Tervell

On October 21, the publication strana.ua shared the testimony of a recently mobilized man at a ‘manpower distribution centre’ in the central region of Vinnytsia. I illustrated it with some photos of a mobilization centre in Kyiv. Conditions in a regional city like Vinnytsia are likely worse:

Our training unit can be compared to a real prison. There are 120 of us living in a cramped basement — bunk beds are packed tightly together. Out of the 120 people, some have tuberculosis, and a few clearly have an open form of it — they cough up blood, and some have blood on their pillows and sheets. Everyone sleeps practically on top of each other; it’s impossible to turn away from the person coughing next to you — no personal space at all, the beds are right up against each other. The walls are damp, condensation runs down them, everything is covered with fungus and mold. There’s no air to breathe at all. It’s suffocating. People with serious illnesses, even those with high fevers, beg for medical help, but they’re only taken to see a doctor once every two or three weeks. After that, at best, they’re sent to a hospital. Even those who arrived here healthy have already gotten sick — everyone is coughing. We asked for ventilation to be installed in the basement, but the command simply ignored our requests. After the training ground, we come back filthy. But we’re allowed to shower only twice a week. And even that started only recently, after things almost reached a riot — when our group first arrived, we didn’t see a shower for two weeks.

The toilet is outside, filthy, completely unsanitary. There’s no toilet paper; we have to buy it ourselves. The food is terrible — meager and monotonous: for breakfast, porridge with a sausage, weak tea with bread; for lunch, some kind of thin slop, again porridge or pasta. For dinner — leftovers from lunch, no vegetables at all. When we first arrived, they confiscated all our phones. We’re allowed to use them once or twice a week, for only half an hour. Even prisoners in jail communicate with the outside world more often than we do. Of course, under such conditions, many try to escape. But every escape brings repression for those who remain. Recently, one man escaped. They found him in a nearby village, beat him, knocked out his tooth, brought him back covered in blood. After that incident, a new rule was introduced in our unit: at night, we’re allowed to go to the toilet only in underwear and slippers, so no one can run away. And only in groups of five — until five people are ready to go, the commanders don’t let anyone out. So, there we are, five half-naked men running to that filthy outdoor toilet, while another group waits their turn.

Many people try to escape from here, even volunteers — they just didn’t expect the kind of hell they were being brought into. If they find a hidden phone, they take it and screw it with a drill to the door of the commander’s office. There are already three phones attached to the door as a ‘lesson’ to others. The commanders live separately, in good rooms, while we’re treated like cattle. The only people who treat us decently are the instructors. No complaints about them — they’re experienced combat veterans. But even they are trying their best to get transferred out of here — the psychological atmosphere in this training center is unbearable. We’re all being trained as assault troops, just regular infantry, so the command treats us like expendable material — cannon fodder. Yet among us there are many specialists of all kinds — translators, engineers, technicians, and radio mechanics — people who could actually serve the Armed Forces in their professional roles. They bring in everyone here without distinction — chronic alcoholics who can’t stop shaking, drug addicts with burnt veins, skinny and toothless people. They even bring in homeless men in terrible condition — covered in sores, eczema, and all kinds of chronic illnesses. Everyone’s psychological state is horrible

More of the same

The shift to the corps system was meant to overcome the old habit of sending hapless ‘meat units’ up and down the front for the caprices of powerful commanders. Units ‘attached’ to larger units are routinely worn down, their infantry carelessly sent to die in pointless missions. The corps reform was intended to make sure that each corps is responsible for a fixed number of units and a fixed section of the front. Thereby, theoretically, commanders would no longer be able to simply burn through their subordinates. The telegram channel ‘Voice of Khortytsia’ usually tries to be optimistic about the reforms that high command recently proclaimed complete. On October 19, however, it gave up:

At least something in the world is stable. How the General Staff is fighting the threat of the enemy’s advance on a specific sector. This is about the Pavlohrad direction, about the fighting on the border between Donetsk and Dnipropetrovsk oblasts. [EIU - this has been the site of significant Russian advances over the past month. Pictured is a comparison between September 1 and October 22.] There, as many of you know, the enemy is concentrating huge resources. After they realized that Pokrovsk would have to be taken by attrition, they stepped up their logistics. Given that situation, the huge force package they were holding on the Pokrovsk axis simply wasn’t needed. The enemy found a more “useful” employment for it. They threw those forces into Dnipropetrovsk oblast. Meanwhile, the General Staff of the Armed Forces of Ukraine — and General Syrskyi personally — decided to fight an old problem with old methods that, as it turned out, only make the problems grow exponentially. A decision was made to reinforce the Pavlohrad direction by redeploying brigades from other parts of the front. ... Removing these forces from their sectors will not lead to anything fatal or irreversible. It’s just sad to realize that the General Staff, after all this time, is incapable of countering enemy advances by other means. I would also note that this contradicts the very purpose of the corps-level reform, which was supposed to stabilize corps composition and stop these constant brigade “relocations.”

