In northern Ukraine, Kyiv region was not subjected to any attempted shelling in the last six days. However, sporadic missile and rocket attacks continue to be a risk throughout Ukraine. Russia continues firing missiles in Chernihiv and Sumy from across the border. The settlements of Vasylivske, Bilopillia and Atynske of the Sumy Oblast were shelled and Russian forces also carried out mortar attacks on Mkhy, and Zalizniy Myst of the Chernihiv Oblast. An air strike from a Mi-24 helicopter hit a school building in Esman in the Sumy region on 04 July.
In eastern Ukraine, Russian forces continued limited and unsuccessful ground assaults in northern Kharkiv Oblast. Ukrainian forces reported repelling Russian assaults on Prudyanka, Dementiivka, Sosnivka and Pytomnk. In addition, Russian forces continued to conduct intensive air and artillery strikes against civilian and military infrastructure north, northeast, and east of Kharkiv, however, Russia’s ability to launch a full ground assault on Kharkiv city remains low at the moment.
On 04 July, Ukrainian forces reportedly attacked Russian ammunition depots at Dibrivne, near the front line in the Kharkiv region. This is the third attack by Ukrainian forces on Russian ammunition depots in occupied territory this week.
In the Donbas, Russia has made significant advances. On 04 July, Russian Defence Minister Sergei Shoigu declared that Russian forces had taken full control of Luhansk Oblast after the fall of Lysychansk over the weekend and control of the villages of Bilhorivka and Zolotarivka. However, Ukrainian forces have stated that they have repelled Russian forces from Bilhorivka. On 5 July, Russian forces continued their efforts to push westwards from Lysychansk and the Luhansk Oblast border towards Siversk. Russian parties also reported that Russian military forces have begun demining and clearing Severodonetsk and Lysychansk in order to extend their control and administrative presence in the area and to continue to use it as a base for future westward offensives. It is estimated that 15,000 civilians remain in Lysychansk and 8,000 reside in Severodonetsk. The prospects of Ukrainian civilians trapped in Russian-occupied cities reflect the humanitarian crisis in Mariupol.
Russian forces continued to intensify offensive operations northwest and east of Slovyansk, however no significant advances have been made and Ukrainian forces claimed to repelled a Russian attack on Dolyna – which connects Izyum to Slovyansk. On the other hand, Russian forces continued to launch attacks and advance along the front line southeast of Bakhmut. The Ukrainian General Staff has confirmed that the Russians have taken the town of Klynove.
In the south, Russian and Ukrainian forces continued to shell the front line of the Mykolaiv-Kherson region. Russian shelling of civilian settlements along the Mykolaiv-Kherson front line continue, with the Ukrainian General Staff reporting numerous Russian attacks on Ivanivka, Potemkyne and Myrne. Several trains loaded with Russian ammunition have been recorded arriving to the Kherson region, indicating that Russia continues to reinforce its troops on this front.
Ukrainian partisan offensives target Russian railway lines near Melitopol in the Zaporizhia region, obstructing Russian resupply efforts to the Zaporizhia Oblast front line.
In western Ukraine, there have been no significant developments. All of Ukraine remains under risk of Russian missile attacks, however, the risk of a Russian ground invasion of western Ukraine remains low.
Developments in Russia
The Russian government submitted a draft amendment to introduce ’special measures in the economic sphere’ to support the military effort in Ukraine. This amendment would force companies to supply goods, perform works and provide services for the ”special military operation”, while allowing the alteration of existing workers’ contracts to force them to work weekends and holidays.
These measures pose serious reputational, legal and sanctions risks for any company asked to directly support the war, which will reinforce the lasting risks for Western companies still operating inside Russia territory.
International Developments
On 03 July, the Bulgarian government reportedly confirmed that 70 Russian diplomats – including family members and a number of technical staff – have been deported to Russia under charges of espionage against the Bulgarian government. Following this move, Russia has threatened to cut diplomatic ties with Bulgaria. These developments raise the political risks in the short-term in Bulgaria as pro-Russian Bulgarian parties have condemned Prime Minister Kiril Petkov’s decision as a “national traison”. Petkov has until 08 July to form a new government with the support of the independent parliamentarians, and this issue could become a critical fact for the formation of such a government.
