It’s this time again. Mr Peace strikes (sic!) again in his effort to win the Nobel Peace Prize. A couple of month is years in “Trump time” so it’s hardly shocking that we are once again discussing a potential ceasefire between Russia and Ukraine. In a truly Trumpian style it all started with an unexpected visit of Witkoff in Moscow.

We’ve got little details about a 3-hour conversation that took place between Putin and Witkoff, but we are now promised a face-to-face meeting between the Russian and the American president. Additionally, it is possible that we will see a trilateral meeting between Putin, Trump and Zelensky as soon as following week.

It was enough to spike the ceasefire odds across all markets:

Did you just miss a train for a cool 10x? Or is it just another opportunity to enter the No side with a favorable price? But most importantly - is the ceasefire coming? 8 months after my initial No ceasefire thesis, it is high time to revisit the situation.

Intro

Last time I did my evaluation, I focused on several factors: Trump’s behavior and possible actions, Europe’s dilemma and the state of Russia across society, economy and global alliances.

This time we have far more data, mainly clear Russian demands. We also have more clarity from Europe in terms of approach. And we know precisely why the first attempt at the ceasefire failed.

So I will revisit everything - the US, Russia, Europe, Ukraine, the situation on the ground and the failed attempt at the ceasefire. Buckle up and pour yourself your favorite drink - it’s going to be a long one.

Recap

So… what went wrong the last time? Well, a lot. I’m a bit amazed that I was able to predict the high-level course of action with such precision. Russia felt good about its overall state and demanded what it already had annexed as recognized + demilitarization of Ukraine.

Trump considered it a good deal taking into account circumstances, but both Zelensky and the EU thought otherwise. With the minerals deal and ReArm Whitepaper, the burden of supporting Ukraine shifted towards Europe, which accepted it.

And ultimately there was no deal as the EU was still committed and Zelensky felt he has the required support to continue the war.

I tried to be brief here as I have already written extensively about the first attempt at the ceasefire. Now though, we need to understand what (if anything?) changed since then:

1. The situation on the ground.
2. The state of Ukraine.
3. The west - the state of aid and military goals.
4. The state of Russia and its goals (+ goals of its allies).
5. Prediction Markets.

The Frontline

You won’t be surprised that nothing much changed since the last ceasefire attempt. Russia is in the middle of its summer offensive, however no major city has been captured (however, they are currently in the middle of a small breakthrough). The military offensive index shows the momentum is growing:

It may seem like much, but the reality is that Russia is close to capturing a few frontline cities after a year of struggle.

That’s expected, as this war is not about fast gains; it’s about attrition. In the last year, we heard a lot about Ukraine needing ammunition. Yet this is not the case now, despite lack of new significant aid packages. The war is now mostly a drone war.

There is essentially a 15 km wide no man’s land between the two armies along the frontline, which is about how far a short-distance optic-fiber drone can fly. Excluding insignificant gains by Russia (eg. Pokrovsk), it is essentially a drone and missile back and forth. That being said, Russia has steady territorial gains, around 5 square miles per day in the recent months.

This means that in the long run, human and economic capital (to be exact drone and missile production capability) are king. And when it comes to that, Putin seems to feel fairly comfortable to stall and wait till Ukraine is too tired to fight. The sheer size difference between the two countries is enough for him (more details on respective countries’ condition later on).

But what is essential here is that there was no significant breakthrough from either side that would incentivize ceasefire negotiations. The whole discussion is not the effect of frontline changes. It is in a way forced by Trump and his pressure.

Putin uses this opportunity to present a plan that ensures the international recognition of his territorial gains and reflects his advantage on the ground. In the first phase:

• full Donetsk and Luhansk,
• full Kharkiv and Zaporizhia.

And in the second phase:

• territorial swaps,
• all other conditions for lasting peace.

This is hardly a victory for team west and it is a worse proposition than initially. However one can have significant doubts a better deal can be reached anytime soon. But maybe there is a reason, a plan? Let’s see.

Ukraine Fitness

When it comes to economy, there is really no use in evaluating Ukraine - the war effort is (almost) entirely dependent on the western aid. From lending, through assuming some of the debt burden, to military and humanitarian aid. And while the US support is… let’s say shaky, European countries are fully committed.

