The Ukrainian Sea
NO MORE RUSSIAN LAKE | MOORE'S LAW AND DRONES
Dear BWR Shoeshiners and Barbers!
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“Latin America - US, Russia, and China Battling for Resources and Influence”
We had an excellent turnout. I would also like to thank Mark Sanor, founder of 360 One Firm, for organizing the event, Greenberg Traurig (Miami) for hosting us, John Price from Americas Market Intelligence for assisting in recruiting the finest panelists, and the outstanding panelists for sharing their expertise in the region.
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“Barbershop Whispers….Russia (BWR)” begins with “My Takeaways” on the main topic, followed by a discussion on the main topic. The last two BWR sections are “Follow-ups” on previous publications and “Quick Bites” on emerging events.
In last week’s BWR, I discussed Ukrainian drone attacks and more US sanctions targeting Russia’s energy sector. Drones and sanctions continue to slowly degrade Russia’s economy and Russia’s ability to project power abroad.
In this week’s BWR, I will discuss the continuing evolution and innovation of Ukrainian drone technology and its impact on Russia.
Takeaways
TECHNOLOGY—Drone and autonomous drone navigation system technology developed in real-time has dramatically changed the economics of war. Multi-billion dollar war machines are vulnerable to a swarm of $100K drones.
The Ukrainian Sea
NO MORE RUSSIAN LAKE | MOORES LAW AND DRONES
Black Sea Fleet Neutralized
Last month, Ukrainian unmanned surface vessels (USV) took out three Russian Mi8 helicopters over the Black Sea off the Crimean coast. Two were destroyed, and one was disabled. The Ukrainian-designed and manufactured Magura V5 USVs were armed with and launched repurposed Soviet-era R-73 heat-seeking air-to-air missiles.
This is the first such successful encounter in modern warfare and a game-changer on many levels. The cost-benefit of an $800K USV with a repurposed air-to-air missile (AAM) vs an $8M Mi8 helicopter is economically compelling.
Shortly after the takedown of Russian helicopters, the Ukrainian Centre for Strategic Communication and Information Security (CSCIS) announced a successful Ukrainian Armed Forces (UAF) strike against a Pantsir-S1 ground-based missile defense system. Their announcement on the Blue Sky channel stated,
Only a week after Ukrainian sea drones made history by successfully taking down Russian helicopters, another historical first as our homegrown naval drones are now launching their own FPV drones, destroying Russia's air defense units.
The $15M Pantsir-S1 was disabled by multiple first-person view (FPV) drones launched from a Magura V5 located in the Black Sea. The FPVs also struck targets in Pryvillya, Kherson deep inside Russian-occupied Ukraine.
The precursor to the UAF strike on the Pantsir S1 defense system in late January 2025 was a Black Sea UAF operation in Dec 2024, when six USVs launched multiple FPVs disabling Russian gas rigs in the Black Sea.
Moore’s Law and Drone Technology
Moore's Law observes that the number of transistors on an integrated circuit doubles approximately every two years with minimal cost increase. In the realm of drones and drone technology, we are witnessing advancements occurring even faster than Moore’s Law.
Since the start of Putin’s second invasion of Ukraine in February 2022, Ukraine has been at the forefront of developing cutting-edge drone technology and autonomous navigation systems. What began as makeshift kamikaze watercraft loaded with explosives has evolved into mobile drone-launch platforms capable of striking from anywhere along the Black Sea coast.
These technological developments are changing battlefield warfare strategy and equipment economics. Multi-billion-dollar kits are now vulnerable to a $500K piece of equipment. Another the cost benefit was the takedown of a Russian S-400 and S-300 missile defense system, valued at $1.2B, in Crimea in June 2024.
This left Russian warships exposed to missile attacks in Russian-occupied Crimea. Ukraine has taken out more than 1/3 of the Black Sea fleet by deploying a combination of surface-to-surface missiles and drones - aerial and seaborne. This has forced the Black Sea fleet to take safe harbor on the eastern shores of the Black Sea, thus thereby turning the Black Sea into the Ukrainian Sea.
While drone technology is advancing rapidly, countermeasures and defense systems against drones are also evolving. A prime example is the Turkish-made drone Bayraktar TB2, which played a critical role in the early days of the war. However, due to new air defenses, Bayraktars have become obsolete. The technology life cycle is fast and brief, and while Russians are innovating, they are not doing so as quickly as the Ukrainians. The Ukrainian advantage stems from their fight for survival while they also have the support of the Russian state bureaucracy and corruption hampering Russian innovation. No matter how hard the Russian government tries to drive innovation, the Soviet control mentality will prevail.
