Strategic clarity and strategic ambiguity. (And cryptocurrency on the side.)
N2K logoFeb 8, 2022

Diplomacy moves to the fore this week, but there's an interesting cyber front emerging: cryptocurrency remittances seem to be financing Ukrainian hacktivism and prospective irregular forces.

Strategic clarity and strategic ambiguity. (And cryptocurrency on the side.)

There have been no striking developments in reporting on the cyber aspects of Russia's hybrid war against Ukraine since Microsoft's descriptions of Actinium's cyberespionage campaign, but governments around the world remain on alert for a resumption of cyber war that could spill over outside the theater of operations. Diplomacy has taken center stage, but there are interesting signs of alt-coin remittances funding Ukrainian equipment, a prospective resistance, and ongoing hacktivism.

President Macron is in Kyiv.

French President Macron is in Kyiv today for talks with his Ukrainian counterpart, President Zelenskyy. He left Moscow yesterday, the AP reports, saying that he'd received assurances from Russia's President Putin that Russia would neither "escalate" the conflict nor station troops permanently in Belarus. President Macron reposes some hope in quiet diplomacy as opposed to the public exchange of notes Russia has so far sought. Reuters observes that these gestures were reported by the French side, not the Russian, but there's no reason to doubt that President Macron heard what he says he heard in Moscow. Both sides agreed to further talks, and another round of high-level but non-summit discussions is planned for later this week. They will include French, German, Ukrainian, and Russian officials.

The US-German summit on sanctions.

It's tempting to see the French and American governments as taking a good-cop, bad-cop approach to influencing Russia (with Mister Biden cast as Starsky, Monsieur Macron as Hutch, and Vladimir Vladimirovich as the perp), but there's substantial agreement within NATO that Russian aggression against Ukraine needs to be, if not prevented, at least resisted. German Chancellor Olaf Scholz said, shortly before meeting US President Biden yesterday, that NATO's response to Russian aggression would be "united and decisive." He told the Washington Post, in response to question about an international perception of Germany as having been soft on Russia during the present crisis:

"Reality is more important than rumors. The reality is that Germany is the biggest NATO partner in continental Europe, that we are continuously strengthening our military forces, that we are a very good partner. We are cooperating with our allies in NATO and [the European Union], and with the United States, on the question of how to react to this threat to Ukraine that is coming from Russia. Our strict response is saying it will have very high prices if they intervene and that we work very hard to get a way out of this situation. Being a partner in NATO and the E.U. and doing our job is, I think, the best for solving the crisis.

"We are the strongest economic supporter of Ukraine. And we will continue to be. … It is approximately 2 billion U.S. dollars so far, [in the past 7 years]. … We are working together in renewable energies and future technologies that are important for giving Ukraine … the chance for having more economic and financial resilience.

"Today, Germany has the largest defense budget in continental Europe. … We contribute to the NATO response forces with thousands of German soldiers, have deployed hundreds of troops to Lithuania, where we lead the NATO Enhanced Forward Presence, and we currently dispatched several fighter jets to Romania to patrol the skies together with allies. And we will do so again in the Baltic countries."

President Biden said that the Nord Stream II pipeline wouldn't be permitted to go through if Russia moved on Ukraine, the New York Times reports. Chancellor Scholz suggested that Nord Stream II could indeed be held at risk, but he counseled more strategic ambiguity over the pipeline. This presumably would not only serve deterrence, but might also lead to a face-saving formula that would help Russia back down from an untenable position without more humiliation than is necessary. The sanctions under preparation, of which an interruption of Nord Stream II would be a part, are expected to impose severe, painful costs on Russia's economy and society should they be imposed. OpenDemocracy has a summary of their probable effect.

Developments on the ground.

