Support systems: allies debate Ukraine’s tactics

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Of $45 for a three month plan equivalent to $15 per month. Required new customer offer for first three months only. Speed slow after 35 gigabytes. If network's busy, taxes and fees extra. See mintmobile.com. Hello, and welcome to the Intelligence from the Economist. I'm your host, Ore Ogumbi. Every weekday we provide a fresh perspective on the events shaping your world. It used to be that how Americans felt about their economy determined how they spent their money. But not anymore. Pessimism about the future isn't stopping the spending and it's leaving forecasters rather puzzled. And have you been watching the Rugby World Cup? If you're familiar with the sport, you'll know of New Zealand's historic dominance. They were world number one for almost 15 consecutive years. But this year, something's off. But first, Around this time last year, Ukrainian troops amazed the world with a fast and powerful counteroffensive. Ukrainian forces are on a roll.

Russia's front line quite literally crumbling, capturing.

Equipment and cutting Russian supply lines.

And the operation is ongoing around cities including Izium, Balakliya and Kupenses and recaptured more than 3,000 square kilometers of territory.

So expectations were high coming into this summer based on last autumn's success and the eventual liberation of Kherson. And yet progress this time around has reduced from liberations of one city after another to advances of mere square meters or kilometers of countryside. Top Ukrainian defense official claims their forces.

Have liberated about 20 square kilometers of suburbs around Bakhmut from Russia.

Ukrainian forces are running out of time to make substantial gains this year as the summer winds to a close and the wet season nears. As we heard from President Volodymyr Zelenskyy earlier this week on the show, this slow success on the battlefield could be used by some allies to hold back the financial and military aid that has been flowing so freely.

Reading, hearing, listening and seeing their eyes which say that we'll be always with you, but I see that he's not or she's not, or they are not here now, not with us.

So what's on the minds of Ukraine's closest supporters?

Since the beginning of the year, American and British officials have been working really closely with Ukraine in preparing for the big counteroffensive that was launched in June.

Shashank Joshi is the Economist's defence editor.

They provided intelligence and advice. They, they helped design and train the brigades that received lots of Western tanks and other equipment. They've been working hand in glove. But I think there are also some emerging divisions over the summer over precisely how the counteroffensive ought to progress and whether Ukraine is on the right path.

Shashank, what are they squabbling about?

There's a lot of divisions, I think, as there tend to be in any big war involving allies. One point of contention is over where Ukraine is focusing. Should it focus on the east or the south? Another one is about Ukraine's level of aggression. You might say whether Ukrainian commanders have been overly risk averse at times this summer. And third, perhaps the most important debate is over Ukraine's tactics, whether they can aspire towards a Western way of war, what we call combined arms manoeuvre, or whether they need to carve out their own path. You know, these kind of debates do happen in war. I can give you numerous examples from the Second World War, the Gulf War, Kosovo in the 90s. But I think they've spilled over into the press in a slightly unseemly way over the last couple of months.

Okay, so you said there's lots of different debates. Let's start with the where. Why are they debating the location of the counteroffensive?

The focus of the counter offensive, as most of your listeners will know by now, is in the south of Ukraine. But before the offensive began, Ukraine was defending the eastern town of Bakhmut. And that was a controversial decision because many people said Bakhmut is not a strategic town. You are wasting your troops here. You're wasting some of the ammunition they should have saved up for the offensive. But perhaps more importantly, Ukraine's best brigades were fighting in the east. And so when it came to training up the force for the offensive, it was the least experienced brigades, the ones with the newest troops and the newest commanders who were given things like German tanks, British tanks, American armoured vehicles. And so there's really two issues. One is that Ukraine split its forces between the east and the south, although of course Ukrainian generals angrily defend their decision. And the other problem really is whether this might have gone differently had the more experienced brigades been the ones who were operating NATO weapons.

And has that now been resolved? Is there a new approach?

Well, some things have changed. Ukraine probably has moved some forces from the east to the south, so has Russia. And we're certainly seeing Ukrainian brigades learn lessons. The most important one is that they held back lots of their vehicles, their tanks, their heavy armour because they just couldn't get past the minefields. They were getting struck by artillery, struck by anti tank weapons. And so what's happening now is you're seeing very small units, sometimes as small as platoons, basically clearing minefields by hand, moving on foot, fighting tree line to tree line in a way that is a real throwback in tactics. The upside of all of that, ori, is that Ukraine's limited its losses of men and equipment, so it's conserving the force. The downside is that this is really slow progress. You're moving at the speed of human advance. That gives the Russians time to reset their defences each time you move forward. And that, I think has prompted a couple of other debates. One of them over whether Ukrainian commanders have been bold enough, and the other one more broadly over whether Kyiv's approach needs to change or whether this is sustainable to keep doing over the weeks ahead.

