The week was eventful; elections in several countries added intrigue. Since our focus has shifted to “negotiations,” let’s look around, as even more dynamic events are ahead.
1. “Negotiations” are notably occurring on three levels.
Last week, Russia killed 16 civilians in the Kharkiv region (including two children), 138 people were injured or affected, and another 2 were blown up by explosive devices.
This morning, the Russians killed a 74-year-old woman with a drone in the Shevchenko community.
Russia routinely continues to commit war crimes by deliberately attacking women, children, and the elderly. This is not a figure of speech—it’s the dry statistics of victims. The most brutal strike was on Nova Vodolaha.
Regarding attacks on Kharkiv, I’ve already kept silent; the day before yesterday they set fire again to the repeatedly attacked “Epicenter.” 80% of the strikes on Kharkiv are reactive drones.
Kyiv is under pressure. There was a series of attacks on the western regions of Ukraine, including consequences in the form of border problems: queues are not due to the number of people leaving/entering, but due to pauses caused by air alarms.
Meanwhile.
In September alone, SBS demilitarized 13,468 Russian occupiers, of which 6,453 (48%) completely. By noon on October 26, 13,848 Russian soldiers had been demilitarized, of which 6,613 (the same 48%) completely. Thus, with 5 days left in the month, the figures are already higher than for the entire September, and already exceed August’s results by 26%. If the pace continues (weather may interfere), SBS alone will eliminate about 2,000 more bodies by the end of the month, about 1,000 of them irreversibly. This means the total number of Russian losses in October will approach 50K (about 25K irreversible) in the absence of comparable advances and against the backdrop of strikes deep into Russia (hello Voronezh).
Meanwhile.
At the same time, the Russians are actively demonstrating a willingness to resume dialogue. And they do not reject “measures to strengthen mutual trust” (exchange of prisoners of war and a humanitarian action in Oleshky). That is, Putin simultaneously escalates against Ukraine’s rear, frantically intensifies at the front, “capturing” cities in advance, but at the same time maintains the appearance of dialogue.
Why? The key word is (UN)CERTAINTY.
2. While trash cans smoked in Paris and shop windows were smashed in Milan, we got somewhat distracted by what’s happening in Russia.
The choral singing of Russian propaganda and some good Russian emigrants led us to believe that Putin is doing more or less fine. He supposedly can comfortably wage war as long as he wishes. At least longer than Europe will want to support Ukraine. It seems that Putin himself started to doubt and is forced to react and speed up.
Last week, a series of arrests and dismissals occurred, interpreted in the context of 1) the biting at Prime Minister Mikhail Mishustin (the second most popular figure in Russia) by the FSB; 2) the strengthening of Finance Minister Anton Siluanov, who obtained the status of Deputy Prime Minister and essentially became independent within the government. Why?
Siluanov’s empowerment is unanimously explained by the need to maintain an extremely strict course in handling budget finances. Simply put, Putin no longer has the ability to maneuver money. And the prospects for 2027 are bleak, with many clamoring for funds.
Even officials openly say that some optimism will appear in… 2029. If the situation does not worsen…
What happened?
A central theme of the interpretation of Russia’s economic policy since 2022 was the notion that the head of the Central Bank of Russia, Elvira Nabiullina, was raising the interest rate to curb inflation and bend it down to the target of 4%. The economy is deliberately being “cooled,” the rate is being deliberately reduced, and soon everything will be fine.
However, last week the Central Bank not only refused once again to lower the rate, keeping it at 14% (though businesses are begging for 10% and below), but Nabiullina also voiced several unpleasant things.
Official (!) inflation by the end of the year is expected to be not 4%, but 7.1-7.6%. Almost twice the target, officially. In reality – more. The Russian Ministry of Finance is trying to borrow money at 17%. But the banks and businesses buying bonds in a semi-mandatory manner look on without enthusiasm.
At the same time, Nabiullina officially states that the room for rate reduction next year is decreasing, and factors of “uncertainty” (war) may worsen.
In summary. Investments in Russia have already sagged, in the negative. Money will remain expensive for a long time. Company profits are falling, the number of bankruptcies and defaults is increasing. Debts are exerting more pressure. Budget financing for the civilian sector will continue to be cut, with promises of another 2 years of problems, forming very poor expectations. Not a catastrophe yet, but very tense. No positivity at all. Not even a dead end, but a slippery road to the brink.
