Bakhmut point: Ukraine readies a counter-offensive

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Hello, and welcome to the Intelligence from the Economist. In London, I'm Jason Palmer, and in.

New York, I'm John Fassman. Every weekday we provide a fresh perspective on the events shaping your world.

Being on a company's board of directors has long been seen as a cushy gig, a fat paycheck for just a few meetings a year. The reality is increasingly different. Boards are busier than ever and harder than ever to fill with the skills they need today.

And Antonio Vivaldi was among the most prolific classical composers of all time, churning out more than 500 concerti. Most have fallen into obscurity, but we'll tell you how one of his compositions became ubiquitous. First up, though. In recent weeks, two stories have dominated coverage of the war in Ukraine. The first is Bakhmut, a city at the edge of the Donbass region that once held 70,000 people, but has been almost entirely flattened by Russia's seven month effort to capture it. The Kremlin now claims to have the city surrounded overnight. Ukraine's president, Volodymyr Zelensky, said that his soldiers would continue to defend Bakhmut and that no part of Ukraine would be abandoned. The second is tanks, which types the west is sending how many and when. Both stories are important. Ukraine needs more and better tanks and Bakhmut's fall would be an important symbolic victory for Russia. But behind these stories lies a bigger and more important one of a new phase in the war that could begin with the spring thaw.

In the last few months, everyone has been obsessing over tanks, and I think that has led people to get distracted from a much deeper shift that is occurring in terms of military aid to Ukraine.

Shashank Joshi is the Economist's defense editor.

We are seeing in the last few months a huge influx of Western arms to Ukraine and a sense in the US and in Europe that the next couple of months are going to be decisive in terms of sustaining and enabling a Ukrainian counteroffensive to take back territory. We still have a Ukrainian army that is dominated by Soviet legacy equipment, but the balance is steadily shifting towards more and more Western kit, one that will have a really significant amount of NATO standard weaponry. And the hope is that that's going to enable a Ukrainian breakthrough perhaps as soon as next month.

So let's start with tanks. You say they're just one part of this, but they're still an important part.

No, they are a key part, John. Yeah, I mean, you know, look in terms of things that are very mobile, that have lots of protection and have a big gun, so lots of firepower, the tank is the only thing on the battlefield that combines all of those different elements. And tanks were critical to Ukraine's offensive in Kharkiv Province, for example, last year. So it is significant that now we have seen Germany agree that it will be sending its own Leopard tanks. That has unlocked the movement of tanks from other countries. Not all of it is going to arrive in time for a spring offensive. But clearly Ukraine is in a much better position now than it was back in the autumn when it was conducting its offensives in Kharkiv province.

And tell us about the strategic shift beyond just tanks.

Well, what's happened is that sometime in December, the US and UK realized that Russia's offensive potential was so limited and its battlefield position so precarious that Ukraine would have a window of opportunity to strike in the spring. And what we saw was a turning point on January 20, when a group of defence ministers from countries supporting Ukraine met at America's Ramstein Air Base in Germany, and they basically agreed a big influx of kit that they were going to send to Ukraine. I was told that if you tally up everything that was agreed, you were looking at somewhere along the lines of about two thirds of everything that was sent to Ukraine in all of 2022. So that's a huge amount. So I think what's very clear is that there's an effort to kind of concentrate this aid rather than trickle it out week by week, month by month, to give Ukraine what it needs to make major gains in the spring. So in other words, not just giving it enough to stay in the fight hand to mouth, but giving it enough to really make a difference on the battlefield and shock the Russian system into a change of approach.

And so that's the goal, and it's a medium term goal. I wonder if we can focus on the immediate for a bit. What kind of impact has this torrent of Western weaponry had so far in Ukraine's army?

Well, I have to say it's been fairly limited. And that's because Ukraine is holding lots of its best forces back. You know, John, our colleague Arkady Ostrovsky spoke to General Valery Zaluzhny, the commander in chief of Ukraine's armed forces, back in December. And I really remember Zaluzhny's words. He said, may the men in the trenches forgive me, I'm gonna hold back these resources for the bigger fight coming next year. And do you know what, by and large, he's done that. If you look at this really brutal fight in Bakhmut, which is this town in Donetsk Province that has become the focus of the Russian campaign, Bakhmut is under serious pressure. Some people think it's going to fall in days, if not weeks. But what Zaluzhny has done is avoid committing his reserves into that fight to try and hold them back for a counter offensive. And so he has been holding back these reserves, allocating some of them to training in Germany, where the US Is leading what we would call combined arms training. That is not just training about how to point a rifle, how to drive a vehicle, how to put a bandage on, but actual sophisticated, complex offensive operations, synchronizing infantry and artillery. And that training has been going on since January. And the hope ultimately is that Zaluzhny will have this reserve force that he can then throw into action in the spring at a time when the Russians will be completely depleted and exhausted from. From their offensives in Bakhmut and other places in the east.