Besides that, the enemy’s strategic intent for the coming year is becoming obvious. But for some reason the General Staff and the country’s senior military leadership are ignoring it. They’ve completely dropped the ball on the Lyman direction, at the junction of two troop groupings. All of that has been left on the shoulders of brigade generals Sirchenko and Biletskyi [the White Fuhrer of the 3rd Azov Corps - EIU]. The Pavlohrad direction, where the enemy is trying to advance, is indeed dangerous, because it lacks the dense built-up area found in much of Donetsk oblast. But, in my view, the actions being taken by the country’s senior military leadership in the zone of the 20th Army Corps defy explanation. Removing commanders, a confusing hodgepodge of units, media “victories,” constant lies, and so on will not give us a real advantage on the battlefield. It’s time to understand that.

Further south, ‘Officer’ reported on October 20 that the situation has been worsening:

Huliaipole direction. Despite the limited media attention on this sector, the situation there is fairly unstable. On the Poltavka–Malynivka–Uspenivka stretch, the removed infantry is carrying out regular assault actions, using mainly convicts and other scum. The logistics situation is more or less the same as everywhere else — the enemy is trying to control all lines of communication, setting up a carousel of FPV drones and using optics as well. In some units there is outright chaos, because for many the Zaporizhzhia direction has become a relaxed posting, and I would advise command to pay attention to this sector, since the road to Zaporizhzhia and Dnipro effectively opens through Huliaipole — an open steppe area with very few settlements. The enemy doesn’t need to attack Zaporizhzhia head-on; it’s enough to go around the impassable lines, as was warned a year ago.

Today we’ll be taking a tour through the Ukrainian army. Luckily for our health, a virtual one, relying on reports from Ukraine’s brave warriors for European Civilization. First, testimony from a man held in the dungeons of the Vinnytsia manpower distribution center. Commanders drill hidden phones to the wall, mobilized men cough up blood amidst the damp and mold, showers are only allowed twice a week at best, the healthy get sick, and escapees are beaten to a bloody pulp:

They bring in everyone here without distinction — chronic alcoholics who can’t stop shaking, drug addicts with burnt veins, skinny and toothless people. They even bring in homeless men in terrible condition — covered in sores, eczema, and all kinds of chronic illnesses. Everyone’s psychological state is horrible

Meanwhile, even nationalist militarists have been complaining about the mobilization of one of the country’s premier medical engineers, responsible for producing equipment that saves lives at the frontlines:

I asked Pavlo: “But you have eyesight problems!” (he wears glasses). “They don’t give a shit, they said I’m fit to serve…” — he replied.

Next, the future. Why complacency in the western media about the ‘100 year Russian offensive’

covers an ‘operational clusterfuck’ with a ‘strategic sedative.’

Meanwhile, how all this translates into the frontline. First, the situation in the south. Amidst Russian advances, the commander of a battalion from the 142nd brigade sent to save the situation is an

incompetent rogue and, according to some reports, arrives at the command post EXCLUSIVELY while intoxicated.

we should bring back calling people "rogues", it's a really cool insult

Besides his drunkenness, the commander’s proclivity towards lies has already led to ‘frightening… considerable losses’. This is apparently all in due course for the 142nd brigade, whose only purpose is to supply expendable infantry for other worn-out units:

It’s worth adding that these commanders had previously effectively annihilated the brigade on the Pokrovsk axis. In some companies fewer than ten people remained.

Meanwhile, recent proclamations by high command that the corps reform has been completed are ridiculed by military bloggers. In fact, the old practice of ruthlessly burning through the infantry of units ‘relocated’ from elsewhere continues. Our correspondents explain how this practice has meaninglessly expended lives on the Pavlohrad axis, where command has:

decided to fight an old problem with old methods that, as it turned out, only make the problems grow exponentially.

Finally, a more theoretical post I translated today begins with the premise that:

As of 2025, the Ukrainian military is a bizarre mutant in which the most talented and the most inept people coexist side by side. The brigades, battalions, staffs, tables, and positions are identical — but some cosplay the U.S. Army during the “Desert Storm,” while others resemble Iraqis.

Besides explaining the heterogenous tendencies existing in the army today, the text also explores the past. It argues that the only high-quality sections of the Ukrainian army destroyed themselves in the steppes of Kherson in 2023. That is, even before the failed counteroffensive of that year, which was simply ‘the nail in the coffin’. Since then, the army has become a Gogolesque phantom:

Our “classical” army has become an army on paper — an army of stillborn brigades, untrained personnel, and incompetent staffs. In this army people worry more about overpayments of additional pay and nonwritten-off equipment than about losing personnel. On paper you have a combat-ready battalion — respectable (not) members (fuck) of the commission signed off — but in reality there are 300 mobilized men: 150 of whom are fucked in the head, an incompetent commander, dreadful training, no commanders at most levels or NCOs, and a lack of supplies needed for modern war. On paper you have 100 trained soldiers, but in reality they literally know nothing, and every brigade asks that people be sent to complete basic combat training immediately within the units.

