brussels machine, had been vocally espousing the farmers’ cause.

The leaders were meeting to decide not only billions of euros in aid for Ukraine, but also whether the bloc could still forge ahead on key policies in the face of Hungary’s monthslong objections. The allies have long complained that Orbán’s intransigence plays into the hands of Russian President Vladimir Putin, and no one had been expecting him to concede without a fight.

Michel provoked Orbán’s laughter by joking that he’d organised the farmers on purpose before the men chatted about football — a passion of the Hungarian prime minister.

After the men were joined by Italian Prime Minister Giorgia Meloni, French President Emmanuel Macron, and European Commission President Ursula von der Leyen, it took those assembled about an hour and a half to agree on a deal that they would then share more widely for buy-in from fellow EU leaders. 

This account was compiled after discussions with officials familiar with the talks, who spoke on the condition of anonymity.

Meloni was among a small group who laid the ground. She had three conversations with the Hungarian premier this week. These included a hotel meeting on Wednesday evening that led to a long night’s work by the delegations.

A visibly tired Orbán spoke in a video message after a deal had been struck. He said Hungary had got what it wanted: a “review mechanism” for EU aid to Ukraine that would guarantee that money would be spent “rationally”.

In fact, the 60-year-old leader appeared worn down by being the only one among the 27 to obstruct aid. He initially opposed the size and duration of the package, as well as the fact that it would be financed from the joint EU budget. The latter is a sensitive point for Budapest because lingering rule-of-law concerns prevent Hungary from accessing about €20-billion ($22-billion) of its own EU funds. 

Orbán would see none of his key demands met, though he may have got what EU officials privately say he had been seeking from the beginning: attention.

Kremlin goes after Russians abroad who criticise Putin’s war

Russia is turning its sights on prominent anti-war critics of President Vladimir Putin who’ve fled abroad, following the Kremlin’s unprecedented crackdown on domestic opponents of his invasion of Ukraine.

The Foreign Ministry in Moscow has told its diplomats to pursue Russian artists and celebrities who speak out against Putin and in support of Ukraine from “friendly” countries that have avoided taking sides over the war, according to two people familiar with the matter.

Members of Bi-2, a self-exiled rock band known for its opposition to the war, were at the centre of a diplomatic tussle in Thailand this week after being detained for breaking immigration rules while performing two concerts at the resort island of Phuket.

Moscow sought to have Russian citizens in the seven-member group deported back to the country, raising concerns among human rights groups that they risked arrest and prosecution. Five of the group held Russian passports, but with four members having Israeli citizenship and one also Australian, Thai authorities eventually opted instead to send them all to Israel after interventions by the Foreign Ministry in Jerusalem.

“I am glad that through smart and diligent diplomatic work we succeeded in freeing the Israeli citizens who were arrested in Thailand, together with their bandmates who have foreign citizenships,” said Israeli Foreign Minister Israel Katz.

An estimated one million Russians have left the country since Putin’s February 2022 invasion of Ukraine, the largest brain drain since the collapse of the Soviet Union. They include high-profile cultural figures who’ve voiced opposition to the war and an increasing number of people that Russian authorities have branded as “foreign agents”, leaving them vulnerable to prosecution.

“The authorities’ major fear now is that people living abroad are getting their message across to a Russian audience,” said Ekaterina Schulmann, a Berlin-based political scientist who was declared a “foreign agent” shortly after Russia invaded Ukraine. “They want to silence them.”

Read more: Russia sentences Putin foe Navalny to 19 more years in jail

Legislators in Moscow on Wednesday also passed a law allowing for the confiscation of property belonging to people who “discredit” the Russian military by criticising the war in Ukraine.

“An absolute majority [is] in favour of the need to punish traitors who, from abroad, pour dirt on our country, soldiers and officers,” Vyacheslav Volodin, a Putin ally and speaker of the lower house of parliament, said on Wednesday.

The government also plans to oblige Russian citizens living abroad to register with consular authorities by mid-2025.

Russia helps lift Austria to ranks of energy exporters

Austria exported more energy than it imported for the first time in two decades, with steady natural gas flows from Russia and lower power consumption giving a boost to state-owned companies. 