I wonder if you can go into that in a bit more detail. Tell us about the meaning of Bakhmut for each side. Why is Russia putting so much focus on taking this town?

Well, it's become significant for lots of reasons. One of them is that it's a town in Donetsk Province. And Vladimir Putin wants to say that he has taken all of Donetsk province. He wants to say that because that's what he needs to do, to say he's taken the entirety of the Donbas region, which is one of his stated aims of this campaign. Never mind that he is destroying his army in the process of taking this. Never mind that he is suffering eye watering casualties. This has become the talismanic aim for the Russians. It's important for the Ukrainians too, Because look, no civilian leader wants to give up Ukrainian territory. And so Ukraine has been defending this to the very end. But from the Ukrainian perspective, defending it has also been worthwhile from a attritional perspective because the Russians have been suffering so many more casualties in attempting to take it than the Ukrainians. And so effectively you are wearing down the Russian force, making them more vulnerable for the offensive that may come.

And so let me ask one last question. Give us a realistic, best case scenario for each side in the coming months when Ukraine begins its offensive. What can each side realistically hope to achieve?

At best, I think Russia can realistically hope to take Bakhmut and perhaps try and plow on a little bit, hoping not to make significant breakthroughs, because I don't think they have enough for that. But to try and get the Ukrainians to commit some of these reserves that we've been talking about, to try and get them to use up some of the stuff that they would want to hold back for the spring, that would count as a success for the Russians, in my view. For the Ukrainians, I think the challenge is to avoid doing that. And it is to hold back as much as they can, to be patient, to wait for the weather to be favorable to an offensive, to wait for the Russians to hit their lowest point, to be running extremely low on ammunition, completely exhausted, and then to strike. We don't know where they will strike. I think the likeliest geography is the south of Ukraine. And I think the likeliest outcome with a high degree of uncertainty is that Ukraine is going to be able to take back significant amounts of territory, but considerably short of being able to restore the pre war front lines, that is the lines that prevailed on February 24th of 2022. But to me, that would be a big deal in itself because what it would do is that it would quash all of this kind of fatalistic gloomy talk that has been building up over the last few months, that the war is in a stalemate, that Ukraine is stuck, that it'll never be able to get the Russians out. I think that there is a real opportunity here with all of this equipment, with all of the training and with all of the Russian weaknesses to prove that that is just not the case.

All right, Shashank, thanks so much for joining us today.

Thanks very much, Sean.

And Arkady Ostrovsky, our Russia editor who Shashank mentioned, is the host of our new podcast, Next Year in Moscow, which looks at the war through the eyes of those Russians who have exiled themselves from their country. The first two episodes are available to download now, and it's a terrific listen. I can't recommend it highly enough.

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This is Corporate meltdowns like FTX show the importance of having a strong and independent board.

Vinjeru Mkandawirre is our Global Property correspondent.

Historically, corporate board seats have been seen as the cushiest gigs in business. Board members were often friends of managers or other people already on the board, and they were paid quite a lot to attend a few meetings a year, but otherwise they mostly left management to run the show. Today, boardroom expectations are considerably higher and board members are dedicating more hours to the job. And so the job description of a company director is changing accordingly.

So tell me about the new job description then. What is expected of board members now?

Well, board members are doing quite a bit more work these days. They're increasingly expected to be able to help bosses navigate crises and challenges. And that includes things like the war in Ukraine, the return of high Inflation and the aftermath of the pandemic. There are also stricter corporate governance rules these days that have forced company directors to be more accountable. Over the years, for example, all sorts of new legislation has increased requirements for financial record keeping and reporting. In addition, board members are more likely to be compensated in stock, and so their incentives are now more similar to other shareholders. So ultimately, the success of the company determines how much money they'll make. And so the fact that the job is now more demanding has changed. Who is seen as being best suited to serve on a board?

So who does that look like now?

There's a lot of demand for board members with expertise in specific areas because of COVID knowledge of supply chains, for example, became seen as desirable or insight into China, given the rising US China tensions, or AI, and even esg, which stands for environmental, Social and Corporate governance. Historically, boards have been mostly white men from similar backgrounds. And that's a problem because it can lead to groupthink, which we know makes governance less effective. And so there's also demand for women and people from underrepresented ethnic minority backgrounds. What was interesting when I started looking into this topic is that many board members actually think that their peers lack the skills needed for the job.

How so? How are they not up to the task?

