Russo-Ukraine War: Ukraine’s successful counteroffensive

Russo-Ukraine War: Ukraine’s successful counteroffensive

Plus: the Japanese yen hit generational lows, but the central bank is unlikely to raise rates

Hi there Intriguer. It has been revealed that two of the late Queen’s corgis will be ‘inherited’ by Prince Andrew. The Queen famously had a lifelong love for Pembroke Welsh Corgis and is said to have owned more than 30 of the hilarious little fellows during her life. Given that, the mind boggles trying to imagine what these two poor specimens did wrong to deserve being sentenced to life with Prince Andrew.

Today’s briefing is a ~4.8 min read:

  • 🪖 Russo-Ukraine War: Ukraine recaptures lost ground.
  • ➕ Plus: The yen falls to new lows against the dollar, Sweden’s election is too close to call, and Albania boots Iranian diplomats for cyber-spying.

Our take: The news of the Queen’s death has fallen out of most non-Commonwealth countries’ news cycles. Ukraine’s counterattack against Russia was easily the most dominant story in the newspapers we reviewed today.

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🇺🇦 Russo-Ukraine War: the Kharkiv counterattack

In brief:

  • Ukrainian forces have pulled off a lightning counterattack in the northeastern Kharkiv Oblast, recapturing nearly a third of the region in just three days.
  • While triumphant news from the front lines should always be taken with a grain of salt, Russia appears stunned by the counterattack, and Ukraine’s new momentum could convince Western allies to keep sending weapons and support.

A map showing Ukraine’s counterattack in the northeast. Credits: BBC.

The ol’ bait’n’switch

A few weeks ago, the Ukrainian government announced it was planning a counteroffensive in the country’s south. Instead, over the last few days, the Ukrainian military has executed a “devastating attack” on Russian forces in northeast Ukraine.

Analyst Sam Greene sums up the bewilderment shared by analysts and military bloggers: 

“As recently as [last Friday], the consensus in Western policy circles – among US, UK & EU experts & officials – was that while Russia was not winning this war, neither was Ukraine. […] For two months or more, everyone has assumed this to be a war of attrition, rather than of position”.

Zooming in

In only a few days, the Ukrainian military recaptured some 6,000 square kilometres of occupied territory.

Kharkiv Oblast (northeastern Ukraine)

Long-time readers of Intrigue might remember us banging on about ‘the strategic logistics hub of Izyum’. Russian forces captured the city at the end of March, and it remained under their control until last Saturday when they beat a hasty retreat to avoid encirclement.

Izyum is close to the border of the Donbas region, which is of critical importance to the Russian army:

“Russian forces are now facing a dire situation in which they have clearly lost operational momentum & the strategic initiative. With the loss of Izyum, Kupyansk, & Velykyi Burluk, the [Russian armed forces’] position in the Donbas is now in operational peril & likewise is strategically tenuous.”

Military commentator @JominiW via Twitter

Kherson Oblast (southern Ukraine)

Ukrainian advances in the south have proceeded more slowly, partly due to previous reinforcements of Russian troops in the region.

  • Ukraine’s special forces claim the much-publicised southern counterattack was a feint to catch Russia’s northern troops unprepared.

What’s next?

Unless you’re inside the war rooms in Kyiv, it’s virtually impossible to answer that question. But we armchair analysts would be out of a job if we didn’t offer at least a few observations:

🪖 1. Ukraine has demonstrated it can effectively use its Western-donated weapons. Many have suggested that Western support for Ukraine will falter, particularly as the reality of a cold winter without Russian energy sets in. But Ukraine’s success this week might convince any fence-sitters to stay the course.

✌️ 2. Morale amongst Ukrainian troops has almost certainly increased. In contrast, pro-Russian military accounts on Telegram are painting a picture of an unprepared military increasingly directing its anger toward inept leaders.

❄️ 3. It will be difficult for Russia to recapture the lost territory. At least one analyst says that the coming winter will favour the Ukrainian Army with its modern equipment and shorter supply lines.

The bottom line: The Russo-Ukraine War is far from over. As the former Commanding General of United States Army Europe Mark Hertling says: “every smart (former) commander knows not to comment when the battles are in progress…especially when you don’t have intel access”.