Additionally, economic data from Ukraine is highly unreliable as they conceal the number of war casualties that could be easily derived from personal income tax data (yes I tried and lost 2 hours trying to figure out why PIT revenues increased despite at least 25% population loss). At least, because there is also high chance that economic data from Ukraine is simply fake.

Something we can trust, albeit to a limited extent, is GDP data. And the Ukrainian GDP fell by 22.9% since the start of the war. What keeps it at this level is agriculture (mainly exports to increasingly unwilling to take them Europe), services which are generally more resilient than manufacturing and defense spending, which is heavily supported by the west. And remember that Ukraine is still losing territory by the day, which puts further strain on the economy as more territory becomes economically unusable due to the proximity of war. Additionally a city is lost once in a while, putting strain on the population, supply chains, etc.

Ukraine is most likely an economic zombie, propped only by the western support. But it is just enough for Zelensky to continue. With such an extensive support, he can still sell a victory narrative to his people.

He also has personal incentives eg. not willing to be the president that ceases territory to Russia. Additionally he can be fairly sure that if war ends without clear paths to EU and NATO accession, the country will just go under Russian influence.

You may think that without the US support, Ukraine will lack critical defense, like PATRIOT missiles, but there is nothing stopping Europe from purchasing them from the US and giving them to Ukraine. It already happened.

Because in the end if no ceasefire is coming soon, something must break - either Europe, Ukraine or Russia.

So for me the main question around Ukraine fitness is society:

1. Support for Zelensky.
2. Support for war.

Zelensky

Zelensky made some headlines a couple of weeks ago with his sudden grab of anti-corruption agencies. However protest erupted all over the country and shortly after Zelensky reversed the decision.

Despite this little fiasco, his approval rating remains strong:

With all the PR campaigns it is hardly shocking. If I were to speculate here, Zelensky’s image would be someone who does all he can in the face of an impossible task. The stories about corruption or mishandling surface from time to time, but they are simply not enough to significantly lower his ratings. The international image of Zelensky is strong, and probably many Ukrainians believe that others would be equally as corrupt (or more!).

When we look at overall leadership survey, the story is a bit different:

While still fairly strong, the overall government receives lower notes, but it was the case since the beginning of the war. Such a general question can be packed with various minor grievances and it is understandably lower than the rating of Zelensky.

Overall, after 3.5 years of war, Zelensky’s standing is still strong. While his popularity diminished since the start of the war, it is still well above the level of some western leaders and far more Ukrainians approve of him than disapprove.

It is safe to say that Zelensky’s grip on power remains robust, and public dissatisfaction with him won’t be an issue when we are talking about forcing an unfavorable ceasefire.

War

Despite strong ratings for Zelensky, Ukrainians appetite for war is diminishing fast:

If 3.5 years of this war showed us anything it is that there is little chance Ukraine will reclaim any of the lost territories in the foreseeable future. Current war is the war of attrition and Ukrainians are visibly tired of it. However that was the case already in 2024 when majority of Ukrainians favored a negotiated settlement as soon as possible.

However, Gallup did itself a disservice here, as this is once again a very general question. Because if majority favored peace ASAP, we would have gotten it on the first try.

The screenshot below offers some visibility on the matter:

While Ukrainians are tired of war, they are still against major concessions to end it. With lack of any proper data here, I can only speculate. Probably the continued media campaign on fairness, Ukrainian strength, relentless western support and talking points as well as various promises, from the EU accession, through security guarantees to NATO accession make it hard for Ukrainians to accept the reality.

Conclusion

Straight and simple - Ukraine is economically weak and tired. While it did make a lot of progress, mainly in defense industry (their drone production capabilities are impressive at a couple of million per year and rising), the simple truth is that Ukraine stands only thanks to western support.

And even now it is steadily losing territory amid Russian summer offensive. They can expect a frontline breather once October / November comes, but the daily missiles on major cities and frontline will continue for the foreseeable future if ceasefire is not reached.

The slow erosion of infrastructure and constant psychological discomfort will further strain the already burdened Ukrainian society. I expect both Zelensky approval to decline in the medium term with increasing willingness to end the war ASAP. But for now Ukraine stands.