So tell me about these other debates.

Well, one of them is to say that, look, there are some Western officials who've been arguing if Ukraine had just stuck with larger scale attacks, pushing through more aggressively, yes, they would have taken higher casualties initially, but then they would have had a higher probability of breaking through these three layers of Russian defensive. And they say that would have shortened the offensive, reduced the overall toll. Ukrainian officials say that's just not feasible. They say that, look, we have an army that's made up of teachers, doctors, lawyers, shopkeepers. It's a citizen army. You cannot expect them to go charge into battle mimicking Russian human wave attacks, taking massive losses. The second debate really is about tactics. Western armies love the idea of combined arms. Think about your tanks, your artillery, your infantry, all being synchronised like clockwork as you attack. Ukrainian troops have struggled with that, they have preferred to conduct heavy artillery barrages, first for long periods and then to send in their troops a little bit later, which is a kind of sequential attack. There are many Americans who say that's a Soviet style approach, it's old fashioned, it's wasteful of artillery and it just isn't going to be the way to get through these minefields.

And are they right? Should Ukraine be changing its approach?

I'm sceptical. You know, first of all, American officials haven't waged this kind of war. Most of their recent combat experience has been in mountainous or desert areas where small units can't take advantage of the COVID to advance in this way. And these small unit infiltration tactics, these have a long pedigree. There's also another problem here, which is that Ukraine's army has suffered such bad attrition over the last 18 months. They haven't got this huge stock of junior officers with the experience, the expertise, the initiative to fight in a really sophisticated way. Lots of decisions are thrown up to more senior officers. That's overwhelming some of their brigade headquarters that already have a lot on their plate. All in all, I have to say I don't think Ukraine had a lot of choice to leave the tanks behind, fight through in a kind of smaller dismounted way, and then open up the line slowly and slowly.

And so, Shashank, what does all this mean for the counteroffensive? How is it likely to progress in the coming months?

This is a hugely contentious area. In the last few weeks, Ukraine has made faster progress in the south. It's pierced the first of Russia's three lines. It's attacking the second. Ukraine probably has enough ammunition to fight through the autumn. The weather is maybe going to turn in October or so, and that's when the rain and the mud are going to stop vehicles from advancing. I will say two big things. One of them is that this small unit approach has its limits. Ultimately, Ukraine's probably going to have to deploy its mechanized forces, its armoured forces, if it's going to exploit any gaps in the line. And tactical problems of experience, coordination, being able to suppress Russian artillery, all those problems will come back. The second issue really is just about raw manpower on both sides. Russia is moving its reserves down to the south, so that shows you that they're running out. But Ukraine has also thrown in some of its reserves to keep this attack going. It just isn't clear how much either side has left in the tank. I think the rate of attrition does favour Ukraine over Russia, but I'M not sure it favors them enough to mean that they can attrit the Russians quicker than the Russians can plug holes. And I've been in Washington a couple of weeks ago. I've been having other conversations across Europe in the last week and officials I talk to who are familiar with the battlefield. I have to tell you, they are sceptical that a big breakthrough is going to come before winter. This is going to be a long, long fight.

And we discussed this on Monday's special episode. But it's Is there any suggestion that slow progress might make Ukraine's Western allies less willing to keep up that military support?

The Ukrainians are keenly aware that at each stage in this war, success on the battlefield is what has inspired Western governments to give them the next big cache of arms. So they are worried, I think, that if they don't have something to show for this offensive that it would begin to reinforce, maybe embolden those voices in the west amongst America's Republican Party, for instance, or in European far right circles that say, you know, we've put in billions of dollars, this isn't working. Maybe it's time to negotiate with the Russians. They've got to stave that off. They've got to show that they are in a decent position and they have made decent progress the next few weeks. That's going to be really significant to warding off those doubts in the West.

Shashank, thank you so much for coming on the show.

Thanks very much for having me.

Have you heard we're launching a new subscription next month? It's called Economist Podcasts plus. Don't worry, we're not going anywhere. Everyone will be able to listen to these weekday episodes of the Intelligence. But to enjoy our full offering of podcasts, including our specialist weekly shows like Money Talks or Babbage and our very exciting new show, the Weekend Intelligence. You'll need to sign up if you're already an Economist subscriber. Thank you. You're already covered by your existing plan, but if you're not a subscriber yet, listen up. You can get a year long subscription for half price, about $2 a month if you sign up for economist podcast plus before October 17th. So come on, head to our show Notes to find out more. Since the pandemic, Americans have been feeling pretty gloomy about the economy.

