As we warned at the end of December, Russian troops had been gaining ground on the eastern front at an exponential rate, with the key city of Velyka Novosilka nearly encircled and ready to fall.  After weeks of incomplete reports on the situation, Ukrainian officials have finally confirmed that the area has been overrun.  Some reports also indicate that Ukrainian soldiers were nearly surrounded during the retreat.

Kiev claims encirclement while Russian footage of clean-up operations on the ground indicates that some Ukrainian units may have been abandoned. 

The establishment media has remained relatively quiet on the event, even though geo-located video footage showing Russian troops raising flags over the center of the city are circulating widely on social media.  Analysis of known Ukrainian defenses suggests that Kiev's lines are thin beyond Velyka Novosilka and that the city was the last major stronghold preventing Russian troops from surging into central Ukraine and the Dnipropetrovsk Oblast region.

Velyka Novosilka was made vulnerable to Russian attack after Ukraine retreated from Vuhledar, roughly 30 kilometers (18 miles) east.  The Ukrainians originally claimed that Vuhledar was strategically "unimportant", but the loss has proven to be disastrous. 

The prevailing ugly truth for the Ukrainians is one of manpower - They don't have enough.  In the early days of the war a steady stream of western mercenaries, many of them military veterans from the US and the UK, flooded into Ukraine along with NATO weapons, cash and "advisers".  This source of extra manpower dried up at least 18 months ago 

The initial retreat by Russia to the east in 2022 was wrongly interpreted by western media as a sign of surrender by Vladimir Putin, but Russia was in fact reforming their lines in order to execute a new attrition strategy.  Attrition warfare negates the tactical advantages of maneuver warfare commonly used by NATO armies.

Continuing Russian gains bring into question the context of peace talks being arranged by the new Trump Administration.  It is unlikely that Putin will accept any agreement that requires Russia to give up any part of the Donbas territory; Russia has all the leverage.

Trump has indicated that Vladimir Zelensky is also resistant to entering negotiations and insists on continuing the war.  Zelensky seems to operate under the assumption that the US or the EU will eventually be forced to deploy troops to the front and that Ukraine will not be required to give up any territory.  This, of course, would would result in a new world war over a country that most Americans are no longer interested in propping up.