The West

If Ukraine’s fighting chance depends heavily on the western support and Zelensky is not looking to surrender, the west becomes the critical actor in this puzzle. Key here are two things:

• aid,
• willingness to escalate and military goals.

And here we have a difference between the two pillars of the west - Europe and the US.

The US

Since I last look at the ceasefire chances, the approach of Trump changed a bit. While he is still looking to end the war, he is not exactly comfortable leaving Europe to deal with the problem if his efforts fail.

The reason here is pretty simple. First thing is that the US is inevitably tied to this war and a Ukrainian loss will be perceived as the US loss. The second thing is that considering a complete lack of public support for continuing aid, in case of a prolonged conflict he will need to leave Europe on its own. And Europe is to underdeveloped militarily and too fragile economically to carry the burden on its own.

That’s why we’ve seen weapons deals and sanctions threats. Trump would much rather have a fairly strong Europe, unburdened by a costly conflict in its periphery as for better or worse, Europe is US biggest ally.

Oh and there is the Nobel Peace Prize and some vague wish to draw Russia out of an alliance with China. However neither is likely.

In the end though, the US can manage a conflicted Europe. If ceasefire fails, Europe will assume the majority of the burden as it build its industrial capacity. The US will step in only when the situation is dire, until Europe builds its own defense industry, capable of mass production of weapons.

So the US is unwilling to further bankroll the war and has no wish to escalate. Trump’s military goals are simple - a decent ceasefire, because in his mind the situation can only be worse. There is no actual plan to beat Russia.

Europe

Europe can be a mystery box in this scenario. It has an aggressive narrative combined with apparent lack of direction and incompetence. Looking at various statements from European leaders I was long puzzled as I struggled to understand this curious mix:

But there is one approach that makes sense. One thing that can unite a divided Europe in such a fashion. A ceasefire favorable to Russia would mean one thing that they cannot accept - Russia would become a major player in the European affairs that could no longer be ignored. Not only would it have Ukraine in its sphere of influence, it would also impose its will on other European countries and challenge Germany, France and the UK for the pole position in this geopolitical theater.

Even before the Euromaidan, Europe was skeptical of Russia and leading countries, while happy to take its energy, have never considered it worthy to join their ranks (bar some individuals, eg. Radosław Sikorski, current minister of foreign affairs in Poland, known for his cutting remarks, and below two X posts). Especially since Russian elite felt it should be a decisive force, not a second or third tier country under western influence.

It’s hard to imagine now that he was for Russia’s accession to NATO back in 2010.

All the talk about Russia getting ready to attack the Baltics, or Poland, or any other NATO country, while being just on the verge of collapse due to sanctions, is the byproduct of this thinking. Russia is the enemy, so it must be vilified, but at the same time Europe must show its people that it is stronger.

This very thing causes the vicious cycle we are witnessing now. The European political elites are unable to accept Russia as a major player in European affairs, but at the same time they are not strong enough to overcome it, without significant damage (or at all).

This wasn’t the case when the US administration was favorable to the European cause, but with Trump at the helm they can no longer count on Uncle Sam to support them indefinitely.

Aid and Military Goals

I can just repeat the old mantra of Europe not having a plan. Of Europe just throwing aid at Ukraine without an end goal in sight. I could discount current rhetoric on Ukraine sovereignty and say that Europe will force Ukraine to accept a ceasefire.

But if the goal is to weaken Russia using Ukraine, the plan is going pretty well. Let me draw you a picture.

Just one explanation beforehand - why the need to weaken Russia? Because while Europe wouldn’t accept Russia as a major player in European affairs, Russia couldn’t accept being thrown out of Europe. Russia is culturally European; for centuries it has been a major player on the continent. And after the fall of the Soviet Union, its sphere of influence was quickly shrinking - it lost whole CEE and was looking at losing Ukraine, essentially being left with only Belarus. Facing China on its Asian border, it would fade into irrelevance if it lost Europe. Thus Crimea, Donbas and now the Ukraine war. This war began, because neither side was willing to step down. Now we can continue.

