Hello from the Bear Market Brief.
This week in the news:
The U.S. hosted a NATO Summit in Washington, D.C., during which the Alliance announced a Pledge of Long-Term Security Assistance for Ukraine.
On Monday, Russia carried out missile strikes on several Ukrainian cities, hitting medical facilities and residential buildings.
Indian Prime Minister Narendra Modi made a two-day trip to Russia to discuss trade relations and potential investments with President Putin.
Lawyers of prominent opposition politician Vladimir Kara-Murza were finally allowed to visit him after he was transferred to a prison hospital last week.
— Sara Ashbaugh, Editor in Chief
NATO Summit: Key outcomes for Ukraine
On July 9-11, the U.S. hosted the 2024 NATO Summit in Washington, D.C. The event brought together all 32 NATO members and 35 partner countries, including Ukraine. On Wednesday, the Alliance issued a declaration that recognizes Russia as the most significant and direct threat to NATO allies’ security. Regarding Ukraine’s potential Alliance membership, the declaration states that NATO “will be in a position to extend an invitation to Ukraine to join the Alliance when Allies agree and conditions are met.”
The document also outlines new initiatives to support Ukraine’s fight against Russian aggression, including establishing the NATO Security Assistance and Training for Ukraine (NSATU). This program will coordinate the provision of military equipment and training for Ukraine by NATO members and partners. Additionally, NATO announced the Pledge of Long-Term Security Assistance for Ukraine, whereby allies intend to provide a minimum baseline funding of €40 billion ($43.7 billion) within the following year. This commitment applies to costs related to the provision of military equipment, assistance, and training for Ukraine, including the purchase of military equipment; expenses related to maintenance, logistics, and transportation of military equipment; and costs for military training. According to the document, the contribution amount will be reevaluated at future NATO Summits.
This year’s NATO declaration also criticized China for enabling Russia’s war against Ukraine. “We call on the PRC, as a permanent member of the United Nations Security Council with a particular responsibility to uphold the purposes and principles of the UN Charter, to cease all material and political support to Russia’s war effort. This includes the transfer of dual-use materials, such as weapons components, equipment, and raw materials that serve as inputs for Russia’s defense sector,” the document reads.
In addition to receiving new assistance pledges from the Alliance, Ukraine’s President Volodymyr Zelenskyy met with key Western partners and secured €300 million ($328 million) to purchase munitions for F-16 fighter jets and $500 million in military assistance from Canada. He also secured additional strategic air defense systems, including additional Patriot batteries donated by the U.S., Germany, and Romania; Patriot components donated by the Netherlands and other partners; and an additional SAMP-T system donated by Italy. U.S. Secretary of State Antony Blinken announced on Wednesday that F-16 fighter jets are already being transferred to Ukraine from Denmark and the Netherlands and will fly over Ukrainian skies this summer.
— Lisa Noskova
Emergency responders and civilians picked through the rubble of the Okhmatdyt children’s hospital in Kyiv on Monday after it was hit by a Russian missile strike. The rubble was cleared by July 10 and the patients evacuated to other hospitals in the city. According to Ukrainian authorities, two people were killed and 32 injured as a result of the hit. President Zelenskyy posted about the attack on social media, saying, “Russia cannot help but know where its missiles are flying, and must fully answer for all its crimes: against people, against children, against humanity in general.” (photo: kyivcity.gov.ua)
Russia attacks Ukrainian hospitals in a massive missile strike
On Monday morning, Russia carried out another missile attack across Ukraine, targeting Kyiv, Dnipro, Kryvyi Rih, Sloviansk, Pokrovsk, and Kramatorsk. According to Ukraine’s State Emergency Service (SES), Moscow launched over 40 missiles of different types during the strike. As a result, two medical facilities in Kyiv, including the renowned children’s hospital Okhmatdyt, were severely damaged. Two people were killed as a result of the attack on Okhmatdyt. The hospital’s intensive care, surgical, and oncology wards were damaged, and 600 patients had to be transferred to other medical facilities. Another medical facility hit was Adonis, a private clinic in the capital. The attack killed seven people. In addition, Russian missiles hit residential buildings, a kindergarten, and a business center. As of Wednesday morning, SES reported that search and rescue operations on all affected sites in the capital have been completed. In Kyiv alone, 33 people, including five children, lost their lives as a result of the Russian missile strike. Another 121 people, including ten children, have been injured.
