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In Israel, Support Grows for Offensive Against Hezbollah

As the U.S. works to avoid a regional war, inside security circles some wonder whether now is the time to risk one

TEL AVIV — As Israel braces for an attack from Iran and its ally Hezbollah, there is a debate here over whether now is the right time for the country to launch an offensive attack against the Lebanese militia or try to de-escalate to avoid triggering a wider regional war.

The U.S. has been working feverishly behind the scenes to avoid an escalation that could lead to a regional war. The Biden administration is expected to send a senior delegation to the region this week to work on that effort.

Inside Israel, there is a split. Some, like Defense Minister Yoav Gallant, say now is the time for a cease-fire in Gaza that would see the release of hostages and help calm tensions on the northern border so the thousands of Israelis displaced there can return home. Israeli Prime Minister Benjamin Netanyahu has said he doesn’t want a war but has promised a “heavy price” in response to an attack.

But there is also a growing number of current and former security officials, as well as politicians from the center, right and far-right, who think the timing could be ripe for Israel to take an offensive approach with Hezbollah, which has amassed more than 100,000 rockets, missiles, drones and other projectiles along Israel’s northern border.

The leadership of Israel’s northern command, the military branch responsible for defending the border with Lebanon, is pushing for a more aggressive approach against Hezbollah than Israel has taken during the current war, say current and former Israeli officials.

One senior security official said a disproportionate response by Hezbollah could “lead to an Israeli attack that will lead to a new reality on the northern border.”

Amos Yadlin, a former intelligence official and president of MIND Israel, a national security consulting firm, said a diplomatic deal, while preferable, is unlikely at this point. Strategically, he thinks Israel should wait until after a Hezbollah attack so it has the justification needed to launch a swift and strong campaign that can cripple the group in a matter of days or weeks while enjoying U.S. support.

“Enough is enough,” said Yadlin. “Since Hamas is basically destroyed, it is time to move to the north.”

Within Netanyahu’s cabinet, far-right national security minister Itamar Ben-Gvir has been calling for a war with Hezbollah as have members of Netanyahu’s right-wing Likud party. Even centrist politicians, like National Unity party chairman Benny Gantz, have called for Israel to strike Lebanese infrastructure, an offensive move that is likely to start a war.

A war between Israel and Hezbollah has long been considered inevitable so it is just a question of timing, say security analysts. With an anticipated retaliatory strike from Iran and Hezbollah for killings in Beirut and Tehran, Israel could have the justification it needs to hit the group hard enough to deter future attacks for many years to come. Israeli troops are amassed at the border. Israelis are psychologically prepared for a war. And the U.S. has moved assets into the region, including a guided-missile submarine.

There is also tremendous pressure on the government to deal a blow to Hezbollah so that the 60,000 Israelis who have been displaced can return home.

“I don’t see any way to return residents to northern Israel without a powerful war against Hezbollah in Lebanon,” said Yoav Kisch, education minister and a member of Netanyahu’s coalition, in a radio interview on Sunday.

Yet after 10 months of war in Gaza, some argue that now is exactly the wrong time to enter into another war. Israeli reservists are exhausted. The economy is struggling. Fitch on Monday lowered the country’s credit rating, citing military operations on multiple fronts. The country also needs time to replenish its stock of weapons.

More dangerously, destroying Iran’s most powerful proxy risks a direct confrontation with Tehran, one that would likely lead to a full-blown regional war that could spread beyond the Mideast, likely dragging the U.S. into the conflict. The U.S., Europe and Arab allies in the Mideast have all been working to avoid such a scenario since the Hamas-led Oct. 7 attack that sparked a war in Gaza and the near-constant volley of attacks between Hezbollah and Israel.

Gallant on Monday pushed back against those calling for war with Hezbollah. “I’ve seen this courage when it comes up for discussion,” he said at a parliamentary hearing. “The conditions for war in Lebanon that exist today are the opposite of what they were at the beginning of the war.” The Wall Street Journal reported that Gallant had advocated for an Israeli attack against Lebanon right after Oct. 7, but President Biden successfully urged the Israelis to halt such plans.

Such a war would be devastating for both sides. Hezbollah is more like a well-armed military than a traditional militant group, with enough missiles and drones to overwhelm Israel’s air defenses and thousands of well-trained infantry to storm its territory. With civilian casualties likely on the Israeli side, the country’s military would seek to finish the war as quickly as possible through a punishing air campaign targeting the group, which is embedded in villages along the southern border, and Lebanese infrastructure, security analysts say. Israel would likely raze Lebanese villages located near Israel and could reoccupy southern Lebanon and create a new buffer zone, the analysts said.

Hezbollah, a U.S.-designated terrorist group and a key ally of Hamas, has vowed to keep fighting until the war in Gaza comes to a halt.

Some are arguing that the military should pre-emptively strike in Lebanon.