The future

The Economist put out an article on October 17, triumphantly proclaiming that Russia would have to keep fighting for 103 years to take all of Ukraine.

real WW2 nazi propaganda hours

also reminds me of those alt-history videogames/settings which are like "World War 1 has been going for a hundred years!" and it's like, going on with what manpower, are they fucking breeding poilus and tommies in cloning vats? (this would at least be an actually interesting concept for a sci-fi dystopia setting, where a brutal WW1-style attritional war can only go on by virtue of the parties involved literally mass-manufacturing soldiers - the anime Ergo Proxy actually had an episode like this, where a post-apocalyptic arcology was fighting off a robot invasion and only surviving by just breeding more soldiers, but it was just the one episode)

But, Ukrainian ‘Officer’ did not feel reassured, writing the following the same day:

Shall we fight for another 100 years? Can somebody tell these ‘experts’ that it doesn’t work like that. I get really pissed off when those analysts try to calculate the time it would take Russia to capture certain territories based on what happened once before. First of all — to what end? What use is that information? Probably to soothe someone and cover an ‘operational clusterfuck’ with a ‘strategic sedative.’ Like: our stomach hurts, but we’re still a long way from needing an appendix removed, so we can keep eating whatever we want. Unfortunately, the snowball effect doesn’t occur to any of these authors. Second, war is not subject to any formulas, theorems, or axioms. Yet for some reason people still bluntly compute timelines for enemy territorial gains based on past events, while the factors that influence all this are not constants but variable inputs. Has the war of 2024 changed compared to 2025? — Obviously yes. If one side quickly adapts to new rules of warfare, pulls a trump card, or simply exploits the opponent’s problems — all your mathematical calculations collapse completely.

On October 18, Officer wrote about how the dangerous effects of winter. Since Ukrainian sources constantly complain of Russian drone superiority, he seems to be implying that the Russians are the ‘hunters’ with the advantage:

We’re entering a rather interesting phase of combat in the modern drone war: in this autumn–winter period, when kill-zones have already formed on both sides of the line of contact in most sectors, logistics will become maximally complicated because the greenery is almost gone, leaves have completely fallen — the terrain’s camouflage value is minimal, and the number of revealing factors (snow, etc.) will increase. The conditions for infantry being in the field and for their approaches to positions will become much harder; accordingly, whoever is hunting will have the advantage, and whoever is hiding will be in a less favorable position. The headaches for infantry will grow, because mechanization and lots of equipment are all well and good, but it is the infantry that actually forms the frontline battle zones—and we haven’t moved away from that.

Engineers to the infantry

On October 19, a telegram run by a veteran of the ultra-nationalist paramilitary ‘Shakhtarsk-Tornado’ (closed down years ago for extreme violence against civilians) complained that specialists were being mobilized:

️I’m asking for maximum reposts! And please read carefully what kind of *** is going on. Ternopil’s military enlistment officers have detained a man whose company is the only one in Ukraine that manufactures surgical instruments, without which not a single military hospital can operate — as well as civilian hospitals, including Ohmatdyt. They’ve already assigned him to a brigade, and the military medical commission was “passed” in a matter of minutes. I asked Pavlo: “But you have eyesight problems!” (he wears glasses). “They don’t give a shit, they said I’m fit to serve…” — he replied. He’d asked me many times to help him get enlisted, but I understood that his work was far too important. And not as a joke — quite seriously, I told him: “There are so many guys here who are crippled, and without your work it’s impossible. So keep doing what you do.”

...

Remember the story of another man from Ternopil — Bohdan Pokitko. The situation is almost identical. But Pavlo’s work is real help that saves lives — both military and civilian. I know many people who’ve been “taken.” But I’ve never written about anyone — until now. I can’t stay silent. ... You might ask — what about an exemption from mobilization for such people? Well, apparently, you have to pay a lot for that. But a man who’s taken out loans and donates almost his entire salary to the Armed Forces of Ukraine can’t afford that! That’s how we damn live!

The Aidar Batallion’s Stanislav Buniatov also commented on the incident:

The military medical commission, as usual, was completed in just a few minutes. People like him, as always, have no exemption from mobilization — unlike McDonald’s employees, who do.

When you establish that $136,500 is the real break-even point for an American family, you start to explain the rage you see in the American electorate—especially the animosity the “working poor” (really, the middle class) feel toward the “actual poor” and immigrants. Our entire safety net is designed to catch people at the very bottom, but it sets a trap for anyone trying to climb out. As income rises from $40,000 to $100,000, benefits disappear faster than wages increase. I call this zone the Valley of Death. At $35,000, a family gets SNAP food benefits and childcare subsidies. But move to just $45,000, and the family loses Medicaid eligibility. Now there are premiums and deductibles. For a family in New Jersey, the $10,000 gain is erased by an increase of $10,567 in costs. At $65,000, there is another cliff where childcare subsidies vanish. The $20,000 income gain is accompanied by $28,000 in new tuition payments. A family earning $100,000 is effectively in a worse monthly financial position than a family earning $40,000. At $40,000, you are drowning, but the state gives you a life vest. At $100,000, you are drowning, but the state says you are a “high earner” and ties an anchor to your ankle called “market price.”

An income of $140,000 provides a bare buffer against slipping into this Valley of Death, in which every dollar in income means the disappearance of nearly as much in benefits. And at the bottom of this valley lies ruin. Eviction, bankruptcy, or default are death penalties in the financial system. They leave you barred from the credit system (often for 7–10 years), barred from the prime rental market by landlord screens, and barred from employment in sensitive sectors. During the Covid lockdowns, the costs of participating in the economy were suspended while government transfers replaced or even increased income for those at the lower income scale. Childcare ($32,000), commuting ($15,000), and work lunches ($5,000) disappeared, and families earning $80,000 actually felt comparatively rich. Then it all came back, with the costs inflated. The rage we feel today is the hangover from that brief moment. Economists and politicians look at this anger and call it racism, or lack of empathy. They are missing the mechanism. The anger at the benefits given to the poor—the EBT card, healthcare, childcare subsidies—comes from seeing that people are getting for free the exact things that they are working 60 hours a week to barely afford. And these are just the bare costs of participation. The anger isn’t about the goods. It’s about the breach of contract. The American Deal was that effort = security. Effort brought your hope strike closer. But because the real poverty line is $140,000, effort no longer yields security or progress; it brings risk, exhaustion, and debt.

