The Big Idea

Wars Update

| December 4, 2024

This document is intended for institutional investors and is not subject to all of the independence and disclosure standards applicable to debt research reports prepared for retail investors. This material does not constitute research.

From time to time, I find myself watching a college football game being played by two of my favorite team’s rivals.  I am interested in the outcome of the game, but I have trouble deciding who to root for because I dislike both teams intensely.  The U.S. may be feeling that way as it watches events play out in Syria.  Radical Islamic militant rebels are fighting the Assad regime and have taken a massive amount of ground over the past week, including regaining control over much of the city of Aleppo.  These rebels are led by Hayat Tahrir al-Sham, an offshoot of Al Qaeda that is designated by the U.S. as a terrorist organization.  To be fair, the organization has disavowed Al Qaeda and is projecting a more moderate image.  The other main group fighting the Syrian government is the Syrian National Army (SNA), which is funded mainly by Turkey.  On the other side is the Assad regime, which has used chemical weapons on its own population and is supported by Iran and Russia, two countries that the U.S. is battling via proxies in both the Middle East and in Ukraine, as well as Hezbollah.  Russia at one time had significant boots (and equipment) on the ground there, but much of its resources have been diverted to the fight against Ukraine.

The rebels have been advancing steadily southward on the ground and after seizing most of Aleppo are said to be approaching the next significant cities, Hama and Homs.  If rebels are able to control territory as far south as Homs, they may be able to cut off the Mediterranean Sea coast from the Assad regime as well as isolating strategic Russian air and naval bases near Tartus (satellite images show that Russian ships have already fled their berths in the Syrian port; ISW expects them to pull back to Kaliningrad or northwestern Russia).  The regime’s Syrian Arab Army (SAA) sent reinforcements to shore up its defensive lines just north of Hama over the weekend.  This move stabilized the lines for a couple of days, but by Tuesday, rebel forces were gaining ground both west and east of Hama and, as of today, intense clashes were occurring in the city.

President Assad was said to be in Moscow late last week pleading for help, but his allies are preoccupied elsewhere and may not be in a position to bail out his regime as they did roughly 10 years ago.  In fact, when the pro-government forces routed the rebels in 2015 and 2016, it was Hezbollah that constituted the most capable infantry, as Assad’s army is poorly trained.  However, Hezbollah, decimated by Israel over the past two months, has so far chosen not to get involved.  Russian and Syrian jets have been targeting rebel supply lines, but Russia has pulled most of its air power closer to home and thus does not carry the weight in Syria that it did in 2015.  Iran very much wants to prop up Assad, but its options are limited.  The one “Axis of Resistance” member that may be in a position to help Assad tip the balance of power is the array of Iranian-backed Iraqi militias.  Some of them are said to be already fighting alongside the SAA in Syria.

The Israel-Lebanon ceasefire continues to hold, though not without issues.  Israel claims that Hezbollah has committed violations, and the IDF has taken things into its own hands by retaliating, which Lebanon and Hezbollah argue contravenes the terms of the deal, which require reporting violations to the UN peacekeepers (UNIFIL) and the oversight mechanism created in the deal (Israel says that it struck a side deal with the U.S. that permits such action, but US Special Envoy Amos Hochstein has reportedly told Israeli officials that its actions are violating the terms of the ceasefire).  So far, thankfully, these actions amount to no more than small skirmishes.

The Biden Administration, having successfully managed to get Israel and Hezbollah to stop fighting, is working feverishly on a ceasefire deal in Gaza that would yield a release of the hostages held by Hamas.  President-elect Trump has taken a different approach, promising (in all caps, no less) that there will be “ALL HELL TO PAY” if all of the hostages are not released by the time he takes office on January 20.  Israel believes that with Hezbollah essentially throwing Hamas to the wolves (until shortly before the ceasefire deal was reached, Hezbollah had insisted that any agreement would have to include Israel pulling out of Gaza, a condition that was dropped as the IDF dismantled Hezbollah’s infrastructure near the border), Hamas may be willing to make major concessions that it has resisted for over a year.  Indeed, Hamas has been negotiating with Fatah to form a civilian committee to govern Gaza, with Fatah expected to take the lead.

The U.S. military acknowledged that the Houthis fired on two US Navy destroyers and the three American-flagged commercial ships that they were escorting through the Gulf of Aden on Sunday.  No injuries or damage were reported, but I continue to be astonished that the Administration allows the Houthis to persist in this type of behavior without a more forceful response.


Russian interests are struggling around the globe.  In addition to the situation in Syria covered above, the pro-Russia Georgian Dream party in Georgia is facing mass popular protests.  The pro-Russia majority party in parliament called elections and then claimed to have won despite evidence of a clear defeat (this playbook seemed to work for Maduro in Venezuela).  In any case, protests are building momentum, as the majority of the public opposes the Georgian Dream’s platform of halting accession to the EU and cozying up with Russia.  The Georgian Dream leadership is planning to hold a presidential election on December 14, but the sitting (pro-EU) President has declared them illegitimate and has promised to stay in power.