The U.S. condemned the attack, calling it “yet another example of how Russia threatens European security.” Danielle Bell, Head of the UN’s Human Rights Monitoring Mission in Ukraine, stated that it is highly likely that Okhmatdyt was directly hit by a missile rather than being struck by debris from an interception. The Kremlin denied attacking the hospital, saying that the explosion was caused by a misfiring air defense missile. According to the BBC, six independent munitions experts unanimously agreed that the missile that hit Okhmatdyt was not an air defense missile after seeing the footage. They also said that it was likely an air-launched Russian missile, mentioning a Russian Kh-101 missile as a possibility.
— Lisa Noskova
Modi in Moscow
On July 9, one day after Russia carried out a devastating missile strike against Ukrainian cities (hitting, among other things, a children’s hospital in Kyiv), India’s Prime Minister Narendra Modi arrived in Moscow on a two-day visit—his first in five years. While Modi criticized “the death of innocent children” in public remarks next to Vladimir Putin, and one planned session of talks was canceled, the Indian Prime Minister also “bear-hugged” Putin in what looked like a symbol of friendly relations between Russia and India—which earned criticism from Ukrainian President Volodymyr Zelenskyy.
For Russia, Modi’s visit served the same goal as the visit of Hungarian Prime Minister Viktor Orban the week before: showcasing that Russia is not isolated politically and that leaders of countries maintaining friendly relations or even (in Orban’s case) alliances with the leading powers of the Western coalition backing Ukraine are willing to talk face-to-face with the Russian President in spite of Russia’s continued attacks on Ukrainian civilians. For India, the visit was most likely due to Russia’s growing reliance on China in terms of trade and diplomatic support—a concern that Modi knows part of the Russian elite also shares.
Prior to the full-scale invasion of Ukraine, Russia was an important arms supplier to India, but Russia’s share in Indian arms imports has been drastically reduced over the past two years due both to concerns over quality and Russia’s focus shifting to meeting the needs of its own army. However, India, which has in recent years engaged in several border clashes with China, is still buying equipment from Russia, which in turn is increasingly dependent on China for technology used by its arms industry. From this point of view, it is notable that it was First Deputy Prime Minister Denis Manturov, the overseer of the arms industry, who met Modi when he first arrived at the airport.
Russia’s state-owned nuclear company, Rosatom, is also active in India’s nuclear power sector. Trade between India and Russia surged to $65.7 billion in the last financial year, due to India sharply increasing its import of Russian oil and oil products that cannot be sold in the West. An agreement recently signed between Rosneft and the Indian Reliance Industries stipulates that payments will be denominated in rubles, although many Indian companies still pay for oil shipments in rupees that Russian exporters cannot withdraw from the country.
The talks concerned plans to raise mutual trade to $100 billion a year by 2030 and to increase both Russian investments in India and Indian investments in Russia, especially in the Far East, which is a development focus for the Russian government. To increase mutual trade, the countries agreed to open a maritime corridor between Vladivostok and Chennai. Rosatom also offered to build a number of new nuclear reactors in India. Additionally, Rosneft is “in talks” with Indian refineries about long-term oil supply deals—but these agreements have not been signed yet. However, the two leaders managed to settle a tense point in the relationship when Putin promised the early release of Indian citizens from Russia’s army, specifically those who were lured there to sign contracts when domestic recruitment efforts flagged.
— Andras Toth-Czifra
Indian Prime Minister Narendra Modi arrived in Moscow on Monday for his two-day visit to Russia. He was warmly received by Vladimir Putin at the President’s official residence at Novo-Ogaryovo, an estate outside Moscow. The pair held an informal meeting, taking a stroll on the property and visiting a stable, before engaging in more formal talks the following day. “There are no surprises in preparation. The main thing is to create an atmosphere for meaningful interaction,” Kremlin spokesperson Dmitry Peskov said about Russia’s plans for the visit. (photo: Gavriil Grigorov / POOL / AFP)
Domestic repressive apparatus in overdrive
For days there was no reliable information available, even to his family, about the health of Vladimir Kara-Murza, a prominent opposition politician and political prisoner, after he was taken to the hospital of the prison where he has been held. On July 10, Kara-Murza’s lawyers were able to visit him in the hospital to verify that he was alive. However, Kara-Murza, who had survived two poisoning attempts before being convicted on trumped-up treason charges in 2023, is still suffering from polyneuropathy, a neurological disease that is exacerbated by the circumstances of his confinement, and which should therefore prevent the Russian authorities from incarcerating him. The biggest concern is that following the death of Alexei Navalny in prison earlier this year, which triggered a wave of silent protests and condemnations (but not much else beyond these), the Russian authorities may feel like they do not have to care about keeping even high-profile political prisoners alive.