When you are drowning, and you see the lifeguard throw a life vest to the person treading water next to you—a person who isn’t swimming as hard as you are—you don’t feel happiness for them. You feel a homicidal rage at the lifeguard. We have created a system where the only way to survive is to be destitute enough to qualify for aid, or rich enough to ignore the cost. The Census Bureau tells us that the American upper class is ever-growing. Economists look at the federal government and cheer. “Look!” they say. “In 1967, only 5 percent of families made over $150,000 (adjusted for inflation). Now, 34 percent do! We are a nation of rising aristocrats.” Except that $150,000 line isn’t really the “upper class” line. It’s the survival line. About 34 percent of Americans, or a little more, have managed to escape deprivation. And the 45 percent of the country that the government and economists tell us makes up that middle class are the real working poor. These are the families earning enough to lose their benefits but not enough to pay for childcare and rent. They are the ones trapped in the Valley of Death.

“Poverty” has collapsed to 11 percent. All the anti-poverty policies of the last decades have worked as intended. But remember Mollie Orshansky. The poverty line doesn’t measure poverty. What it measures is the percentage of Americans who cannot afford a minimum food diet multiplied by three. That’s it. It’s not measuring who can afford rent. It’s not measuring who can afford childcare. It’s measuring starvation. Of course that line is going down. We are an agricultural superpower who opened our markets to even cheaper foreign food. Food is cheap. But life is expensive. The numbers on the cost of living above—that number of around $140,000? It shows you the costs of participating in our economy. The gap between that threshold and the nominal poverty line is the Valley of Death that most American families are struggling to dig themselves out of in a system designed to prevent them from escaping. And those falling poverty numbers that economists and bureaucrats gaslight you with? Those numbers are not evidence that the system is working. They are evidence that it is failing—and that economists and politicians simply refuse to admit it.

For my whole career in finance, I have distrusted the obvious. And yet, for many years there was one number I assumed was an actuarial fact: the U.S. poverty line. Yes, I saw Americans feeling poorer every year, despite economic growth and low unemployment. But ultimately, I trusted the official statistics. Until I saw a simple statement buried in a research paper. And I realized that number—created more than 60 years ago, with good intentions—was a lie. The statement was this: “The U.S. poverty line is calculated as three times the cost of a minimum food diet in 1963, adjusted for inflation.” When I read it I felt sick. And when you understand that number, you will understand the rage of Americans who have been told that their lives have been getting better when they are barely able to stay afloat.

In 1963, Mollie Orshansky, an economist at the Social Security Administration, observed that families spent roughly one-third of their income on groceries. Since pricing data was hard to come by for many items (e.g., housing), if you could calculate a minimum adequate food budget at the grocery store, you could multiply by three and establish a poverty line. Orshansky presented her findings in 1965. She was drawing a floor, a line below which families were clearly in crisis. For that time, that floor made sense. Housing was relatively cheap. A family could rent a decent apartment or buy a home on a single income. Healthcare was provided by employers and cost relatively little (Blue Cross coverage cost in the range of $10 per month). Childcare didn’t really exist as a market—mothers stayed home, family helped, or neighbors (who likely had someone home) watched each others’ kids. Cars were affordable, if prone to breakdowns. College tuition could be covered with a summer job. Orshansky’s food-times-three formula was crude, but as a crisis threshold—a measure of “too little”—it roughly corresponded to reality. But everything changed between 1963 and 2024. Housing costs exploded. Healthcare became the largest household expense for many families. Employer coverage shrank while deductibles grew. Childcare became a market, and that market became ruinously expensive. College went from affordable to crippling.

The labor model shifted. A second income became mandatory to maintain the standard of living that one income formerly provided. But a second income meant childcare became mandatory, which meant, for many, two cars became mandatory. The composition of household spending transformed completely. In 2024, food-at-home is no longer 33 percent of household spending. For most families, it’s 5 to 7 percent. Housing now consumes 35 to 45 percent. Healthcare takes 15 to 25 percent. Childcare, for families with young children, can eat 20 to 40 percent. If you keep Orshansky’s logic—if you maintain her principle that poverty could be defined by the inverse of food’s budget share—but update the food share to reflect today’s reality, the multiplier is no longer three. It becomes 16. Which means if you measured income inadequacy today the way Orshansky measured it in 1963, the threshold for a family of four—the official poverty line in 2024—wouldn’t be $31,200. If the crisis threshold—the floor below which families cannot function—is honestly updated to current spending patterns, it lands at close to $140,000.