The main factor is “uncertainty,” whose cause is generally and quietly referred to as the war, and specifically and openly the visits by Ukrainian drones and missiles. So, Russian officials and businesses are openly responding to those good Russian emigrants who mumbled that Ukraine was not shooting in the right direction. It turns out, they are.
In fact, despite the expensive oil gifted by Trump (already for 7 months):
• The deficit of Russia’s federal budget by the end of the year will be significantly above the plan.
• Russian oil refining has shrunk by about 30%, and while there are no exact data on oil production, it is declining.
• Farmers are in hysterics.
• Insurance companies are fainting.
• The platform economy is suspended as a type. Losses from two marketplaces have reached a macroeconomic level.
• Developers are scratching from the last of their strength, some are confidently sinking.
• The defense industry is formally afloat, but no longer drives the economy forward, lying on its side, plagued by internal non-payments, and requires money.
• Oil and other chemicals occasionally smoke, which unnerves even a colossus like “Sibur”.
• Banks are in quiet horror, the volume of bad loans is growing.
• In aviation, eye twitching has increased fivefold. Because that’s how much the number of airport closures, delays/cancellations of flights has grown.
• It has suddenly turned out that the super-concentration of data centers is good, but only if not attacking Ukraine. Otherwise, it is bad. Especially when it is impossible to organize adequate import substitution…
3. Russia’s problematic sectors can be listed for a long time.
The main intrigue now is the EU’s readiness to finally stop importing Russian LNG from January 1, 2027. This is a blow not so much to Russia, as to the sacred – the personal feeding trough of Putin’s entourage and, as rumored, the leader’s personal stash. It’s terribly interesting there.
The gas sold by the formally private company “Novatek” from its Arctic projects is de facto gifted by the Russian people to a group of private Russian individuals (and the French with the Chinese). “Novatek” was exempted from paying the mineral extraction tax (MET) from projects in the Arctic, but the benefit had a limit for decency – either on 250 billion cubic meters of extracted gas or for 12 years from the start of commercial production (started in 2017).
Hence, the threshold of 250 billion cubic meters will statistically be exceeded by the end of 2026. Therefore, the Russian Ministry of Finance in September 2026 quietly initiated the extension of “Novatek’s” benefit until 2029, meaning “12 years without considering the volume of sold gas”. They simply want to gift gas to good people for another three years. The same Ministry of Finance, which in the same September initiated an additional withdrawal of money from “super-profitable” businesses and other (including small) investors.
And this is the same “Novatek” which suddenly became a participant in the LNG production project in Alaska along with a character connected to Trump’s entourage, which has already caused a scandal.
Simultaneously, the main formal owner of “Novatek” oligarch Leonid Mikhelson intensified public pressure on Europe to postpone the rejection of Russian LNG, or better yet, cancel it altogether. Because there is a risk that Putin’s friends will not only lose money, but will also be unable to fulfill obligations to the conditional friends of Trump. And this is not respectable. For such a case, a couple of European capitals could be helped to be smashed, for more negotiability…
In summary, Ukraine is suffering greatly from the continuation of the war. Every day brings new victims. At the same time, the war is taking Russia further away from the comfort zone. Including those who are beneficiaries of the regime.
The continuation of the war for another six months through a predictably difficult winter is quite a challenge for the Kremlin, despite all bravado.
Therefore, Putin is trying to invent signals of certainty for the internal audience and also presents the main demand – the lifting of sanctions – for the external audience.
Look, he’s signaling inside the Russian Federation. We’ve already settled things with Trump. Gave him an American prisoner and a tanker of diesel, he’s in our pocket and owes us reciprocal passes. We’re already grilling Europe, it’ll burn out by spring. Dobropillya is already captured (no, but who would dare to contradict?), other regions of Ukraine are in chaos. The “special military operation” is going according to plan, with a slight delay. In two weeks we’ll polish everything in China, and it’ll look nice. So don’t fidget.
But all this beauty collapses if Ukraine doesn’t quickly concede.
Firstly, it would be awkward in front of Comrade Xi and we wouldn’t be able to loosen the Chinese collar. Secondly, from January, Comrade Trump will be more concerned with preserving what he has acquired through hard work and protecting himself from possible consequences.
Hence Putin’s hurry, who ideally needs to freeze things and start eroding the sanctions before winter. Because conditions might be different in spring. For instance, Marine Le Pen could situationally turn out to be a fierce anti-Putinist and anti-Trumpist. Because associating with toxic villains can be costly.