Well, PwC, one of the big four accounting firms, surveyed more than 700 public company directors in America last year. And they found that less than half of them thought their peers had a good enough grasp of ESG issues or cybersecurity. And nearly one in five said that their peers were reluctant to challenge management, which is arguably their most important job. Another concern has been that boards aren't replacing company CEOs as often as they used to, even if the CEOs are underperforming. And we know that early on in the pandemic, directors avoided replacing CEOs because there was so much uncertainty. The trouble is that this reluctance to dismiss CEOs is continued because of new sources of uncertainty, like the war in Ukraine. As a result, directors are promoting company insiders to the CEO role at a record rate.

So if these boards are underperforming even in the estimation of some of the people on these boards, what's to be done?

Bringing in new blood would be a good start, but this is often difficult to do. Historically, low turnover on boards means that there's often little room for newcomers. And few companies impose term limits on directors, so some members stick around. For decades, Charlie Munger, who recently turned 99, has been on the board of Berkshire Hathaway since 1978. And where there are openings, it's hard to find candidates with in demand expertise like AI or esg.

Why, though? Why are those skills so hard to come by?

Well, these are relatively new areas of expertise, so companies are often fishing in the same talent pools. The result is that boards are getting more expensive to recruit and more incestuous. 65% of S&P 500 non executive directors sit on at least one other board and 1 in 10 sits on at least three. Experienced directors who aren't white or male are in especially high demand. I interviewed Moni Mannings, who's a former lawyer and she's held non executive positions in firms on both sides of the pond. And she said that she was inundated with calls from recruiters in the months after the murder of George Floyd, which happened to coincide with the five year Parker review into boardroom diversity of UK companies. So the FTSE companies in Britain and both of these events sparked a major hiring boom for directors from ethnic minority backgrounds. So moving forward, recruiters are trying to cast their nets more widely. They'll probably have to spend longer on recruitment for board members and in the meantime, current board members will be busier than ever.

Benjeru, thank you very much for your time.

Thanks for having me, Jason.

These days we hear Vivaldi's Four Seasons everywhere. They're on mobile phones, they're in elevators and hotel lobbies as music. And of course, they're the extremely annoying snatches that you get when you're waiting to talk to a human being and on hold to some service provider.

Boyd Tonkin writes about music for the Economist.

Vivalda's Four Seasons are perhaps the best known pieces of classical music in the world. Of course, there's nothing natural in this state of affairs. It came about almost because of a collection of accidents. This year may be the 300th anniversary of Vivaldi finishing the Four Seasons. We don't know for certain, but 1723 is a perfectly plausible date. This is music that has become, whether you like it or not, the soundtrack for everybody's lives. And the story of how it got to this weird position is, I think, very interesting. Vivaldi was an incredibly prolific composer. He wrote around 500 concertos for many different combinations of instruments. The Four Seasons are violin concertos, and in fact, they're part of a series of 12 called the contest Between Harmony and Invention. He was very much a jobbing musician. He spent a lot of his career working, in fact, as music director at a girl's orphanage in Venice, La Pieta. And it's possible, although no one really knows, that the Four Seasons were written for a star violinist at La Pieta, a young woman called Anna Maria. This, I have to emphasize, is speculation, but if true, it's quite a revealing and interesting indication of how seriously Vivaldi took his work at the orphanage. Initially, the Four Seasons was popular and it attracted a lot of attention. After all, here was quite a radical programmatic description of nature in all its moods, and not many composers had attempted that before. People borrowed from it. You'll even find a snatch of spring in one of J.S. bach's cantatas from the next decade. But then, in the 19th century, Vivaldi's name really fell from grace. And the Four Season entered a fairly long period of obscurity, which only really started to end at the very end of the 19th century. By the early 20th century, Vivaldi was beginning to be a name to conjure with again. There was a big rediscovery of Vivaldi manuscripts in Italy in the 1920s, and this snowball gradually began to roll. There was a Vivaldi Week in Siena in 1939. And then in 1942, you have the first ever recording of the Four Seasons by an Italian conductor called Bernardo Molinari. The trouble is that there was a certain, let's say, questionable element to this revival, in that Molinari had dedicated his transcription of Four Seasons to Beniti Mussolini, the Italian dictator. So you had a Vivaldi revival starting to get going, but at some level it was a bit tainted by fascism. Well, the trouble with this level of familiarity is that it does tend to breed, if not contempt, then a certain weariness. What's happened, I think, is that people have gotten what a revolutionary work it is. It has this brilliant series of depictions of nature, of every mood, of climate, from gales to downpours to snow to sultry summer heat. It has these extremely witty accounts of natural sounds, of birdsong. Above all, it has tremendous dramatic changes of pace and of mood and of colour. And I think his operatic flair and his sense of theatrical contrast is always at work. So there's a perpetual sense of action and movement. And, of course, there is the sheer harmonic brilliance of his own composing, which is very, very virtuosic and still, of course, completely enchanting to contemporary listeners.

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