Oh my God. I'm just so shocked this morning that when I passed by a gas station with the price going up again, so very concerned.

Consumer sentiment has worsened, hitting its lowest level in June 2022.

Astronomical hurting our pockets, heading my pockets for real.

You'd expect this to have made them tighten their belts. But unusually, this doesn't seem to have affected how they're spending their money.

Over the past 40 years or so, there's been a really strong relationship between changes in America's economy and consumer sentiment.

James Fransham is a data journalist at the Economist.

Since 1946, the University of Michigan has asked a representative sample of Americans about half a dozen questions about their purchasing habits and their perceptions of the broader economy. So questions like, do you think now is a good time to buy a new tv? And then these questions are distilled into a monthly index of consumer sentiment, which is a closely observed barometer of behavior in America. Because as well as tracking the overall mood music of the economy, this consumer sentiment also follows actual consumer spending, too. And since consumer spending accounts for some two thirds of US gdp, the monthly reading acts as a vital pulse of America's economy. And what is concerning is that in June 2022, this consumer sentiment index fell to its lowest ever level. And though the reading has recovered, by this August, it was still under 70 points, which would kind of normally indicate a recession.

And were economists right to be worried about this big dip in consumer sentiment?

Yeah, so that's a good question and one that we sought to answer with a bit of number crunching. So to do this, we gathered a battery of macroeconomic variables, from inflation to gas prices, unemployment to mortgage rates. And using all these indicators, we built a model to estimate consumer sentiment from 1980 to 2016. And what we found is that our model was pretty decent. So 13 of these variables explained over 4/5 of the changes to consumer sentiment, which is a pretty solid model. The key, however, as any stats nerd will tell you, is how well our model performs out of sample. And so what was interesting is that between 2017 and 2019, so the three years prior to the COVID 19 pandemic, our model was still really accurate in predicting consumer sentiment. But from 2020 onwards, our model, we found, was pretty useless. There was almost no correlation between our battery variables and consumer sentiment. And that's because something happened during the pandemic to send the model haywire. And so our model was suggesting, for example, that in the current macroeconomic environment in America, consumer sentiment should be about 100 points, not the 70 points that the University of Michigan was saying it was. So to see all these charts, you can go to economist.com graphic detail.

Okay, it's good to know that the model didn't just break and actually something happened. James, why should we care about consumer sentiment? Has consumer spending fallen as well?

Yeah, so that's a fair point. And so as you said, it's consumer spending that matters, not this sentiment vibes measure. To find that out, we built a second model using the same battery of variables to predict actual consumer spending rather than sentiment. And what we found, which is really interesting, is that the relationship between those variables and spending was stable once the pandemic began. So that gave us a kind of indication that actually it's the sentiment measure that's going slightly haywire.

So now that this relationship between consumer sentiment and economic health seems to have broken down, what are forecasters looking to instead?

Yeah, so a lot of economy watchers have been really worried about this kind of so called vibe session. And there's a lot of anecdotal and causal explanations that might be going on there, such as the pace of the Fed's tightening, a war in Europe, America's increasingly fractious relationship with China, and of course, another looming election to look forward to in America next year. And to some extent, the low consumer sentiment wasn't really happening in a vacuum. It was also echoed by business too. So mentions of recession during quarterly earnings calls among America's biggest firms was super high earlier this year. It's since fallen somewhat, but it's still cause of concern. And so the concern then becomes, if the average American is saying to researchers at University of Michigan, no, I don't feel like buying a new TV this year, then perhaps that low sentiment will become self fulfilling and a recession will eventually follow. But what we seem to show from our number crunching is that while there's been this structural shift in the relationship between sentiment and the overall economy, Americans have continued to spend pretty normally. So for the moment at least, there doesn't appear to be a cause for concern. So I think if I was a, a macro economy watcher, I was paid day in, day out to do this, I would be saying, I think I'll just tweak my model and I'll create this structural shift at the onset of the pandemic and then recalibrate everything for the past three years. I think what the new equilibrium of sentiment and its relationship with economic variables will be is yet to be tested and trained, as it were, because three years, it's not very much data to assess. But the relationship that really matters is the relationship between the economic variables and consumer spending itself. And as our data demonstrates, that relationship has not broken down. And that is a reason for optimism.

James, thank you so much for joining us.

My pleasure.

