Failing at the front, Putin shifts fire behind the lines; Trump’s diesel deal hands him a gift
U.S. President Donald Trump’s diesel deal with Russia came as a shock to Ukraine’s leadership. Hardly anyone expected Trump’s son-in-law Jared Kushner and special envoy Steve Witkoff to deliver a peace settlement -- but few anticipated that they would simply start doing business with the Russians behind the backs of Ukraine and the Europeans. This episode is telling for all observers. It exposes Trump’s desperation, and badly undermines U.S. credibility, since his administration has struck deals with a war criminal without apparent remorse and, in effect, has traded away Ukraine. What can any U.S. security guarantee be worth after this? Yet the practical consequences are limited. The key factor sustaining Ukraine’s resistance -- financial support -- is guaranteed by the EU, and will keep flowing.
While Washington bargained over diesel, Russia launched near-continuous attacks on Kyiv. Since mid-August, the sirens in the capital have barely stopped. Moscow has scaled up its use of jet-powered drones, and Ukraine was somewhat late in developing counter-drone air defense tools, opening a window of opportunity that the aggressor is exploiting. Interceptors for these drones already exist, and are in active use, but scaling-up lags. The main objective is evidently to shake up public sentiment. Pro-Russian politicians promptly stepped up their “peace initiatives,” but these attracted no support. Life in Kyiv was already hard, and has become harder still, yet public opinion doesn’t favor capitulation. Kyivans are preparing for another difficult winter as best they can, and almost no one is planning to give up.
The shift of Russia’s main effort to the rear, and to Kyiv in particular, is explained by the failure of its summer offensive. Ukrainian forces carried out a series of successful counteroffensives, and pushed the enemy back in several important sectors. With zero results at the front, Moscow has intensified terror against civilians, betting that unbearable living conditions in the capital will break public morale. We believe that, as in 2022, Russia is misjudging the structure of Ukrainian society, probably measuring it by its own standards and assuming that a burning, heavily damaged capital will break the backbone of resistance. Ukraine is a country of horizontal ties, which sets it radically apart from Russia’s vertical system.
Meanwhile, the budget debate has intensified. President Volodymyr Zelensky stated that Ukraine faces a $27 billion shortfall in 2026, and Finance Minister Serhiy Marchenko put the 2027 gap at $32.6 billion. Their appeal surprised many, given that the €90 billion already allocated by the EU for 2026-2027 is still largely untapped. After consultations, Brussels declined, saying it sees no grounds for additional funding, and that existing resources must be spent first. The episode may well be linked to conditionality. EU money is tied to reforms, which have been delayed, and many require changes in law enforcement bodies, something Zelensky has been reluctant to undertake. We believe the president has little real choice: EU funding will continue, but only if he delivers on the reforms he has been asked to implement.
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