Eurasia note #67 - China's Xi In Surprise Visit To Saudi Arabia

Ukraine attacks air bases deep inside Russia, which bombs electric grid in return

Chinese president Xi arrives for three-day programme, upstaging Biden’s July visit.
Nations announce $30 billion in mutual business projects, with Arab-China summit.
Plan to revitalize China-Arab States Cooperation Forum (CASCF) formed in 2004.

A third missile attack on Russia strikes an oil depot in Kursk.
Earlier attacks hit military bases in Ryazan and Saratov.
Attacks come days after U.S. deputy seccretary Victoria Nuland visited Kyiv.

Battle for Bakhmut continues in Donetsk; Zelenskiy calls the situation “difficult.”
Ukraine pursues digital identity and currency, shaping post-war economy.
Deindustrialised, depopulated and digitized – a new normal awaits Ukraine.

(1,800 words or six minutes of speed reading.)

Tbilisi, Dec 7, 2022

The latest escalation of the war saw a strike on an oil storage depot in Kursk. On Monday three Russians died in an attack on a base in Ryazan, 200 kilometers (115 miles) southeast of Moscow.

Armed Forces of Ukraine fired a missile or drone at the Dyagilevo airstrip, which Russian air defences intercepted, though debris caused fatalities.

A second strike hit the Engels-2 airbase near the city of Saratov housing bombers capable of carrying nuclear weapons.

Russia said Ukraine may have used Soviet-era Tupolev Tu-141 reconnaissance drones outfitted with explosives.

Kyiv did not claim responsibility but it comes days after an attack on an oil depot in the Russian border region of Bryansk.

Russia responded with attacks on military command and control centres in Ukraine as well energy and communication utilities in several Ukrainian regions. One person was killed in the city of Kryvyi Rih, and two people in Zaporizhzhia, according to local reports.

Local press reports said Russia launched more than 100 cruise missiles and that Ukraine’s air force claimed it shot down more than 60 of the 70 missiles. Russian sources said just under 20 facilities were targeted.

Ukraine has accelerated missile strikes on Donetsk and the regions that recently voted to secede and became part of the Russian Federation. At least four civilians were killed.

United Nations OCHA spokesman Stéphanie Tremblay told a scheduled briefing in New York that Odesa’s water supply is suffering from lack of electricity, communal heating is compromised in Odesa and Dnipro, while 40 per cent of the Kyiv region was left without electricity. Night time temperatures this week are about -5 °C (23 °F).

Military latest

Heavy fighting continues north and south of Bakhmut, a city on the Bakhmutka River about 90 km north of the Donetsk, capital of the administrative region. The city had a population of about 70, 000 people, the region’s third largest.

It’s been the focal point of fighting since the Russian loss of Kherson, but the battle for the city is already in its sixth month, having begun in May and intensified in the autumn. Now that winter has arrived soldiers are shivering in waterlogged trenches, as recently depicted by the UK’s Channel Four television crew.

Waves of Russian troops seek to provoke Ukrainian fire, identifying their location before striking with missiles. The AFU loses up to 50 troops per day. The battle is said to be as fierce as that for Mariupol and the twin cities of Severodonetsk and Lysychansk.

Russian forces control roughly half of Donetsk oblast and see the opportunity to break through Ukrainian lines around Bakhmut, to surround a large number of AFU troops, and to fortify their defensive lines in southern Ukraine.

What Ukraine seeks to gain from risking such losses is not clear, according to the neoconservative Institute for the Study of War. It admits AFU could afford to withdraw and still have other redoubts in cities like Lyman and Kramatorsk.

Ukraine President Volodomyr Zelenskiy visited the frontline on Tuesday, filmed beside a flag of Sloviansk and described the situation in Bakhmut as difficult.

NATO chief Jens Stoltenberg said Russia was seeking to freeze the conflict over winter in preparation for a renewed assault next year. NATO would use that time to repair and resupply Ukraine’s armed forces.

Sanctions latest

The G7 countries pushed ahead with an oil price cap on Russian tanker exports but set it at a price of $60 per barrel, which is presently higher than the $52 price at which Russian crude sells.

There is growing evidence that the price cap is fueling the growth of what the industry calls Russia’s “dark fleet” — tankers sailing under the flags of nations like Iran and Venezuela. Tsvetana Paraskova of OilPrice com says insurers have seen a large number of tankers change hands in recent months. Even before the EU and G7 threat to withhold insurance from vessels, the condition of tankers worsened with economic crisis and those of Venezuela in particular. The result, she says, is an oil spill waiting to happen. [1]

Western Europe’s self inflicted wound of sanctions on Russian energy continue to fester. The German Chambers of Industry and Commerce (DIHK) said on Tuesday that one-in-10 German firms plans to leave the UK, but blamed the move on Brexit.

It is just as likely that energy costs are the reason. DIHK did not say where these companies would relocate their operations, saying “to Germany or elsewhere.” The latter is more likely as there is little advantage to moving from one high-cost energy zone to another.

Russian oil firm Rosneft booked a $889 million loss in the third quarter from Germany’s seizure of its assets in that country.

British home owners face energy bills of £2,500 per year, and this is expected to to reach £3,000, even with subsidies from the government totaling £150 billion ($172 billion). The UK’s Office for National Statistics claims the spending will reduce inflation.

Across the European Union as a whole, proposed energy subsidies already would cost more than €500 billion.

The wealth transfer effect of higher energy prices could amount to $3 trillion from developed countries in the Organization for Economic Cooperation and Development (OECD) to non-OECD countries that rely for income on extractive industries and raw materials. The exeception is the United States which is closer to energy independence and spends a lower proportion of total national income on energy.

India wants to expand its exports to Russia as a way to narrow its trade gap and reduce the imbalance.

ChinArabia

The big news was the visit, announced only as he landed, of China’s president Xi Jinping to Saudi Arabia. It will culminate in a summit on Friday between the Asian superpower and Arab countries, according to Chinese state media Global Times. It comments that Arab countries, though energy-rich, have been entangled in geopolitical conflict not of their making, including the “Arab spring.”