Aleksandr Khodakovsky, who styles himself the commander of the Vostok ("East") Brigade in the eastern Ukrainian region which nominal separatists style the "Donetsk Peoples Republic," has said the separatists would be unable to withstand an assault by Ukrainian forces should Kyiv seek to forcibly restore order in the Donbas. He called for Russia to move 30,000 troops into Donetsk, specified that the order of battle should include multiple rocket launchers, and asked that the Russian forces sent in be clearly marked and identifiable as Russian. Reuters summarized Mr. Khodakovsky's request: "He said Russia would raise morale among separatist forces and deter Ukraine by openly sending clearly marked Russian units to the breakaway regions, and that it was now only a matter of time before Russia formally recognised their independence." Ukraine has disclaimed any intention of conducting a military campaign in the Donbas, and it's said that Russia has for some time deployed deniable forces in the region, a charge Moscow of course denies. But Mr. Khodakovsky's request that Russian units be clearly marked is interesting insofar as it suggests a departure from expected practice.

Commentators continue to focus on weather, and see an unusually wet winter with early warming in the region as presenting a severe obstacle to any Russian invasion. Poor trafficability makes maneuver difficult and tends to render heavy forces road-bound, but mud wouldn't present an insuperable obstacle to a determined invasion. CNN reports that US intelligence sources say Russian military commanders perceive difficulties with an invasion that their Kremlin masters overlook. Such difficulties are unlikely to be confined to the weather, and the military operators would be more alive to the challenges that face a large-scale incursion than would their political masters.

Alt-coin remittances go to Ukraine (including hacktivists and prospective resisters).

One complication any Russian invasion of Ukraine would face, especially if Moscow's troops were to be there for the long haul, is the likelihood of a Ukrainian resistance movement. Kyiv has already begun to organize more than a hundred thousand civilians into a reserve militia capable in principle at least of functioning as irregular resistance forces. A former NATO SACEUR, retired US Admiral James Stavridis writes in a Bloomberg op-ed that a Ukrainian resistance is likely and merits Western support.

Some of that support has been crowdfunded. The blockchain analysis and cryptocurrency compliance firm Elliptic says that alt-coin contributions to Ukrainian groups, official or unofficial, rose by 900% in 2021, reaching a total of $500,000 for the year, and continuing into 2022. Whatever alt-coin's (debatable) promise as an investment might be, its value in delivering difficult-to-trace remittances across borders has been clear for years. Some of the contributions have gone to hacktivist groups like the Ukrainian Cyber Alliance. Elliptic notes that the donations have been going on at a small level since Russia's 2014 seizure of Ukraine, increasing dramatically with rising tension over the Donbas:

"Shortly afterwards, Russia seized Crimea and triggered a war in the eastern Donbas region of Ukraine. After decades of corruption and neglect, the Ukrainian military could not cope, and again volunteer groups stepped in. They provided soldiers, weapons and medical supplies to fill the gap.

"These groups are funded by private donors, who have used bank wires and payment apps to donate millions of dollars. Bitcoin has also emerged as an important alternative funding method, allowing international donors to bypass financial institutions that are blocking payments to these groups."

It's not the only kind of funding, but it's increasingly popular. And it's not only non-governmental organizations who benefit, and it's not only private donors who can move funds in cryptocurrency:

"For most of the fundraising campaigns examined in our investigation, cryptocurrencies represented a small proportion of the funds received. The majority of donations were received through traditional payment methods, such as bank wires and online payments services.

"However, cryptocurrency has proved to be a robust and increasingly popular alternative. In some cases, we found that financial institutions had closed accounts belonging to these fundraising campaigns - this cannot happen with a crypto wallet. Cryptocurrency is also particularly suited to cross-border donations, allowing easier access to wealthy overseas donors.

"Some of the Ukrainian volunteer groups and NGOs accepting crypto donations have very close links to the Ukrainian government - and this adds to a trend of nation states turning to cryptocurrency as a means of raising funds. Iran is using Bitcoin mining as a way to monetise its energy reserves, while North Korea is believed to be stealing cryptocurrency to support its missile development program."

Should kinetic war turn irregular, watch the blockchains for insight into both sides' logistics.