On 04 July, Swedish Prime Minister Magdalena Andersson met with Ukrainian President Volodymyr Zelenskyy in Kyiv. Andersson also visited the mass graves at Borodyanka and Bucha, where hundreds of civilians were buried, and strongly condemned Russian violence.
On 05 July, NATO has formally begun the ratification process to include Sweden and Finland in the alliance, with members signing the protocols of accession in what its secretary general called a ”historic moment.” This will bring the military alliance up to Finland’s 830-mile border with Russia. The move is expected to garner swift support from the alliance’s members although the threat of a last-minute veto from Turkey remains.
This week US Secretary of State Antony Blinken will meet his Chinese counterpart at the G20 foreign ministers’ meeting in Bali with the aim of intensifying diplomacy and communication between the two countries. The announcement comes after last week’s G7 meeting included tough language on China, as well as China being included for the first time in NATO’s ”Strategic Concept”, which states that China’s ambitions and ”coercive policies” challenge the interests, security and values of NATO allies.
On 05 July, Norwegian oil and gas workers went on strike over pay on, the first day of a planned strike that threatened to cut the country’s gas exports by almost 60 percent and aggravate Ukraine-Russia’s war-related supply shortages. Norway is Europe’s second-largest energy supplier after Russia, and the strike had pushed gas prices to their highest level in four months. Therefore, the Norwegian government has proposed compulsory wage arbitration to resolve the dispute. The Norwegian government has thus avoided escalating the energy crisis and further increasing inflation in Europe.
Furthermore, Markus Soder, the Prime Minister of Bavaria, warned of possible gas shortages during winter as Germany is reducing its dependence on Russian gas imports. Soder stated that if Russia continues to cut gas exports, gas triage could be necessary, leading German state to halt industrial production in order to reduce energy use.
These developments demonstrate the weakness and high dependence of the European energy sector, increasing operational risks for European companies, with the risk of production disruption.
Forecast
The fall of Lysychansk will provide Russia with its most important victory since the fall of Mariupol by proclaiming the ”liberation” of the Luhansk People’s Republic (LNR). However, this is only half of the Donbas region. Russian troops will now focus on controlling the Donetsk Oblast, of which Ukraine still controls 45 percent. Ukrainian authorities have urged residents of Donetsk to evacuate the region. Russian forces will most likely focus on advancing towards Siversk and Bakhmut from the east, with the ultimate goal of overrunning the heavily fortified cities of Slovyansk and Kramatorsk in Donetsk Oblast. Therefore, these cities are likely to be targeted by Russian attacks in the coming weeks. For the objective of full takeover of the Donbas region, Russian troops will most likely face several months more of attrition fighting.
On 05 July, Nikolai Patrushev, Secretary of the Russian Security Council, declared that the Russian military operation in Ukraine will continue until Russia achieves its goals of protecting civilians from ”genocide”, ”denazifying” and demilitarising Ukraine, and forcing Ukraine to remain neutral permanently between Russia and NATO. Patrushev’s statement suggests that Russia’s military leaders will continue to push for progress out of Donetsk and Luhansk regions and that Russia is preparing for a protracted war with the aim of seizing much larger areas of Ukraine.
G20 foreign ministers are meeting this week in Bali. It will be the first time that foreign ministers from some of the world’s leading economies have met with Russian Foreign Minister Sergei Lavrov since Russia’s latest invasion of Ukraine on 24 February. Western leaders are expected to attend the meetings with Lavrov, even though they had planned to snub such encounters in previous talks. Official group photos of Western leaders with Lavrov are expected to be avoided. The reaction to Lavrov in Bali could also be an indicator of how G20 members might respond if Putin attends the group’s November summit in person, something that has yet to be confirmed. Food and energy security is expected to feature prominently in the discussions at this week G20 meeting.
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