Estonia’s top military commander said fresh intelligence on Russia’s ability to produce ammunition and recruit troops had prompted a re-evaluation among Nato allies and a spate of warnings to prepare for a long-term conflict.

Russia’s war in Ukraine is intensifying an acute deficit of workers that’s hitting businesses from metal refineries to posh Moscow restaurants and igniting a race to increase salaries that threatens the Kremlin’s ability to replenish the armed forces.

Russia says Ukraine downed plane carrying 65 prisoners for swap

Russia accused Ukraine of shooting down a military plane it said was carrying 65 Ukrainian prisoners for an exchange.

The IL-76 aircraft crashed in Russia’s Belgorod region on Wednesday, killing the prisoners as well as six crew and three Russian soldiers on board, the Defence Ministry in Moscow said. Russian radar systems tracked the launch of two surface-to-air missiles from the nearby Ukrainian region of Kharkiv, it said. 

Officials in Ukraine haven’t commented on the Russian allegations so far. The Ukrainskaya Pravda news website reported that Ukraine’s armed forces believe the plane was carrying a consignment of S-300 air defence missiles.

A senior Russian legislator, Andrey Kartopolov, head of the defence committee, earlier told the lower house of parliament that Ukraine shot down the plane using either US Patriot or German-made Iris-T missiles. A second IL-76 plane with another 80 Ukrainian prisoners on board turned around and escaped attack, he said.

An investigation team was sent to the crash site, the state-run news service Tass reported, citing the Russian Defence Ministry.

A prisoner swap on the Ukrainian-Russian border was planned for Wednesday, and the Ukrainian side knew the prisoners would be brought by military aircraft to Belgorod’s airport, the ministry said. Ukrainian officials confirmed a prisoner exchange had been scheduled to take place that day.

Ukraine’s Coordinating Headquarters for the Treatment of Prisoners of War said on Facebook that it was “gathering and analyzing all necessary information”. Dmytro Lubinets, the Ukrainian ombudsman, urged against “premature assumptions” in a statement on Telegram.

Ukraine and Russia exchanged almost 500 prisoners earlier this month, the largest swap since the February 2022 invasion began. Ukraine handed over 248 Russian prisoners for 230 Ukrainian servicemen and civilians, according to announcements by both sides that also highlighted mediation by the United Arab Emirates in the negotiating process. 

Nato has underestimated Russia’s war machine, says Estonia

Estonia’s top military commander said fresh intelligence on Russia’s ability to produce ammunition and recruit troops had prompted a re-evaluation among Nato allies and a spate of warnings to prepare for a long-term conflict. 

Martin Herem, the commander of the Estonian Defence Forces, said predictions that Russian forces would reach the limits of their resources had not come true. President Vladimir Putin’s military had the capacity to produce several million artillery shells a year, far outstripping European efforts, and can recruit hundreds of thousands of new troops, he said. 

The general from Estonia, which shares a nearly 300km border with Russia, joins a growing number of North Atlantic Treaty Organization military chiefs who have warned over the past month that the alliance should prepare for a war footing with the Kremlin. Herem referenced an earlier estimate that Russia could produce a million artillery shells a year. 

“A lot of people thought they couldn’t go beyond that — today, the facts tell us otherwise,” Herem said in an interview in Tallinn. “They can produce even more — many times more — ammunition.” 

Almost two years since Putin ordered the invasion of Ukraine, Nato leaders are bracing for a long conflict as Kyiv’s counteroffensive has fallen short of its objectives and troops are dug in along a 1,500km frontline stretching from the eastern Donbas region to the mouth of the Dnipro River in the south. 

Estonian intelligence has predicted that Russia would need three to five years to rebuild its military machine enough to pose a direct threat to Nato. But the Baltic region’s proximity and increasingly bellicose rhetoric from Moscow have raised concerns about military readiness.  

The remarks by the Estonian military chief offer a gloomier outlook than that of the country’s prime minister, Kaja Kallas, who told Bloomberg this month that Ukraine still has a path to defeat Russia if allies contribute a chunk of their economic output to Kyiv. 

“If we do things right, then there’s no point in those grim predictions,” Kallas said in a 16 January interview.

Read more:

• Ukraine Allies Have to Outspend Russia to Win War, Estonia Says
• EU Says Very Unlikely It Will Meet Ammunition Pledge to Ukraine
• Ukraine’s Struggle for Arms and Attention Gives Putin an Opening

While he doesn’t see Russia as a direct threat “today or tomorrow”, Herem said the risk for Nato could rise to a critical level once Russian resources were freed up from the campaign in Ukraine. It would be in a position to engage in smaller-scale aggression, he said.  

“One year is enough for them to do something horrible in our direction,” Herem said. 

Zelensky seeks to ease tensions in spat over business crackdown

President Volodymyr Zelensky promised Ukrainian companies better protection from the pressure of corruption investigations as he sought to reassure angry business owners, even as he warned them to pay their taxes. 

Business executives have increasingly complained of overreach by authorities, an issue that culminated in the detention of investment banker Igor Mazepa on 18 January on charges of real estate violations. Mazepa alleged that he was held in retribution for speaking out about corruption in law enforcement. 

“The state will fulfil its part of the moral contract with business,” Zelensky said in his regular video address to the nation on Tuesday night. “It is important that every business in Ukraine also fulfils its part of the agreement: business pays taxes, operates legally, respects its employees — and definitely does not work with Russia.”

The government would propose amendments to existing laws “to minimise the potential for any possible pressure” on legal businesses, including from investigators, Zelensky said. The National Security and Defence Council, a coordinating body that includes Zelensky, floated a three-month moratorium on any legal proceedings which result in a company halting its operations, he said. 

Mazepa was released on Tuesday on bail, which was reduced to 21 million hryvnia ($560,000) from 349 million hryvnia, according to Anna Diakonova, a spokeswoman for his company Concorde Capital. 

Russia’s war fuels a wage spiral that threatens army recruitment

Russia’s war in Ukraine is intensifying an acute deficit of workers that’s hitting businesses from metal refineries to posh Moscow restaurants and igniting a race to increase salaries that threatens the Kremlin’s ability to replenish the armed forces.

The competition for employees has pushed wages up at a double-digit pace and made once-relatively lucrative military service less appealing, even after a 10.5% increase in monthly pay to fight in the war last year. Specialists such as engineers, mechanics, machine operators, welders, drivers and couriers can now find jobs with salaries comparable to or greater than in roles with the army after compensation for such work rose by 8%-20% last year, according to data from local recruitment service Superjob seen by Bloomberg. 

For a period after Putin ordered a mobilisation in 2022 for the war, companies lost employees to the army and defence plants, which offered much higher wages than even the most generous civilian factories. Then, private sector salaries began to rise in response, and many companies regained their competitiveness. 

Now, there’s competition within civilian sectors. Industrial facilities vie for workers as openings for couriers and security guards offer top salaries that match those in factories, but with far fewer job-related responsibilities, a top executive at one of the biggest metals and mining companies said, asking not to be identified because he’s not authorised to speak to the media. The result is that today’s labour shortage is unlike any seen before, he said.

The Russian economy needs a record 2.3 million workers, Federal Statistics Service data published at the end of December show. At the same time, Russia’s unemployment has plunged to a historic low of 2.9%. DM