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🇦🇱 Albania

Diplo-spat alert: Albania has cut off diplomatic relations with Iran, accusing it of orchestrating a major cyberattack against Albanian state infrastructure (which Iran denies).

  • Relations between the two have been tense ever since Albania welcomed members of the People’s Mujahedin of Iran, one of the Iranian regime’s most prominent opponents.
  • The US has supported Albania’s move and slapped additional sanctions on Iran’s intelligence ministry.

🇫🇷 France

France sent out a power emergency alert to the UK and Spain last week, asking them to be ready to sell any surplus power after a trading error put France’s power supplies at risk.

  • ES Energies Strasbourg made a series of transaction errors involving more than eight gigawatts of electricity.
  • Europe’s energy crisis will likely worsen this winter, with households preparing for eye-wateringly high energy prices.

🇪🇸 Spain

Around 150,000 Catalan separatists held their annual independence rally in Barcelona over the weekend.

  • Catalonians held a hugely controversial independence referendum in 2017 that was declared illegal and met with violence from Spanish police.
  • Since then, the Catalan independence movement has lost steam – around half of Catalans do not favour independence, and there is even infighting among separatists about whether or not to participate in discussions with the central government in Madrid.

🇸🇪 Sweden

Sweden’s general election results are very tight, but the latest updates suggest a bloc led by the far-right Sweden Democrats party will secure a one-seat majority in parliament.

  • If the current predictions hold, the Sweden Democrats will become the country’s biggest party, overtaking the Social Democrats, who have governed Sweden since 2014.
  • It’s important to note the Sweden Democrats party will need to rely on the support of more moderate parties within its bloc, so it is unlikely to be able to implement its entire agenda.

🇪🇺 The EU

The European Central Bank has raised interest rates by 75 basis points while informing the public to expect more hikes.

  • The historic rate increase comes after the US Federal Reserve took similar action in July.
  • Europe’s fast-rising prices have forced the ECB to throw incremental rate hikes to the wind and bring out the big guns, and it looks like they’re not finished yet.

💴 The yen at rock bottom?

Source: Google Finance

The news:  The Japanese yen has fallen to a 24-year low against the US dollar.

  • Last Thursday, the dollar was trading at more than 140 yen – one US dollar fetched about 100 yen as recently as the start of last year.

The causes: Japan has an official interest rate of -0.1%, but the central bank has decided not to increase it for fear of dampening the country’s post-pandemic recovery.

  • At the same time, the US Federal Reserve has aggressively increased its rates, strengthening the dollar vis a vis the yen.
  • Additionally, the US labour market has shown signs of recovery, encouraging investors to trade the yen for the dollar.

Government responses: The Japanese government has expressed concern about the yen’s “excessive, one-sided moves in the exchange rate”.

  • Masato Kanda, Japan’s Vice Finance Minister of International Affairs, said the country is “ready to take necessary responses in the foreign exchange market, without ruling out any options.”

The options: Japan’s central bank doesn’t want to increase interest rates, so what else can it do? The government could…

  1. Intervene in the foreign exchange market and start buying (virtual) truckloads of yen to pull up its valuation.
  2. Continue with the (so far unsuccessful) verbal pledges to stabilise the yen – i.e. try to make the markets think they will intervene without actually having to.
  3. Relax Covid restrictions on the still locked-down tourism sector which would boost demand for the yen.
  4. Mix and match the above.

As with everything in macroeconomics (and life!), each option has pros and cons, but it’s clear that Japanese authorities aren’t going to let the current situation play out much longer.


Three suggestions to help you log a few quality couch hours this week…

  • 🕌 Ramy follows an Egyptian-American on his humorous and poignant spiritual journey. Set your calendars, as Season 3 premieres on 30 September. (Hulu)
  • 🔪 Bad Sisters is a dark comedy/thriller about a group of Irish sisters (one of whom is Bono’s real-life daughter!) who can’t stand their brother-in-law and are determined to do something about it. (Apple TV)
  • 🎸 My Life as a Rolling Stone is a recently-released BBC docuseries commemorating 60 years of Mick Jagger’s reign. (Various platforms)
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