Ukraine must decide how its Russian incursion ends — advance further or retreat before it's too late

More than a week into Ukraine’s surprise incursion into Russia’s Kursk region and the operation, and the gains made in the last week are likely to have exceeded even Kyiv’s wildest expectations.

Ukrainian forces now occupy more than 1,000 square kilometers of Russian territory and have captured 74 settlements, Ukraine’s top military commander Oleksandr Syrskyi told Ukrainian President Volodymyr Zelenskyy Tuesday.

On Wednesday, the president claimed Ukraine’s forces had advanced even further into Russia, making gains of 1-2 kilometers and capturing more than 100 Russian soldiers since the beginning of the day.

Ukraine appeared to make the most of its newfound offensive momentum by launching the largest ever drone attack yet on Russian military airfields on Thursday, destroying a Russian Su-34 jet used to launch glide bombs at Ukrainian front-line positions and cities, Ukraine’s General Staff said. CNBC was unable to independently verify the claims made by Zelenskyy or the military.

Russia is seething about the incursion which has seen the first foreign army on Russia soil since World War II. It says the raid is designed to stop its rolling offensive in eastern Ukraine, and to destabilize the country. Officials in Moscow have also used the incursion to further attack Ukraine’s Western backers.

A grim-faced President Vladimir Putin has vowed a “worthy” retaliation to what he initially described as a “large-scale provocation.” But the gains in the southwestern region of Kursk have seemingly stunned Russia’s military command, which has yet to mount a robust response to the incursion.

Geopolitical and defense analysts warn that a response will come, and while Kyiv can bask in the success of its cross-border operation for now, it does need to have a plan as to what happens next.

Whether Ukraine chooses to consolidate its territorial gains in Kursk, reinforce its troops and continue its advances — or to withdraw its forces while the going is still good in order to preserve lives, and ahead of what might be a furious Russian response — a decision will need to come quickly.

“The initial phase of the offensive that saw quick Ukrainian advances and the establishment of defensive positions in the Kursk region appears to be coming to an end,” Andrius Tursa, Central & Eastern Europe advisor at risk consultancy Teneo, said in a note Wednesday.

“While the first week of the offensive appears to have been successful for Kyiv from the military and political perspective, it still entails significant risks, he noted, adding that it’s crucial to watch whether the Ukrainian forces “can manage to hold the occupied territory and, if needed, pull back troops and equipment with minimal losses.”

The offensive is being carried out by experienced troops with advanced Western military equipment that appears to have been pulled back from the frontlines in Ukraine, Tursa said.

“Their loss would have negative implications for the country’s defensive capabilities and could backfire politically, especially if the outcome of the incursion is perceived to be unworthy of the losses,” he warned.

Russia appears to be largely relying on Russian conscripts, and elements of some regular and irregular military units pulled from less critical sectors of the frontline in eastern Ukraine, to address the ongoing Ukrainian incursion, analysts at the Institute for the Study of War think tank stated Tuesday.

Analysts warn Russia’s lackluster response to Ukraine’s incursion is unlikely to last much longer, however.

“In the coming days, Russia’s so-called counter-terrorist forces — consisting of various domestic security units — will likely step-up efforts to liberate the occupied territories. This will likely include addressing the dilemma of whether Russia should use heavy weapons within its own territory,” Teneo’s Tursa noted.

Matthew Savill, the military sciences director at the Royal United Services Institute defense think tank, said Tuesday that “sustaining a force of any size in Russia, and defending against counter-attacks, will be hard, given the limited reserves available to Ukraine. Neither has it – thus far – resulted in the Russians slowing their advances around the Donbas, where the situations around Chasiv Yar and towards Povrovsk remain difficult.”

Ukrainian officials and defense analysts acknowledge that the incursion into Russia is designed to give Ukraine more bargaining power in any future peace initiatives with Russia. The timing is salient as a possible second term for former President Donald Trump brings with it the likelihood that Ukraine could be pressured or forced into negotiations with its foe and possible territorial concessions, in order to end the war.

As such, hanging on to territory in Kursk could prove a useful bargaining chip, although doing so could come at a high cost in the face of a stronger and more organized response by Russia to the incursion.

President Zelenskyy appeared to suggest there may be plans for a longer operation in Kursk, saying on Wednesday that he had held a meeting on the security and humanitarian situation in Kursk and had discussed “security, humanitarian aid” and the “creation of military administrations if necessary,” he said on Telegram.

A senior Ukrainian official told CNBC this week that Kyiv hoped that “if everything goes well [in Kursk], the presence of the Ukrainian troops in Russia will serve as a force to change the dynamics of the war, and it will increase our negotiating power, for example, in the context of the possible peace initiatives,” the official said, speaking on condition of anonymity due to the sensitivity of the operation.

The official insisted that Ukraine had no interest in occupying or annexing a part of Russia but would seek to use its incursion to change the dynamics of the war, particularly in eastern Ukraine.

“This is not about Ukraine’s desire to seize Russian territory. We’re confident the world understands this is not about annexing parts of Russia. We don’t need that territory. We just need them to get out from ours,” the official said. The official said Ukraine wanted to use its present position as “leverage” to “bring about a just peace, faster.”

“Occupying” Russian territory ahead of any peace talks is seen as way to put Ukraine in a stronger bargaining position, and may go some way to reducing Putin’s position in any future peace talks, academic Taras Kuzio, a professor of political science at the National University Kyiv-Mohyla Academy in Kyiv, wrote in analysis Tuesday.

He also noted occupying Kursk had other possible benefits, in that “a belt of Ukrainian-occupied land in the Kursk and Belgorod regions would prevent Russian artillery fire against north-eastern Ukraine (and maybe drone flights) and block supply lines to Russian occupation forces in the Donbas.” Ukraine’s occupation could also provide Russian opposition groups with a base inside Russia, he added.

“Ukraine’s incursion into Russia is bold and risky, and it may yet fail; that’s the nature of war. But has already brought benefits. It has shown that the misplaced fear of crossing Russian “red lines” leading to nuclear escalation, which led to the drip-drip supply of military equipment, is a myth and that Ukraine’s battle-hardened military remains a formidable force. As Putin is once again discovering,” Kuzio said.