Therefore, the end of the year promises to be extremely turbulent. The international events also suggest this, of which (specifically about Bulgaria, Serbia, and Brazil) the following remark.
* * *
1. Bulgaria, first round of presidential elections.
It’s predictably bad – with a small margin (3%) a lady leads (34.76%) who is not a friend to Ukraine, quite the opposite. In second place is a decent guy (31.94%). The nuance is that in third place (12.54%) is a pro-Russian ghoul.
Before the second round (November 1), there are two intrigues: 1) how the votes cast for the pro-Russian ghoul will distribute (some of his voters might not come), and 2) what the turnout will be (extremely low in the first round – 22%).
So much depends on how the leaders mobilize their electorate and demotivate the opponent’s voters. The methods are known, it depends on the execution. The forecast is moderately negative, meaning in favor of the one who is not our friend. But there is room for alternatives.
2. Serbia.
After the announcement of the first data, according to which the current leader Aleksandar Vučić, who planned to move from the president’s seat to the prime minister’s, is losing, impressionable people of various genders and ages filled the internet with their caps. Almost “our side won”!
When today these “our side” started making comments, the euphoria subsided. Because the question is not whether this is good for Serbia. Maybe it is. The question is, what does this mean for Ukraine?
Last night I asked a grumpy fellow who understands Serbs: “What will they do? And how does it affect us?”. Received a comprehensive expert reply: “Who the heck knows! I’m sure they don’t know themselves. It’s not even a fact that they’ll last together for at least half a year. If they have enough brains, they’ll start maneuvering.” Let’s remember this tweet.
Here’s the thing.
In Serbia, a classic protest vote occurred against the tired Vučić. The reason is known – the collapse of the canopy at the station in the city of Novi Sad in November 2024 (16 people died) without a clear investigation and punishment of those responsible, which became a symbol of corruption and a rallying point for all dissatisfied with the regime, who demonstrated for 2 years and finally achieved their goal. The drivers were student movements.
The vast majority of seats in parliament will be occupied by representatives of the so-called “Student List.” They will form the government.
This victory was not guaranteed; high voter turnout helped, which, among other things, forced Vučić to abandon potential forceful actions and quickly concede defeat.
The “List” presented an 11-point program that essentially promised to “make good people happy, and bad ones – suffer.” This approach was generally adequate for the task of toppling a common enemy.
What happens next is a mystery.
For some reason, impressionable ladies immediately started claiming that Serbia would now turn away from Russia and rush towards the EU. Why is unclear.
Because the representatives of the “List” are a highly heterogeneous mix, with “ingredients” that, under other circumstances, would enthusiastically clash with each other. There is a non-negligible probability that they will soon do just that.
Besides internal tasks, the “students” will have to overcome several external challenges.
Firstly, they need to deal with the EU. Not all members of the “List” fundamentally want to join the EU. They believe in maneuvering like Vučić, but without Vučić. Today, newly elected deputies have already stated that they will not impose sanctions against Russia, do not intend to quarrel with Moscow, and will maintain a balance “in the interest of Serbia.” But they will need EU money.
Secondly, they need to address Kosovo. Including for the sake of EU funds. The general approach of the “students”: no Kosovo, Kosovo is part of Serbia. For some members of the “List,” the optimal and desired resolution of the Kosovo issue is a small victorious war. But Brussels is unlikely to approve. Vučić had specific agreements. Some “List” members intend to “update” them, that is, to revise them. How it will end is anyone’s guess.
Thirdly, what about Bosnia and Herzegovina, where the Republika Srpska is? They will not abandon their people, no matter what. But the “modality” of involvement can vary greatly, including being destructive.
The main question is their global stance on Russia and Russian presence. And here is where the real concern lies. To put it mildly, there are signs and a sense that the Russians invested in promoting the “List.” Because there are ideological sympathizers and simply convenient material for work. To some extent (for some “students”), this could have been a “blind play.”
The intrigue is that Russia’s interest is not Serbia’s well-being, but the ability to use Serbia as leverage. The extreme form of using such leverage is Russia’s favorite pastime of “igniting the Balkans.” In this context, I noted several comments from sensible Serbs, the essence of which is as follows.
The generation of “Serb-parents,” “Kosovar-parents,” “Croat-parents,” etc. (45+), vividly remembers the events of the 1990s. Those older have firsthand experience of shooting at each other. Some of the older Serbs are seriously poisoned by resentment. But they have seen real war, which sobers them. Therefore, they are ready to escalate, they understand creeping confrontation, but in a way that does not spiral into a major hot conflict.