This is the New Zealand men's rugby union team performing their haka, a traditional Maori ceremonial dance, before the opening game of this year's World cup in France against the hosts last Friday. The fearsome sight and sound is meant to intimidate opponents. And certainly for a long time, New Zealand have been an unstoppable force in rugby union. The team was world number one for virtually the whole time between 2004 and 2019. But in recent times, the All Blacks hacker has proved somewhat less intimidating. Last week, the players lost their first group game against the tournament's hosts. They'll be hoping to bounce back against Namibia in their second game this evening. But why does the team seem more beatable than it once was?

The New Zealand men's rugby team were. I guess nowadays you'd call them the Goat, the greatest of all time.

Beau Franklin is a digital editor for the Economist.

They've dominated the men's game for decades. In 2015, in the world cup semi final, the coach of South Africa's team described the New Zealand team as the best to have ever played the game. They've won two of the past three World Cups, and under Steve Hansen, who was their coach between 2012 and 2019, they won a crushing 87% of their matches.

That is pretty impressive. Why were they so good?

Well, Steve Hanson, that coach, has to take some credit. His tenure was the country's most dominant period, but he also had some incredibly talented players to work with. New Zealand is obsessed with rugby, and for a country of barely 5 million people, it overachieves massively. That's because players tend to start very young, and the most gifted athletes that the country produces are more likely to play rugby than other sports, such as tennis or cricket.

But I understand their dominance has started to slip. What's changed?

Well, many Kiwis tend to blame the management, which is understandable. Steve Hansen retired in 2019 and his assistant Ian Foster took over. But continuity wasn't the right choice. And under Mr. Foster, they've only won 68% of their games, which is still pretty impressive, but not good enough for New Zealand. So he's going to get booted out in 2024 after this world Cup. But I don't think you can blame the coaching entirely. The country's obsession with rugby has definitely cooled. Interest in other sports has increased. And concerns that you've seen around the world about rugby's physicality, its brutality, especially the rate of concussion, both at the very top of the Game and at the grassroots level has really come to the fore and you can see that in the number of teenagers who are playing the game. According to a government report, the number playing fell by 18% between 2012 and 2022. And then at the top end of the game, you have some of New Zealand's best players, such as Richie Moonga, who's the side staff flyhalf, getting tempted away from New Zealand's domestic league, and that's by bigger money in other leagues. Japan especially is really taken to rugby recently and are tempting players away. And a bit like other countries such as England, if players aren't playing in the domestic league, they're not eligible for their national side. So that means New Zealand's top team is definitely hurting because of that decision.

Now, what about the opposition? Isn't it possible that they've just got a bit better?

Definitely. The All Blacks rivals have improved hugely as New Zealand has plateaued a bit. And that's particularly true for Northern Hemisphere teams. Ireland and France in particular have got much better. There's an economist in New Zealand, Niven Winchester, who's also a massive rugby fan, and he's built a mathematical model to measure teams quality and expected match outcomes. And he's estimated the chances of Australia, England, France, Ireland and South Africa, which are New Zealand's biggest rivals, beating the All Blacks in a neutral venue. In 2016, at the height of New Zealand's powers, the chances of their biggest rivals beating the all blacks was about 10%, so almost non existent today, that's risen to 33%.

So with all this in mind, Bo, do you think that New Zealand can still win the current World Cup?

I think it's important not to exaggerate New Zealand's slide. They're fourth in the world rankings at the moment, which is a slight improvement over last year when they slid to fifth, their worst ever ranking. And they have lost a lot more matches in recent years. But in July, they beat Argentina, Australia and South Africa to win the Southern Hemisphere Rugby Championship. They're still a formidable team and they still went into this World cup as the bookies favourites and Mr. Winchester's model's favourites too. And they can still win despite losing to France in the opening match of this World Cup. So you shouldn't write New Zealand off, but I think the fact that New Zealand's crown has slipped a little bit and the team is becoming more fallible has to be a good thing for rugby as a whole. If the sport wants to attract new fans, it needs to be competitive and unpredictable. And the fact that New Zealand aren't going to walk it this year means that this is definitely the most competitive World cup in a long time.

Beau, thank you so much for joining us.

Thanks, Orey.

That's all for this episode of the Intelligence. The show's editors are Chris Impey and Jack Gill. Our deputy editor is John Jo Devlin. And our sound engineer is Will Rowe. Our senior producers are Rory Galloway and Sarah Larinjuk. Our senior creative producer is William Warren. Our producers are Alize Jean Baptiste, Kevin Kanors. And with extra production help this week from Emily Elias, Benji Guy and Maggie Khedifa. Our brand new assistant producer is Henrietta McFarlane. We'll all see you back here on Monday.