If you were heading Europe and your plan was to significantly weaken Russia through the war it has started, you wouldn’t aim to invade it. Russia is a nuclear state, a global superpower - you cannot invade it and you cannot conduct a regime change there. Just as Soviet Union fell due to its economy collapsing, another fall of Russia must be the same.

The only way Russia becomes irrelevant in the European affairs, or even “better”, becomes fully under western influence, is if it fights itself into oblivion. Experts rightly call this a war of attrition. They just misidentify the “attrited” parties.

Ukraine is just a tool in the hands of Europe (and up until this year, the US hands; we cannot forget that the Biden administration was also behind this). It is given just enough aid to survive. Remember how much land Ukraine loses per day? 5 square miles, which is 150 per month and 1,800 per year. For comparison, Warsaw, the capital of Poland is 200 square miles large; Berlin is 344; London is 607. The whole Ukraine is 233,100 square miles. With that tempo, Russia would conquer it in 104 years, taking into account they already have roughly 20% (I know such thing is hardly linear, it’s just to illustrate the current tempo).

So in effect this war is a competition between Europe (before also the US) and Russia (aided by China, North Korea, etc.) - who will fall first?

You won’t read about it in the media, because if society knew this, the people wouldn’t agree. Neither Ukrainians, nor Europeans. But the clever and overwhelming framing of Russia as a barbarian aggressor and Europe as the moral savior works wonders.

Just think about it for a minute. The collapsed initial ceasefire talks in 2022. The reluctance to provide more aid so Ukraine has the edge. The reluctance to send troops. The coalition of the willing (to stick to the plan). European leaders and Biden were called stupid, incompetent and were accused of not having a plan. But if I learned anything, it’s to never assume someone is stupid or acting without a plan. Usually you just have too little visibility to understand it.

Well, the plan can be stupid and IMO it’s not exactly a great one, and that’s me being polite. But it’s there.

So the military goal is simple and so is the aid. Well, there was one complication with aid - Biden administration was all in on the plan, but Trump administration is against it. Without Uncle Sam, Europe must agree to a ceasefire that is essentially a defeat for them or to take on the war’s burden.

Thus the ReArm Whitepaper. And thus the crying we’ve seen after Munich Security Conference. All the European leaders were supporting Kamala Harris and hoping she would win. They knew that without the US in, the chances equalize are far more even and they were scared.

But since Europe is already in over its head, my expectation is that it will find a way to continue the aid and thus continue the war. Any “fair” ceasefire will be rejected by Europe and by extension Ukraine. Only chance Europe accepts a lasting peace is if Russia agrees to give back some of the territories and there will be no restriction on Ukrainian military, and EU and NATO accession.

Conclusion

There is a plan. Call it risky, outrageous, vile or stupid. But it is there and with US onboard it could work. It could also work without it. While Trump is against it and doesn’t want to take part in it, Europe is still in. The messaging is clear.

Russia

And now the final part - in what shape is Russia? Is it still willing to take on this fight for its relevance. And most importantly is it still able?

From the pure geopolitical perspective it has to. The alternative is irrelevance, losing national identity and societal disruption further down the line. There is no question about it, Putin is very clear when he speaks about the war effort.

Putin is also fully aware that this is a war of attrition. Neither Europe nor Russia is looking to actually escalate this war beyond Ukraine. European countries lack the social mandate as well as military capability to threaten Russia. Oh and Russia has nukes.

Russia is also worried then about its enormous border with European countries - Finland, Baltics, Poland, Ukraine - logistics would be a nightmare. And in both sides cases, the society is far more willing to accept a slow war in Ukraine than a massive pan-European war.

Putin is also aware that for the time being he has the upper hand. His forces are advancing slowly, but at the same time at the verge of a breakthrough. In case of peace, all he needs to do is to get what he annexed and ensure that Ukraine remains weak and susceptible to Russian influence.

Economy & Society

I won’t LARP as some kind of Russia expert here. I’m not. I read, I talk with people and listen to people that are smarter than me when it comes to the state of Russia. And when I do that, there is one conclusion.

The overall state of Russian society and economy is decent. Despite sanctions it actually grew and is still growing. The people are living a pretty similar life - some are better off and some are worse off, but the life moves on.

