Executive Summary:
- The July 23 Manila meeting between United States Secretary of State Marco Rubio and Russian Foreign Minister Sergei Lavrov produced no breakthrough. Rubio admitted that old peace parameters are obsolete, and Lavrov insisted on outdated Anchorage terms.
- Russia moves further from victory each day as Ukraine sustains a Crimea blockade, daily drone strikes on Moscow and refineries, and a new campaign against domestic logistics hubs, while EU sanctions and recession deepen Moscow’s economic strain.
- Ukraine seeks to convert battlefield initiative into negotiating leverage through renewed U.S. engagement, as growing unease among Russian elites and neighbors such as Kazakhstan suggests that Russia’s war against Ukraine looks increasingly self-destructive and unsustainable.
The July 23 meeting in Manila between U.S. Secretary of State Marco Rubio and Russian Foreign Minister Sergei Lavrov lasted only 35 minutes and produced no new momentum, according to the Kremlin (The Moscow Times, July 23). The meeting marked an important turn in the negotiation process, however, as Rubio stated that previous peace parameters had become irrelevant and that new ideas were needed (Kommersant, July 23). Lavrov offered none, instead insisting that the understandings allegedly reached between Russian President Vladimir Putin and U.S. President Donald Trump at the August 2025 Anchorage summit remained valid (Izvestiya, July 23). Follow-up Kremlin messaging held that Russia remained committed to achieving a complete victory in its “special military operation” (SVO), placing responsibility for new proposals on Washington (see EDM, June 20; RIA Novosti; RBC, July 24). Russia moves further from victory each day, while new dynamics are generated not only by Ukraine but also by its European and U.S. partners.
Kyiv continues to reshape the battlefield by ensuring that Russian attacks through the “kill zone” yield minimal territorial gains at enormous human cost (Mediazona, July 17; The Insider, July 24). Ukraine maintains its blockade of Crimea, where electricity and water remain scarce, and sustains daily drone flights over Moscow. These strikes have become frequent enough that one Su-57 fighter was reportedly downed by “friendly fire” from an extra-vigilant air defense system (Important Stories, July 23; Krym.Realii, July 25). Ukrainian drone strikes have also targeted Russian oil infrastructure, with refineries as far away as Tyumen erupting in flames and worsening fuel shortages (Meduza, July 25). A separate campaign against logistics hubs belonging to the online retailer Wildberries in Moscow, St. Petersburg, Krasnodar, Yekaterinburg, and other major cities caught Russia off guard (Meduza, July 24). Official media downplay these hits, yet many commentators and jingoist bloggers voice alarm that these high-impact attacks are hitting the wallets of millions of consumers (Rossiyskaya Gazeta, July 23; TopWar.ru, July 25).
These Ukrainian measures, often described ironically as “kinetic sanctions,” are reinforced by European economic pressure. The European Union approved its 21st package of sanctions on July 23, targeting Russian refineries, military enterprises, and vessels linked to Russia’s shadow fleet (Forbes.ru, July 23). Russian commentators initially focused on disagreements over the package’s contents and predicted that EU High Representative for Foreign Affairs and Security Policy Kaja Kallas would fail to secure tougher measures. They have since shifted toward minimizing the significance of restrictions whose scope is unprecedented (Izvestiya, July 23). The European Union aims to prevent any increase in Russian export revenues, particularly amid new spikes in oil prices caused by escalating hostilities in the Persian Gulf region (Kommersant, July 24).
The tightening EU sanctions regime is hitting Russia hardest amid a deepening recession that even the Russian Central Bank’s limited interest rate cut cannot reverse. Losses among major online retailers threaten to add further pressure to an already weakened economy (The Bell, July 24). Massive military expenditures have contributed to a growing fiscal crisis, one of the main drivers of the downturn, leaving government “technocrats” unable to control the budget deficit (Nezavisimaya Gazeta; The Insider, July 21). Official economic data remains scarce and subject to manipulation, though a new surge in capital flight is unmistakable and the consumer confidence index has registered a sharp decline (Levada Center, July 14; The Moscow Times, July 22).
Ukraine seeks to convert its battlefield initiative into diplomatic leverage, making continued European engagement important and the U.S. channel crucial. On July 22, the day before Rubio dismissed Lavrov’s appeal to return to the Anchorage understandings in Manila, Ukrainian President Volodymyr Zelenskyy spoke by phone with U.S. special envoys for peace missions Steve Witkoff and Jared Kushner, whose visit to Moscow remains long awaited (Radio Svoboda, July 22; The New Voice of Ukraine, July 23). That call prepared the ground for Zelenskyy’s trip to Washington on July 28, where he is expected to discuss new peace-deal parameters with Trump at the White House and attend the funeral of late U.S. Senator Lindsey Graham (Kommersant, July 23; RIA Novosti, July 25). Graham, who passed on July 11, co-authored the sanctions’ expansion resolution against Russia now awaiting approval in Congress, a measure that could give Trump additional leverage over Moscow (see EDM, July 13).
Unexpected support for the peace process came from Kazakhstan President Kassym-Jomart Tokayev. He used a face-to-face meeting with Putin to urge a freeze in hostilities, a rare public appeal whose underlying motivation Astana has not disclosed (Meduza, July 25). The Kremlin swiftly rejected the appeal, yet Tokayev spoke for a growing constituency among Russian elites who see the need to end the war, since staying on Putin’s course means edging closer to a disaster each day (Carnegie Politika, July 21). Analysts increasingly view the war of attrition as unwinnable and self-destructive for Russia’s economic foundation and societal cohesion (Re: Russia, July 22). This trajectory worries Russia’s closest neighbors, such as Kazakhstan, and its key strategic partner, the People’s Republic of China, which profits from Russia’s economic dependency yet remains wary of an uncontrollable escalation into chaos (Riddle, July 22).
Neither domestic nor external pressures have yet forced Moscow to compromise despite Putin’s position being weaker than his public resolve suggests. His inner circle can dismiss calls for new ideas only at increasing cost. Battlefield losses, refinery fires, and a shrinking economy continue to erode the propaganda narrative that sustains the war at home, even as state media downplays the damage. U.S. and European mediators also face a significant obstacle because Moscow views them as extensions of Kyiv rather than neutral brokers, limiting their ability to translate growing Russian war-weariness into a negotiated settlement. Any agreement will likely fall well short of Putin’s original war aims. Prolonging a war Russia can no longer win outright may prove even more costly, making a reluctant compromise Moscow’s least damaging option.
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