Second round of Russian mobilisation causing strategic business risks highly likely, warns Dragonfly

The Russia-Ukraine war is likely to grind on well into next year with the chance of a negotiated peace agreement during the next few months highly unlikely, according to security intelligence firm Dragonfly. It also predicted that a second round of mobilisation by Russian military reservists is highly likely and would bring a range of strategic risks for companies in Russia. Giving an update on the war as we head into next year, a Dragonfly spokesperson said future mobilisation of Russian military reservists remains a “highly likely” scenario and would bring “a plethora of strategic risks to companies” operating in the country. “The timings are obviously less clear,” he continued. “But this is a one-way path under Putin, so I see no realistic scenario where he can row back and move Russia back towards a peacetime society.” “The dynamics are highly likely to deteriorate over the coming months… and what I think is far clearer now is that Russia is on a largely one-way path to what I would call a wartime society. Spending the first seven months of the war under the special military operation banner, pretending everything is fine and rosy, has failed, and the war has been brought home to the Russian population in a way it wasn’t before,” added the spokesperson. With businesses and risk managers planning for the year ahead, Dragonfly analysts have outlined the chances of different scenarios for the Russia-Ukraine war during the winter months. Unfortunately, they believe there is just a 10% chance of a negotiated agreement and peace deal between the two sides. “I am pessimistic about this,” said a Dragonfly expert. “At this point there are things we would need to see for a peace deal to become likely. Russia would have to start negotiating in good faith. We haven’t seen it. Ukraine president Zelensky would need to become more willing to cede territory… We haven’t seen it. Ukraine has momentum on the battlefield so why would it suddenly agree to cede territory now? It’s unlikely,” he said. “Have we seen any indication that Russia has actually scaled down its strategic objectives from day one of the war? Not yet? It seems unlikely that they would suddenly sue for peace when they don’t control all of the annexed territories, or those they claimed to have annexed in September. There are a lot of steps that I would expect to see before a peace deal becomes likely and we haven’t yet seen any of them,” the spokesperson said. He believes that by the end of winter and beginning of spring it will become clearer what each side can achieve from the conflict and peace is more likely. “But even then I don’t see a clear path out yet. Entrenchment is too great and the stakes too high for both. I think this is something that will grind on well into 2023,” he said. Dragonfly thinks the most likely scenario for the war during the coming winter months is a steady advance of Ukrainian troops towards the border of Crimea and Russia. This is rated a 70% chance. Indicators of this scenario would be NATO members scaling up their military support for Ukraine, including longer-range munitions. Continued sign of poor morale in the Russian military and reports that Russian supply chains and control remain in disarray would also indicate this course of direction. The security experts rate Ukraine retaking territory held by Russia since it invaded Ukraine in February as the next most likely scenario. It gives this a 30% chance. Next comes Russian regaining the initiative with a 20% chance, and a peace deal on just 10%. The company also thinks a Russian collapse is highly unlikely during the winter but said it would be wrong to dismiss this possibility entirely. There were also experts taking part in the briefing on the role that European countries and the US will continue to play in the war. One of the experts said there is the potential for military stocks to run low in EU and NATO countries. This could limit how much support they give Ukraine and how far they are willing to go. The other consideration is whether support for the war remains among populations facing up to huge energy bills, partly caused by the war, during the colder months, said the spokesperson. “From a European perspective, the bottom line is that the next few months are probably going to shape its strategy on Ukraine for next year. The main pressures we are going to see on European governments are from their populations and the crunch they are going to be feeling from energy bills in the cold weather. I would say this and weapons stocks in the west are probably the top two things to watch over the next few months,” she said. Another Dragonfly analyst believes the stance from the US is unlikely to change during the coming year. He said a change in the status quo will become increasingly unlikely as we get towards the 2024 US presidential election, because neither party will want to take any major policy risks ahead of the campaign. But the spokesperson stressed there are two things that could change things from a US perspective. “There is the potential impact a recession in the US could have on these assessments, or if tension in other parts of the world moves attention away from Ukraine,” he said.

Second round of Russian mobilisation causing strategic business risks highly likely, warns Dragonfly

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