Consider this: The median household income is roughly $80,000. We have been told, implicitly, that a family earning $80,000 is doing fine—safely above poverty, solidly middle class, perhaps comfortable. But if Orshansky’s crisis threshold were calculated today using her own methodology, that $80,000 family would be living in deep poverty. To understand why, you need to look at the real costs of sustaining a family today. I wanted to see what would happen if I ignored the official stats and simply calculated the cost of existing. I built a basic needs budget for a family of four (two earners, two kids). No vacations, no Netflix, no luxury. Just the “participation tickets” required to hold a job and raise kids in 2024. Using conservative data for a family in New Jersey:

• Childcare: $32,773
• Housing: $23,267
• Food: $14,717
• Transportation: $14,828
• Healthcare: $10,567
• Other essentials: $21,857
• Required net income: $118,009

Add federal, state, and FICA taxes of roughly $18,500, and you arrive at a required gross income of $136,500. This is Orshansky’s “too little” threshold, updated honestly. This is the floor. The single largest line item isn’t housing. It’s childcare: $32,773. This is the trap. To reach the median household income of $80,000, most families require two earners. But the moment you add the second earner to chase that income, you trigger the childcare expense. If one parent stays home, the income drops to $40,000 or $50,000—well below what’s needed to survive. If both parents work to hit $100,000, they hand over $32,000 to a daycare center. Then take housing. Critics will immediately argue that I’m cherry-picking expensive cities. They will say $136,500 is a number for San Francisco or Manhattan, not “Real America.” So let’s look at “Real America.”

The model above allocates $23,267 per year for housing. That breaks down to $1,938 per month. This is the number that serious economists use to tell you that you’re doing fine. I analyzed a modest “starter home,” which turned out to be in Caldwell, New Jersey—the kind of place a Teamster could afford in 1955. I went to Zillow to see what it costs to live in that same town if you don’t have a down payment and are forced to rent. There are exactly seven 2-bedroom+ units available in the entire town. The cheapest one rents for $2,715 per month. So when I say the real poverty line is $140,000, I’m being conservative. I’m using optimistic, national-average housing assumptions. If we plug in the actual cost of living in the zip codes where the jobs are—where rent is $2,700, not $1,900—the threshold pushes past $160,000. The housing market isn’t just expensive; it’s broken. Seven units available in a town of thousands? That isn’t a market. That’s a shortage masquerading as an auction.

Then there is everything else you need to function in society, the cost of the “participation ticket.” Back in 1955, that included a $5 phone line. Adjusted for inflation, that would be $58. Except that in reality, to function today—to factor authenticate your bank account, to answer work emails, to check your child’s school portal (which is now digital-only)—you need a smartphone plan and home broadband. That’s not $58. It’s $200 or more. Economists will look at my $140,000 figure and scream about “hedonic adjustments.” And yes, cars today have airbags, homes have air conditioning, and phones are supercomputers. The quality of many goods has gotten markedly better. But we are not calculating the price of luxury. We are calculating the price of participation. Now run this kind of participation audit across the economy. In 1955, Blue Cross family coverage was roughly $10 per month ($115 in today’s dollars). Today, the average family premium is over $1,600 per month. That’s 14x inflation. In 1955, the Social Security tax was 2 percent on the first $4,200 of income. The maximum annual contribution was $84. Adjusted for inflation, that’s about $960 a year. Today, a family earning the median $80,000 pays over $6,100. That’s 6x inflation. And childcare? In 1955, this cost was zero because the economy supported a single-earner model. Today, it’s $32,000. That’s an infinite increase in the cost of participation. The only thing that actually tracked official Consumer Price Index was... food. Everything else—the inescapable fees required to hold a job, stay healthy, and raise children—inflated at multiples of the official rate when considered on a participation basis. Yes, these goods and services are better. I would not trade my 65″ 4K TV mounted flat on the wall for the 25″ TV that dominated a living room, but I also don’t have the choice to pay less money and buy the old model.

“We’re reshaping how we build and field the Fleet, working with industry to deliver warfighting advantage, beginning with a strategic shift away from the Constellation-class frigate program,” Navy Secretary John C. Phelan said in a post on X. Phelan said that four ships under contract but yet to be built by Fincantieri would now be cancelled. “The navy and our industry partners have reached a comprehensive framework that terminates for the Navy’s convenience the last four ships of the class which have not begun construction,” he said. “We greatly value the shipbuilders of Michigan and Wisconsin. While work continues on the first two ships those ships remain under review as we work through this strategic shift. Keeping this critical workforce employed and the yard viable for future navy shipbuilding is of foremost concern,” he added.

keeping the critical workforce employed by cancelling all their work

Italian shipyard Fincantieri won the contract to build the frigates in 2020 at its Marinette Marine yard in Wisconsin, with the US Navy eyeing an eventual order of 20 ships. The baseline design was Fincantieri’s FREMM frigate, which is already in service with the French and Italian navies among others. The U.S. Navy originally reported “basic and functional designs” were 88% complete. But a March report by the United States Government Accountability Office claimed the U.S. Navy proceeded to order numerous design changes, meaning that five years on, the program was only 70% complete and three years late. “As a result of these changes, in part, the frigate now bears little resemblance to the parent design that the Navy touted as a built-in, risk reduction measure for the program in 2020,” the report stated. “Now, in 2025, the ongoing redesign has driven weight growth at levels that exceed available tolerances. Already the Navy is considering a reduction in the frigate’s speed requirement as one potential way, among others, to resolve this weight growth,” the report added. In his statement on Tuesday, Phelan said, “The facts are clear. It is time to deliver the ship our warfighters need at a pace that matches the threat environment, not the comfort level of the bureaucracy.”

