Kangaroo Tribe.

Groundhog Day.

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1. The European Central Bank has refused to backstop a €140 billion payment to Ukraine, dealing a blow to an EU plan to raise a “reparations loan” backed by frozen Russian assets. The ECB concluded that the European Commission proposal violated its mandate, according to multiple officials, adding to Brussels’ difficulties in raising the giant loan against Russian central bank assets immobilised at Euroclear, the Belgian securities depository. It comes amid pressure on the EU to finance Ukraine for the next two years, as Kyiv faces a cash crunch amid a renewed Russian military onslaught and a US peace initiative. (Source: ft.com)

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2. US envoy Steve Witkoff is traveling to Moscow to meet with President Vladimir Putin, who claimed a key Ukrainian city had fallen to Russia on the eve of talks about a potential peace plan to end his war. Putin said Russian troops had taken the city of Pokrovsk in Ukraine’s eastern Donetsk region in a video announcement posted late Monday by the Kremlin, an advance that would be Russia’s most significant on the battlefield in nearly two years. Ukraine’s Military Staff spokesman Bohdan Senyk denied its forces had lost the city in a message early Tuesday. (Source: bloomberg.com)

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3. The Wall Street Journal:

Putin knows he can’t defeat NATO in a head-on fight, especially given how badly the war in Ukraine has gone for Russian forces. His only hope is to defeat it politically by undermining its cohesiveness, which he tries to do all the time, said Ed Arnold, a former British army infantry officer who specializes in European security analysis for the RUSI think tank.

The U.S.’s latest peace plan would go a long way toward dividing NATO, by proposing what would amount to an amnesty for Russia for the invasion, allowing it to re-enter the G-8 club of rich countries and pursue joint economic development plans with the U.S. in areas like the Arctic.

“That would create huge divisions within the trans-Atlantic partnership,” Arnold said. “Politically, Russia is on the cusp of winning.” (Source: wsj.com)

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4. In a scene reminiscent of the film “Groundhog Day,” the U.S. Navy has canceled the Constellation-class frigate program, with only the first two ships, which are already under construction, scheduled for completion. The program was terminated due to production delays, escalating costs, and design challenges stemming from adapting a foreign design to meet U.S. requirements. The funds from the canceled frigates will be reallocated to other ships that can be produced more quickly. The Constellation-class frigate program was intended to be a “low-risk” approach, basically a slam-dunk to building a new frigate, but it underwent significant changes to its Italian FREMM-based design, making it heavier, more expensive, and less aligned with its original blueprints. And like the Zumwalt-class destroyer, the ill-fated Littoral Combat Ship, and others, the entire process of trying to merge a design with the cost of building a ship has completely gone off the reservation. (Source: nationalsecurityjournal.org)

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5. China’s drive to build a modern, high-tech military is increasingly undermined by a widening corruption crisis that is raising doubts about its true strength. This month, the Stockholm International Peace Research Institute (SIPRI) released a report mentioning that China’s major state-owned defense firms suffered the steepest downturn among the world’s top arms producers in 2024, as corruption scandals rippled through the sector and disrupted procurement. According to the report, arms revenues of the eight Chinese companies on the list fell 10% to USD 88.3 billion, the sharpest decline of any country, dragging down overall regional performance. (Sources: sipri.org, asiatimes.com)