There is an hour long video on the fitness of the Russian economy here. If you want a good picture of what is happening there this is a pretty good summary. In a few sentences though, while Russian economy is slowing down and showing signs of struggle, it still has capacity to sustain for the foreseeable future.

Corporate profits outside of defense industry are shrinking. Interest rates are high and bad debt is growing. The demand for consumer goods is falling, especially for the more pricey ones like cars. So don’t get me wrong, it’s not going great there. But it’s not going very badly either.

Society is kept in line. They are constantly reminded about the rationale for the war and they believe that the country needs to do it. Just look at it:

There is also little public outrage about the proclaimed economic hardship:

And there is even less so related to politics:

While the video I pasted claims that Russia could sustain the war effort at least till the end of 2026, there are voices that Russia went into this war ready to go on till 2030. Taking an intuitive average of these opinions, I believe that Russia as an economy can sustain the war effort for at least two years before significant signs of trouble start to show. And even then it is far from over.

When it comes to society, it looks… good. People seem to live on and there are no signs at all that anything should change here in the foreseeable future.

One funfact from the video - there are now more billionaires in Russia than before the war. Food for thought.

The Ceasefire Proposal and Military Goals

If everything is going pretty well for Russia, then why propose a deal? Well, because as HITMAN said in his video on the situation - you don’t make such a sacrifice for Donbas. Putin is also not interested in conquering whole Ukraine, attacking Europe, etc.

Putin is interested in taking Ukraine into Russia’s sphere of influence and being the main player on the European continent. Thus a ceasefire that legitimizes Russia’s territorial gains is beneficial. It is a victory over the west that can be easily sold domestically. A ceasefire opens Ukraine to being easily influenced - destroyed, demilitarized (as Putin wants) and with no clear path to EU or NATO. And it means being no longer ostracized - sooner or later with peace in place Europeans will once again engage with Russia.

At the same time, these are also crucial elements of any deal as without them, there is no victory for Russia.

The alternative is ongoing fighting. Russia will continue to fight a war of attrition, securing more and more territorial gains. It will ramp up the hybrid warfare - since the actual war is with Europe, the misinformation campaigns, migrants and all other hybrid warfare techniques put strain on European societies. If Europeans decide they are tired of supporting Ukraine, Putin will also win.

So there is no pressure - the west can either take Putin’s terms or go back to fighting. And Putin is comfortable with either option for the time being.

Prediction Markets

By this time I think the conclusion is pretty clear - Europe is not ready to back down, Ukrainians are still in good enough spirit to fight and Russia is far from collapse. The war will continue. The Alaska talks will not change it.

The mere fact that Trump wants peace is not enough to end the war. Especially since nothing substantial changed since the last time. So I’m positioning accordingly - mainly No on various timelines for Ukraine ceasefire

• Russia x Ukraine ceasefire by August 31?
• Russia x Ukraine ceasefire before October?
• Russia x Ukraine ceasefire in 2025?

In reality my fair odds are 1% by the end of August, 5% by the end of September and 15% by the end of year. For now I treat these based on the APY (746.95%; 629.70%; 278.78% respectively), however I take into account that when the talks inevitably fail, the biggest upside will be on the end of year market.

There is a territory market as well, however I see more value in pure ceasefire markets.

• Will Ukraine agree to cede territory to Russia?

On the other side of the spectrum, this market I’m not touching

• Russia announces air truce by August 31?

First instinct would be to put here on No, but something as insignificant as a promise of a limited air truce can come out of Putin, just to play the negotiations game a bit longer. We’ve seen such plays already.

Risks

You may ask - if there is a phased deal on the table, isn’t there more value to Yes on ceasefire that can be later broken? It may have been the case, but with recent breakthroughs I don’t see Putin agreeing to a complete freeze. He could for the whole annexed regions, but neither Europe nor Ukraine would agree. With that, ceasefire markets remain the best value.

Wrap up

And that is all for today. Just ahead of the Alaska talks. And just in time to clarify the situation to position accordingly on prediction markets.

I hope you enjoyed my article, I put a lot of work on this thesis - let me know in the comments. In the meantime stay strong and see you soon!