In a statement, Fincantieri said it expected to receive new orders for “amphibious, icebreaking and other special mission” ships to compensate for lost business. “On top of the aforementioned award of future orders, in order to cover the above, the agreement indemnifies Fincantieri Marine Group, on existing economic commitments and industrial impacts through measures provided by the U.S. Navy, as a result of the contractual decision made for its own convenience,” the firm said. Fincantieri said it has invested more than $800 million in its four U.S. shipyards: Marinette, Green Bay, Sturgeon Bay, and Jacksonville, and now employs 3,750 staff in the United States. George Moutafis, CEO of Fincantieri Marine Group, said, “Our investments in the U.S. shipyards are a testament to our long-term vision: to be a cornerstone of the U.S. maritime industrial base and a driving force to sustain the momentum of the national shipbuilding renaissance, the American shipbuilding renaissance.” Sources in Italy told Defense News the work on the six frigates had been worth $6 billion. Continuing work on the first two, plus indemnities agreed with the U.S. government, would be worth $3 billion, while new orders planned would be worth $2 billion.

Phelan’s decision to truncate the Constellation program was praised by Senate Armed Services Committee Chairman Sen. Roger Wicker (R-Miss.). “I commend (the Navy secretary) for canceling the troubled Constellation-class frigate program — a tough but vital call. Biden-era design changes derailed the contractor, but Fincantieri Marinette Marine will remain key to our shipbuilding future. This is a clear signal that Navy program management is being fixed and accountability restored. Stronger Navy ahead!” In his statement, Phelan added, “The Navy needs ships and looks forward to building them in every shipyard that can. A key factor in this decision is the need to grow the fleet faster to meet tomorrow’s threats. This framework puts the Navy on a path to more rapidly construct new classes of ships and deliver the capability our warfighters need in greater numbers on a more urgent timeline.”

The United States is formulating plans to feed a massive military presence in the Caribbean almost to the end of President Donald Trump’s term in office — suggesting the recent influx of American troops to the region won’t end anytime soon. As gossip, official leaks, and RUMINT (a portmanteau of rumor and intelligence) about a coming war with Venezuela reign in Washington, Defense Department contracting documents reviewed by The Intercept offer one of the most concrete indications of the Pentagon’s plans for operations in the Caribbean Sea over the next three years. The contracting documents earmark food supplies for almost every branch of the U.S. military, including the Coast Guard, Army, Navy, Air Force, and Marine Corps. They detail an effort by the Defense Logistics Agency, or DLA, to source “Fresh Bread & Bakery products to Department of Defense (‘DoD’, or ‘Troop’) customers in the Puerto Rico Zone.” One spreadsheet outlining supplies for “Puerto Rico Troops” notes tens of thousands of pounds of baked goods are scheduled for delivery from November 15 of this year to November 11, 2028. Foodstuff set to feed the troops include individually wrapped honey buns, vanilla cupcakes, sweet rolls, hamburger rolls, and flour tortillas.

The Pentagon has built up a force of 15,000 troops in the Caribbean since the summer — the largest naval flotilla in the Caribbean since the Cold War. That contingent now includes 5,000 sailors aboard the USS Gerald R. Ford, the Navy’s newest and most powerful aircraft carrier, which has more than 75 attack, surveillance, and support aircraft. The surge of combat power comes as the U.S. has conducted more than 20 strikes on suspected drug smuggling boats in the Caribbean Sea and Pacific Ocean, killing more than 80 civilians. As part of that effort, the Trump administration has secretly declared that it is engaged in a “non-international armed conflict” with 24 cartels, gangs, and armed groups including Cártel de los Soles, which the U.S. claims is “headed by Nicolas Maduro and other high-ranking Venezuelan individuals,” despite little evidence that such a group exists. Experts and insiders see this as part of a plan for regime change in Venezuela that stretches back to Trump’s first term. Maduro, the president of Venezuela, denies that he heads a cartel.

Mark Cancian, an analyst with the Center for Strategic and International Studies, told The Intercept that the documents suggest the outsized American military presence in the Caribbean could continue for years. “The procurement’s length of time and the level of effort seemed to point to these operations continuing at the current level for several years,” said Cancian, who previously worked on defense procurement at the Office of Management and Budget. “That’s significant because it means that the Navy will maintain a large presence in the Caribbean that is far larger than what it has been in recent years. It further implies that the Navy will be involved in these counter-drug operations.” The Pentagon has tried to keep the details of its military buildup in the region under wraps, failing to answer questions from The Intercept about troop levels, the bulking up of bases, and warships being surged into the Caribbean. “For operational security reasons, we do not release itemized operational details of asset, unit, and troop movements and locations,” said a spokesperson for Southern Command, which oversees military operations in the region. “Information released is published via official communication web sites and social media accounts, or shared with reporters via news releases and updates.”

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Another former defense official, who spoke on the condition of anonymity due to his current job with a military contractor, said that the documents raise significant questions that the Defense Department would rather not address. “People will ask whether this means escalation from the strikes on smugglers into a Venezuelan campaign, whatever that eventually looks like,” said the former official who has significant experience in military logistics, procurement, and supply chains.