Additional Reading(s)
Disruptive Emerging Technology and War (Barbershop Whispers…Russia, 21 Jul 2024)
Russia Energy Sector Under Fire (Barbershop Whispers…Russia, 3 Feb 2025)
Ukraine Claims Its Drone Boats Are Now Launching Kamikaze FPV Drones at Russian Shore Targets (The War Zone, 7 Jan 2025)
Ukraine’s Marauding Sea Drones Bewilder Russia (CEPA, 30 Jan 2025)
Drones in Ukraine: Four Lessons for the West (European Council on Foreign Relations, 10 Jan 2025)
Follow-ups & Quick Bites
Follow-ups
Germany’s Pipe Dream Saga Continues - Repurpose Nord Stream 2
The Swiss bankruptcy court extended the Nord Stream 2 AG (NS2) deadline for settling its debts to 9 May 2025, and some European countries are calling for the restart of Russian pipeline gas to Europe. Meanwhile, the German government is floating the idea of repurposing Nord Stream 2 for the transport of Finnish hydrogen. This would require the construction of a new pipeline to connect with only one of the four intact Nord Stream pipelines that were not damaged by the mysterious undersea explosion that disabled the other three lines.
In January, Denmark granted NS2 permission to mothball the remaining pipeline “to prevent further gas leakage and the influx of oxygen-rich seawater.”
NS2 is a material negotiating chip in the upcoming formal Ukrainian war ceasefire negotiations.
Watch this space carefully.
Additional Reading(s)
Russia’s Gas Monopoly Comes Apart (Barbershop Whispers…Russia, 24 Nov 2025)
Denmark approves preservation work at damaged Nord Stream 2 gas pipe (BNE ItelliNews, 28 Jan 2025)
Inflation Continues to Rise
In a recently release report by the Central Bank of Russia (CBR) titled “What the Trends Are Saying: Macroeconomics and Markets”, the CBR reported annual inflation in December 2024 reached 14.2%. The report also states,
“There are still no signs of a transition to a sustainable slowdown in price growth…”
The Central Bank cited Western sanctions, a disappointing harvest and the RUB’s decline as the key inflation driver.
At its December meeting, the CBR unexpectedly held its key interest rate steady at 21% after CBR Governor Elvira Nabiullina was reportedly pressured by Russia’s elites to not raise rates further.
The CBR will hold its next rate meeting on 14 February 2025.
Additional Reading(s)
The Stagflation Ghost Haunts the Kremlin (Barbershop Whispers…Russia ( Barbershop Whipsers…Russia, 1 Dec 2025)
О ЧЕМ ГОВОРЯТ ТРЕНДЫ Макроэкономика и рынки (Central Bank of Russia, Feb 2025)
Quick Bites
The Kremlin Continues to Nationalize Private Foreign Assets
A Moscow court ruled in favor of the Russian Prosecutor General’s Office in its lawsuit against the British logistics company Raven Russia, ordering the transfer of 16 warehouse complexes to the Federal Property Management Agency (Rosimushchestvo).
The warehouse complexes, built and acquired since 2005, were deemed by the court to be “transport terminals operating under natural monopoly conditions” and should therefore be transferred to state ownership.
According to the Prosecutor General’s Office, cited by Kommersant, Raven Russia acquired the terminals in violation of foreign investment laws, ultimately amassing a network of facilities near critical transport infrastructure, including the Moscow Ring Road, the city’s airports, and the seaport in St. Petersburg. In March 2022, the company sold its Russian business to local top management, a transaction prosecutors claim was intended to conceal foreign ownership. The Prosecutor General’s Office sought to have the sale annulled.
Additional Reading(s)
Russia nationalizes 16 terminals from the country's largest warehouse operator (Meduza, 3 Feb 2025)
Towards State Monopoly (Riddle, 2 Feb 2025)
Vol 3, No 06 - BWR 09.02.2025
Thank you for reading “Barbershop Whispers....Russia” written by Adam A Blanco! “Barbershop Whispers…Russia” is a product of e8Q Technologies, a consultancy with insights on all things Eurasia. Subscribe for free to receive new posts.