Turning back to the war in Ukraine, Russia is throwing the kitchen sink at Ukrainian units holding ground in the Kursk Oblast of Russia.  Russia has recovered about 40% of the ground that Ukraine initially seized, but their recent efforts to advance further have proven calamitous.  Waves of Russian armor have been chewed up by mines and drones, and Russia has reportedly basically exhausted its heavy armor and has resorted to sending dismounted soldiers headlong into Ukraine’s positions.  President Putin is hellbent on recovering this territory prior to President-elect Trump’s inauguration in January in order to improve his negotiating position for any ceasefire talks, but it appears that he is running out of equipment to support such a counteroffensive.  To add to the difficulty, the weather has turned, leaving many Russian tanks literally stuck in the mud and unable to even make it to the front.

Similarly, Russian troops are feverishly attacking along the entire frontline in Ukraine.  Their success seems to be minimal along the northern half of the eastern frontline and much better in the southern portions.  In the north, Russian attempts to seize Kupyansk have largely come to nothing, as a small force that had managed to enter the city were driven back across the Oskil River.  In much the same way, Russia managed to land a couple dozen soldiers on the western side of the river north of Kupyansk last week, but Ukraine has driven them back across the river.  The Russians have managed to cross the river at other points but are in no position to challenge Ukraine in the key logistics hub of Kupyansk.  Moving southward, Russian units continue to attack on the eastern side of Chasiv Yar and have crossed the canal in a few spots, but any attempts to move into the main part of the town have led to routs.  Proceeding southward, the next hot area is the town of Toretsk.  Russia has surged forward into the main part of town several times over the past few months but have been driven back every time.  Currently, Ukraine holds most of the central area, including the high-rise buildings that constitute the high ground in the battle.

As we continue southward, the Russians have had somewhat better luck.  Russia continues to inch forward toward Pokrovsk, though they are still not close to taking this key logistics hub.  The battles continue to the south and east of the main target.  Moving southward, the next fight is for the town of Kurakhove.  Ukraine was holding a narrow salient southeast of Kurakhove, encompassing a string of villages along a river and a main highway.  Russia has spent weeks trying to attack this salient head on, and finally relented, shifting to flank attacks.  The latter strategy has brought some success, and the consensus of analysts is that Ukraine will soon be forced to retreat from the salient.  Meanwhile, in the main town, the Russians now hold at least the eastern half, and most observers expect Ukraine to fall back soon.  Things have finally started to quiet down near Vuhledar, as Russia has shifted it focus westward and is trying to take the town of Velyka Novosilka.  Russian units have moved forward to within a few miles of the town.  Typically, this is where things tend to get hardest for the Russians.

Through all of this, Russia is punching itself out.  One day last week, Russia suffered over 2,000 casualties in a single day for the first time in the entire war.  In addition, Ukraine frontline sources are increasingly reporting that Russia is running out of heavy equipment (tanks, armored personnel carriers, artillery, etc.) in a variety of locales and are resorting to sending poorly trained Russia volunteers in suicidal charges that seem more appropriate for wars in the 19th century than in the current day.  Russia is gaining ground faster than they were earlier in the year, but Western media is not paying attention to the fact that Russia’s military is exhausting itself.  Putin is clearly gambling that if he can portray an air of strength, then he can gain a favorable negotiated settlement from incoming President Trump.

I continue to hold a non-consensus view on this issue, but the chatter so far supports my take.  Russian officials continue to reject the terms that Trump’s team is supposedly going to offer, mainly a freezing of the current lines.  Russia will reportedly insist on essentially reducing Ukraine to a non-sovereign entity, requiring Ukraine to give up all claim to ever joining the EU or NATO and to demilitarize.  In essence, Putin is demanding that Ukraine become a vassal state to Russia.  I continue to believe confidently that Trump will not accede to anything like those terms.  Ukrainian President Zelenskyy said that he might be willing to talk about a freezing of the current lines temporarily, but only if the Ukrainian-held portion of the country is brought under NATO’s protection, a stipulation that Putin will presumably never stomach.  If Putin’s gamble does not pay off with a ceasefire deal in the first days of the Trump Administration, then his military (not to mention his economy) may fall apart.

ISW reports that Ukrainian officials have upped their Electronic Warfare (EW) countermeasures to thwart the Russian drone threat.  Russia has ramped up domestic production of Iranian-designed Shahed drones, delivering a steady supply of the weapon.  However, Ukraine continues to be able to shoot down or divert the vast majority of them.  President Zelenskyy stated that the Russian fired over 2,500 Shahed drones against Ukraine last month.  But, as an example, on Sunday night, Russia fired 110 Shahed drones and decoys at various targets in Ukraine.  Ukrainian air defenses shot down 52 of them, took down another 50 with EW, and diverted six more into Russian or Belarusian territory.  Of course, Russian missiles have proven far deadlier, and Ukrainian air defenses continue to struggle with certain types of ballistic missiles.

ISW reports that India is pulling back from its defense ties with Russia.  It has sharply reduced its defense equipment orders from Russia and has replaced some of those contracts with Western suppliers.

Stephen Stanley
stephen.stanley@santander.us
1 (203) 428-2556

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