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Troops from the 22nd MEU are currently conducting training exercises in Trinidad and Tobago, the Caribbean island nation only miles from Venezuela. Maduro called the drills “irresponsible” and said the neighboring country was “allowing their waters and land to be used to gravely threaten the peace of the Caribbean.” Members of the unit have also conducted reconnaissance and surveillance training at Camp Santiago in Puerto Rico. For months, the 22nd MEU has failed to respond to The Intercept’s questions about its operations in the region. The unit also did not respond to recent repeated requests for comment about its use of Defense Activity Address Code M20179 and the potential for food deliveries into late 2028 for troops in and around Puerto Rico. The DLA documents are also no anomaly. Other recent contracting documents detail “food catering services for 22d MEU personnel located at José Aponte de la Torre Airport, Puerto Rico, from 15 September to 31 December 2025.” The Defense Logistics Agency is also looking into a separate “potential six-month contract for full-service food support to visiting U.S. Navy Ships” in Puerto Rico. That deal would include foods from beef steak, chicken cutlets, and lasagna to chocolate pudding, brownie mix, and chocolate chip cookie dough, not to mention breakfast burritos with bacon, egg, and cheese. Last week, Defense Secretary Pete Hegseth said that the campaign of attacks in the Caribbean and the Pacific is called Operation Southern Spear. Led by Joint Task Force Southern Spear and Southern Command, “this mission defends our Homeland, removes narco-terrorists from our Hemisphere, and secures our Homeland from the drugs that are killing our people,” he wrote on X. Southern Spear kicked off earlier this year as part of the Navy’s next-generation effort to use small robot interceptor boats and vertical take-off and landing drones to conduct counternarcotics operations.

Trump recently teased the possibility of holding talks with Maduro; Maduro said he is open to face-to-face talks with Trump. The Pentagon has reportedly presented Trump with various options for attacking Venezuela, according to two government officials who spoke to The Intercept on the condition of anonymity because they were not authorized to disclose information from classified briefings. Pentagon press secretary Kingsley Wilson did not reply to a request for comment. Trump has also publicly spoken of moving the sea attacks to land, confirmed that he secretly authorized the CIA to conduct covert operations in Venezuela, threatened future attacks on Venezuelan territory, and said he has not ruled out an invasion of Venezuela by U.S. troops. Asked if the U.S. was going to war against Venezuela, Trump nonetheless replied: “I doubt it. I don’t think so.” But when asked if Maduro’s days as president were numbered, Trump replied: “I would say yeah. I think so.” White House spokesperson Taylor Rogers did not reply to questions from The Intercept about plans to attack Venezuela, the options for strikes presented to Trump, and the contracting documents which indicate the U.S. will have a major troop presence in the Caribbean into late 2028. “These documents suggest that the Trump administration plans to maintain a significantly increased military presence in the Caribbean through the remainder of President Trump’s term in office. With ongoing military strikes against alleged drug traffickers in the Caribbean and the Pacific, the potential for escalation between the U.S. and Venezuela in particular is high, even if the administration isn’t seeking it,” Gabe Murphy, a policy analyst at Taxpayers for Common Sense, a nonpartisan budget watchdog advocating for an end to wasteful spending, told The Intercept.

In the midst of sudden and chaotic peace negotiations between the US, EU, Ukraine, and Russia, astute observers have been quick to dismiss the likelihood of a negotiated settlement happening any time soon. While this cynicism has a solid grounding in the lengthy legacy of failed negotiations in the war so far, European markets are reacting as if a conclusion to – or at the very least a shift in – the war is a real possibility.

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European markets reacted quickly to the rumors. The STOXX European Aerospace and Defense index (SXPARO), which tracks a basket of major defense stocks within the EU, began to slide on the 14th. The decline accelerated on the 19th with the appearance of rumors that the US proposal came with a “deadline” issued to Zelensky to sign a deal by the 28th. While the negotiations have now apparently devolved into a series of increasingly unrealistic European and Ukrainian counter-proposals, there’s been no reversal in this trend. The EUAD ETF, which closely tracks the index, has posted a 12% loss in the past month. This is a larger drop than the fund has experienced since the beginning of the war in Ukraine, and comes on the back of a 5% decline in the first half of October. There’s reason to think that the markets are reacting to more than just the latest rounds of (possibly futile) peace negotiations.

Pump and Dump

Over the past few months, major European defense concerns have announced the signing of letters of intent with the Ukrainians for defense deals of unprecedented scale. The first of these came in late October, as Swedish Prime Minister Ulf Kristersson held a joint press conference with Zelensky to unveil a potential purchase deal through which Saab AB would provide the Ukrainians with up to 150 new Gripen E multirole fighter aircraft. This announcement raised eyebrows for several reasons. First, if the deal were to come to fruition, it would be the largest defense procurement order in Sweden’s history. The value of just the aircraft, discounting maintenance contracts with Saab, would well exceed $20 billion. With Ukraine facing a $60 billion budget shortfall for 2026 alone, they do not have the means to pay for the aircraft, even in small installments. Swedish officials have made vague references to using the windfall from the deadlocked reparations loan to finance the deal, but as we’ve covered previously, the loan isn’t even enough to fund Ukraine’s current levels of expenditure, let alone a new $20 billion procurement contract. The Swedes have tried to build support for EU funding for the deal by suggesting production could take place across the continent, but with EU budgets already stretched to their limits, it’s not clear where the money would come from. Second, the rate of delivery for these aircraft seems wholly disconnected from the realities of the war itself. Swedish officials have suggested that the deliveries will only take place “after the war ends,” while “limited access” to older Gripen C/D airframes may be provided in the meantime. With current production rates of the aircraft being only in the low teens a year, delivering 150 of them would take as long as 15 years, according to the Swedes. Messaging from Zelensky seems disconnected from these statements – he says he hopes Ukraine will be operating the fighter “as soon as next year.”