However, “Serb-children,” the youth invigorated by successful protest, have not seen real war but are brought up on resentment and heroism, including figures like Ratko Mladić. Therefore, they haven’t developed natural restraint yet. They are extremely vulnerable to harmful indoctrination.
Vučić tried to cater to this audience, but the majority ended up joining the wave of protests. Now, they might be incited to various escalations – on the Kosovo issue, the Bosnian issue, and other irritants.
Vučić was certainly not a friend of Ukraine. He maneuvered, occasionally in our direction. We will learn much more after the war. How the “students” will position themselves regarding Ukraine, considering at least part of them naturally gravitates towards Russia, remains a very open question.
So for now, some restraint in expectations is appropriate. Our advantage is that we definitely do not need to ignite the Balkans. On the contrary, we are interested in Europe having fewer problems.
3. Brazil, second round of presidential elections.
This is the most globally intriguing. The context is as follows. In Central and South America, there is a sort of “right-wing turn” – with corresponding candidates winning elections.
In Brazil, the contest for the head of state was between the conditionally “left” incumbent president Lula da Silva and the more conservative Flavio Bolsonaro (son of the right-wing ex-president Jair Bolsonaro).
On October 4, not only the first round of the presidential election took place, but also elections for the lower house of parliament, the reelection of part of the senate, and state governor elections.
According to the continent-wide trend, the position of right-wing forces has strengthened. Bolsonaro’s party gathered the largest faction in the lower house – 23.6% of the mandates (increasing their number by a quarter). They also secured 28 out of 81 senators (35%). Thus, their positions are strong, but without a majority.
In the first round, Bolsonaro slightly outpaced Lula – by 1.87% (2.2 million votes). The catch is that in Brazil since 1989 there has been a solid rule: whoever wins the first round – wins the second. However, the rule did not work! Lula won with a result of 51.79%, Bolsonaro with 48.21%.
Turnout between the first and second rounds increased from 78.9% to 80.8% (such turnout is traditional in Brazil). The intriguing part is that Lula increased the number of votes by 10.4 million (from 53.9 million to 64.3 million), while Bolsonaro only by 3.7 million (from 56.1 million to 59.8 million).
Bolsonaro did not concede defeat and is contesting it, but this will change nothing now.
What was the reason that Lula won not only against the continental trend, not only against the long-standing patterns of his country, but also against the trends of three weeks ago?
Technically, this is explained by better mobilization of his supporters, an effective digital campaign by Lula in the final stretch, and mistakes by Bolsonaro, who relaxed too early and began to act as if he had already won.
But the key to victory is that Lula swayed the undecided, who voted literally “we don’t need reforms, we don’t need to make things better, leave things as they are.”
A cautious explanation for this fact is found in the idea that some Brazilians expressed a desire to maintain conditional neutrality and opposed closer alignment with the USA. Why might this be?
The hypothesis is that between the first round, when the right-wing showed an advantage, and the second – Trump made his presence known in additional form.
This time he did not directly support Bolsonaro’s son, although some media wrote about the exposure of American influence against Lula. Before the first round, Trump stated he was closely monitoring the elections in Brazil, which was quoted in Brazil.
The topic of the diesel deal with Putin was also closely covered, providing an objective assessment. This included citing the Gulf War, rather than Ukraine’s actions, as the reason for rising fuel prices and frequently quoting criticism of Trump from congressmen and senators. This portrayed Trump as a slippery negative character.
Naturally, Trump previously made threats of tariffs against Brazil. And Bolsonaro was associated with him, willingly or not. This might have swayed some people.
In any case, the presidential elections in Brazil were a clear failure for the US administration regarding the renewed “Monroe Doctrine.”
After the elections, Trump stated that these elections “looked rigged.” But he did not elaborate further, noting that he has good relations with Lula.
A catastrophe did not occur—the Brazilian electorate is divided, and the right-wing positions are strong. Therefore, there are grounds to suggest that Brazil will maintain a neutral course, and Washington will be able to convey its stance on the most sensitive issues.
Symbolically, it seems as though Trump stumbled in his backyard when victory was almost at hand. Now he’s unable to paint Brazil in the colors of a loyal country.
Considering the potential fiasco in the Congressional elections, Trump urgently needs some victories… which will affect everyone, including us.
However, all these twists and turns pale in comparison to the elections in Israel (tomorrow). I’ll share my layman’s insinuations a bit later.