This was not the only concerning development involving the state’s repressive apparatus over the past week. A military court in Moscow sentenced theater director Yevgenia Berkovich and playwright Svetlana Petrichuk to six years in prison for staging a play about Russian women who married Islamic State fighters in Syria. The court decided that this amounted to “justifying terrorism.” The two women have been in custody for more than a year, and it is likely that the authorities’ renewed concern over radical Islamism after three terrorist attacks in Russia this year also played a part.
Russia’s financial monitoring authority also added Yulia Navalnaya, head of the Human Rights Foundation and the widow of the late Alexei Navalny, to its list of “terrorists and extremists.” This was announced after another court issued an order for her arrest in absentia, along with journalist Tatyana Lazareva, who is wanted for her reporting on Ukrainian drone attacks inside Russia. These sentences and designations highlight how various elements of the Russian state—not just the federal government—are driven by an urge to constantly escalate repressive activities, either because this is seen as a guarantee of regime stability or because it is perceived as an expectation of superiors.
— Andras Toth-Czifra
On the podcast
Why has the Global South, historically on the receiving end of colonialism and imperialism, maintained what might be called a neutral stance towards Russia's war against Ukraine? Ivan Grek, Director of the Russia Program at George Washington University’s Institute for European, Russian, and Eurasian Studies, joins Aaron Schwartzbaum to discuss.
Quickfire: Regions
A major heat wave has led to power outages in several Southern Russian regions—the Rostov and Astrakhan regions, the Krasnodar Territory, the Republic of Dagestan, and the Republic of Adygea—leaving at least 500,000 people without electricity. These problems again highlight the general neglect of Russia’s public utility networks, which has led to increasingly frequent accidents and shutdowns over the past years. Climate change is just one of the reasons behind the increased strain. In Siberian and Far Eastern regions, where, due to Russia’s forced trade pivot to Asian markets currently investment growth is about twice as high as across the country on average, the grid is increasingly overburdened by heavy industrial use. In cities that have seen construction booms over the past years due to subsidized mortgages, utility networks were often not adequately expanded. In Southern Russia, Ukrainian drone strikes against energy infrastructure are also a growing problem. In Dagestan, whose residents have seen consistently poor service over the past years, power cuts have led to protests several times.
On July 8, “the day of families” (the same day that Russian missiles hit a children’s hospital in Kyiv), relatives of mobilized men held a protest at the Russian Defense Ministry and demanded a meeting with Defense Minister Andrei Belousov, who did not meet them. Care for former war participants belongs to the portfolio of Belousov’s recently appointed deputy, Anna Tsivilyova—however, the government’s policy is currently that mobilized men will not be rotated before the end of the “special military operation.” “The Way Home,” a movement of wives of mobilized men that organizes itself on Telegram, also criticized officials whose children are sheltered from military mobilization. Over the past year the movement has gradually become more radical in its opposition to the government and has previously suggested that the authorities should send the sons of high officials to replace mobilized men on the frontline.
Non-preferential mortgage rates for new housing have reached 19.5% according to Kommersant Daily. Rates have been growing because the Central Bank has kept its key rate high (with the possibility of a further hike at the end of this month) but also because the government has been phasing out preferential mortgage programs, including for families and IT workers. Some banks are currently offering subsidized (but time limited) mortgages, but the terms of these are risky—especially if Russia’s economy is affected by an outside shock or “hangover” effects of its current war-related overheating—and thus the Central Bank may prohibit them to avoid a credit shock. Maintaining the programs while interest rates are growing would put an increasing strain on Russia’s war-focused budget. Without preferential lending, which has led to a construction boom in recent years, the construction market is expected to contract considerably.
— Andras Toth-Czifra