The war in Ukraine will continue to dictate Europe’s prospects in 2023. It will shape local and EU politics, energy security, industrial policy, and international relations. In this article, we outline our expectations for the next phase of the war and offer an optimistic prospect for peace negotiations to lead to a cessation of hostilities in the second half of the year.
Much has happened in recent weeks in the Russia-Ukraine war. The United States has raised the prospect of negotiations, the Russian military left Kherson, emboldening Ukrainians, while a missile killed two in Poland highlighting how easily the war could escalate beyond Ukraine. Expectations are rising that Ukraine is now more willing to sit down for talks given the US change in rhetoric and Russia’s destruction of critical infrastructure ahead of the cold winter months.
Despite these developments, we are not changing our assumptions for the war. Risks remain tilted to the downside, as most scenarios lead to a negative outcome for Europe (in combination a 60% likelihood). Despite the downside pressures, it remains our base case expectation -- at 35% likelihood -- that a ceasefire in 2023 (most likely towards year-end) could lead to an end of the war. Our rationale is that:
- Western support should wane, as the public in Europe and the United States feels a greater economic squeeze next year, causing policy makers to pressurise Ukraine to seek negotiations. These pressures will increase throughout 2023.
- Ukraine will want to fight to regain territory for as long as possible; it will not stop before Western support actually begins to decrease or before it is militarily exhausted.
- Ukraine will only agree to negotiate if NATO offers sufficient security guarantees to deter Russia from launching a new attack after refuelling following a ceasefire. Because the West will be keen to see the conflict end, we expect the West will be willing to grant Ukraine sufficient guarantees. On the Russian side, Russia will have been able to gain and defend some territory beyond the 24 February battle line to be able to claim victory domestically, but it is militarily too exhausted to gain more territory.
The next most likely scenario is a conflict that lasts for several years. Recent signs out of Russia give the impression that Russian President Vladimir Putin is preparing for a long war. The school and University curriculum were amended to include military training and to create a pro-Russian narrative around the need for and goal of the war:
- For this scenario to materialise, both sides would need to be able to keep up the war effort over time with differing levels of intensity.
- Even if Ukraine’s military support weakens, the country can sustain an insurgency, as its fighters are better trained compared to less motivated Russian recruits.
- Russia still has significant resources for mobilisation and can reposition troops from other locations (e.g., Syria, Azerbaijan). Russia may decide to ‘wait’ for Western fatigue in supporting Ukraine to weaken Ukraine’s defences.