The data underscore the uneven impact of the energy crisis triggered by Russia’s invasion of Ukraine. Even as electricity and gas price shocks forced consumers to reduce consumption, companies including OMV and Verbund profited by exporting more energy to Austria’s neighbours.

OMV reported on Thursday that Russia had delivered all the agreed gas volumes under a long-term contract with Gazprom running to 2040. The company purchased 5.3 terawatt hours a month of the fuel in the final quarter of last year. Overall, Austria imported almost twice the volume of gas its economy required, allowing traders to sell just over 90 terawatt hours of the fuel abroad.  

Read more: Russian gas glut shows Austria still in Kremlin’s energy orbit

The power sector was similar, where state-controlled Verbund is the country’s most valuable company. Electricity consumption fell by 5.3%, even as cheap hydro-power generation surged by more than a fifth over the year before. 

That allowed Austria to transmit more electricity abroad than it imported for the first time since 2003, according to E-Control. Power exports rose nearly 9% to 21.62 terawatt hours against imports that tumbled 25% to 21.55 terawatt hours, according to the regulator.  

Russian manufacturing booms with economy on war footing

Russian industry expanded for the third consecutive year in 2023 as the government’s spending on its prolonged war on Ukraine helped counter the impact of sanctions imposed by the US and its allies.

Industrial production increased by 3.5% last year after 0.6% growth in 2022, according to data published on Wednesday by the Federal Statistics Service. The rise in manufacturing among industries benefiting from military orders last year more than offset a slump in mining output, data show.

The figures show businesses had adapted to “the current external economic conditions,” the Economy Ministry said in a statement late on Wednesday.

The scale of Russia’s transition into a war economy was underlined by the three fastest-growing categories of manufacturing — which include goods such as bombs and weapons, aircraft and rocket engines, and ships and combat vehicles. Output under categories like “metal goods,” “computers, electronics and optics,” and “other transport” jumped by as much as a third compared to 2022.  

The Kremlin plans to keep the economy on a war footing for at least the next three years, according to its budget plans, ramping up spending on arms production. That’s as Ukraine is running short of weapons to protect its cities, and vital aid from the US and the EU has been tied up by political disputes.

The war, now approaching its third year, has settled into a stalemate, making a steady supply of weapons and munitions crucial to both sides.

Russian defence plants have been put on round-the-clock production schedules, and reports abound in local media of converted shopping centres and bakeries that now also manufacture military drones. Kalashnikov Concern, Russia’s flagship arms manufacturer, has developed new types of weapons that it plans to present at the World Defense Show 2024 in Saudi Arabia next week, according to state defence industry conglomerate Rostec.

Russia has also lined up supplies of weapons and other support from Iran and North Korea. Satellite imagery since October shows a steady flow of trade between North Korea and Russia that South Korea estimates includes more than two million rounds of artillery and several ballistic missiles.

Ukraine tells allies troops are outgunned three-to-one by Russia 

Ukraine has warned its allies that it is facing a “critical” shortage of artillery shells with Russia deploying three times as much firepower on the frontlines each day. 

Defence Minister Rustem Umerov wrote to his European Union counterparts this week describing the massive numerical disadvantage his troops are facing as they try to fight off fresh Russian assaults. He said Ukraine was unable to fire more than 2,000 shells a day across a frontline that stretches for 1,500km, according to a document seen by Bloomberg. That’s less than a third of the ammunition Russia uses. 

Ukraine’s weapons shortages are growing worse by the day, Umerov added, as he urged his EU allies to do more to meet their pledge to supply a million artillery rounds. He said Ukraine needed to at least match the firepower deployed by its enemy. 

“The side with the most ammunition to fight usually wins,” Umerov said, according to the document. 

The EU acknowledged on Wednesday that it would supply barely half of the shells it had promised by a March deadline, resolving to deliver almost 600,000 more by the end of the year.

Ukraine needs 200,000 155mm shells per month, the document says. Moscow is on track to get almost twice that amount, according to Estonian estimates, with about a million shells coming from North Korea. DM