Saab posted a sharp initial 7.8% gain as the letter of intent was announced, but that gain has now been erased, with a 15% loss month over month, as its share price declined precipitously with the announcement of renewed peace negotiations. This is unfortunate news for Saab, which has faced a long string of setbacks in Gripen sales. Without the Ukraine deal becoming a reality, the future financial success of the platform is uncertain. The Swedes are currently lobbying the Canadian Air Force to acquire the Gripen E. Not to be outdone, the French announced on the 17th the signing of a letter of intent for a similar deal to provide Ukraine with up to 100 Rafale F4 fighters. If the prospect of one procurement deal for aircraft valued in the tens of billions seems implausible, the simultaneous procurement of two incompatible platforms defies belief. Just like Saab, Dassault estimates it will take at least a decade to deliver the quantity of airframes specified in the letter of intent, with the first deliveries being years away. And just like the Swedes, the French point to the reparations loan scheme as the way to finance the deal. These two announcements, which involve no obligations for any parties involved, and only constitute vague commitments to explore future deals, paint a strange picture of the European defense industry. France and Sweden are now competing for the same potentially non-existent pool of funding. The Ukrainians are signaling their intent and ability to place $40 billion or more of procurement orders while being steadily cut off from debt financing and facing a $60 billion hole in their 2026 government budget. Prior transfers of western fighter jets have failed to gain them a noticeable operational or strategic advantage. And operating such a large fleet of hundreds of incompatible fighter aircraft would place enormous strain on their finances, even in peacetime.

Both Dassault and Saab face stiff competitive pressure from the F-35 program, as rising manufacturing costs in Europe reduce the low-cost edge platforms like the Gripen and Rafale once had. US political influence and economy of scale has left bleak prospects for both firms in competing with the F-35. Saab recently pitched to the Canadians that local production of the Gripen could create 10,000 new jobs in Canada – an absurd prospect considering localized production in Brazil has created only a few hundred. Though it hasn’t been stated publicly, the Europeans and the Ukrainians fully understand that these deals are fantasies only remotely achievable through the reparations loan, and even then are unlikely. But they announced them all the same in the hopes of boosting the public perception of their domestic defense industries. It’s also possible they’re using these deals to pressure other EU member states into funding the reparations loan, banking on promises of joint-production across the Union.

“There’s no money in the budget, period. Not happening. If the whole Russian assets deal doesn’t go ahead, these deals don’t go ahead.” - Richard Aboulafia, managing director of AeroDynamic Advisory (Kyiv Independent)

For their part, the Ukrainians get an optimistic headline that grants some temporary confidence to their less observant supporters, who often fail to read the fine print. Both Saab and Dassault have also suggested establishing joint production facilities in Ukraine, which plays well in the Ukrainian media. But Ukrainian sources have been less than triumphant about these potential deals.

“From the political leadership’s point of view, this looks like an attempt to offset internal corruption scandals with big foreign-policy signings. These are not shells or equipment that can protect us today. Strategically, yes, it’s important. But does it protect us now? No.” - Mykola Davydiuk (Kyiv Independent)

Of all the European defense contractors to benefit from the war in Ukraine, Rheinmetall has benefitted the most. We’ve previously covered how 2,000% gains since the beginning of the war have catapulted the German firm into “insanely overvalued” territory. German plans for unprecedented deficit defense spending justified by the war in Ukraine undergird its success, and so it’s more susceptible to changing sentiment around the war than any of the other companies we could discuss here. Accordingly, it’s posted a 16% loss in the week since the US peace proposal was unveiled.

While the latest peace negotiations are clearly responsible for the sudden downturn in European defense markets, they’re likely not the sole causative factor, in and of themselves. As we’ve covered extensively over the past few months, the Ukrainians are facing an all-time peak in battlefield, financial, political, and infrastructural pressure. The markets may be taking the negotiations not as a likely conclusion to the war, but a sign that the writing is on the wall for Ukraine. There’s little reason to think the Europeans will execute a total reversal in their plans for debt-driven defense spending. An ambiguous Russian threat can remain even if the war concludes, and pressure from the US to meet new NATO spending targets will ensure governments continue to dump cash into defense concerns. However, the mind-boggling overvaluation of firms like Rheinmetall will likely not survive a conclusion to the war, as a negotiated settlement could force the EU to scale back some of its spending. Other defense firms like Saab (+935%), Leonardo (+833%), BAE Systems (+485%), and Thales (+324%) have all posted enormous gains since 2022, but each has also lost more than 10% of its value in the past week. Unless the Europeans can ensure the war continues for the long term, these defense companies will have a long way to fall.