“There is a huge difference who attacks first,” said Amir Avivi, a former deputy commander of the Israeli military’s Gaza division who now heads the Israel Security and Defense Forum, a think tank.

He said Israel would destroy 80% to 85% of Hezbollah’s capabilities in an pre-emptive attack.

“If [Hezbollah] attacks first, then it can be devastating,” he said.

U.S. and allied countries have been working on the outlines of an Israeli-Hezbollah agreement that would have seen the group moved away from Israel’s border. But those talks have stumbled along with attempts to reach a cease-fire in Gaza. Many in Israel also argue that any diplomatic agreement without a military response would simply delay an inevitable war, as Hezbollah would likely return to Israel’s border and renew hostilities in the future.

In a poll released by the Jerusalem-based Israel Democracy Institute, 67% of Israelis support a more aggressive approach to Hezbollah, 42% of which said it should include strikes on Lebanese infrastructure.

Giora Eiland, a former Israeli national security adviser, said Israel should agree to a cease-fire in Gaza and bring Israeli hostages home, even if it means Hezbollah stays intact and Hamas survives in Gaza for now.

But if Israel’s government doesn’t make that decision, then he said it should launch a full-scale war against the Lebanese state rather than continuing the status quo.

“The two options are bad,” said Eiland. “We simply need to select one.”

While most policymakers think pay increases will not drive up inflation, some economists are worried

Wages in the Eurozone’s largest economy are rising at their fastest rate this century, fuelling disquiet among some economists about next month’s expected interest rate cut from the European Central Bank.

Negotiated wages in Germany are expected to shoot up by 5.6 per cent in 2024, based on deals agreed between January and June, according to data published on Tuesday by WSI, a trade union think-tank. The pay increase, in real terms, will be the fastest since their records began in 2000.

Although the hikes are far in excess of rate-setters’ overall 2 per cent inflation goal, policymakers in Frankfurt have baked “elevated” pay growth into their forecasts.

The ECB’s calm in the face of higher pay pressure comes from a belief that workers are still “catching up” after their purchasing power was eroded by inflation. Even with this year’s 5.6 per cent pay rise factored in, only half of German workers’ losses between 2021 and 2023 have been compensated.

ECB president Christine Lagarde in June cited a 12 per cent wage deal for public sector workers in Germany — the first in three years — as an example.

“You can imagine that an agreement that is cut in 2024 and that covers [lost purchasing power in] 2021, 2022 and 2023 is obviously going to be very sizeable,” she said.

Markets are pricing in a more than 90 per cent chance of another 25 basis point cut in September, following June’s reduction in the deposit rate from 4 per cent to 3.75 per cent in June.

Policymakers’ confidence is shored up by the reversal of a phenomenon dubbed “greedflation”, which means it is harder for companies to pass on extra payroll costs to their customers.

Rate-setters believe businesses used the combination of high input costs and strong consumer demand to raise prices and boost profit margins in the immediate aftermath of the pandemic. Now, with growth stagnant, profit margins look set to shrink. Unemployment, meanwhile, remains low, meaning workers can push for wage increases.

However, not all rate-setters are convinced that the ECB will manage to avoid what Lagarde has referred to as “tit-for-tat inflation”.

Robert Holzmann, the hawkish Austrian central bank governor who was the sole member of the rate-setting governing council to not support a cut in June, said the rise in Eurozone labour costs would weigh on the region’s competitiveness. 

“The potential loss of competitiveness should encourage wage negotiators to moderate their demands, and the corporate sector to invest in productivity increasing ventures,” he told the Financial Times. “Against this background, monetary policymakers are well advised to look at a very broad set of data and to remain extremely vigilant.”

Jörg Krämer, chief economist at Commerzbank, said the central bank’s handling of wage pressures was “dangerous”.

“What is called catch-up now was called a second-round effect in the old days,” he said.

More bumper pay deals are expected in the coming months.

Germany’s most powerful union, IG Metall, will start its battle for a 7 per cent pay increase for 3.9mn workers in the country’s metal and electrical industry in September.

Collective bargaining is particularly popular in Germany and also covers about 80 per cent of workers across the Eurozone.

Investors are convinced by Lagarde’s message that the behaviour of corporates and households shows that higher pay is unlikely to lead to the dreaded wage-price spiral that haunted western economies in the 1970s, when high pay rises followed oil price shocks and made it more difficult to bring inflation under control.

The ECB president has emphasised that, after rising 4.8 per cent this year, pay deals are likely to be lower in 2025 and “even more so” the following year.

“The [ECB’s] particular focus is on the question to which extent profit margins are absorbing the increase in unit labour costs,” said Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management.

The optimists point to the temporary nature of greedflation — and the current state of the Eurozone economy — to highlight that the risk of history repeating itself today is low.

Isabella Weber, a professor at the University of Massachusetts Amherst and one of the first economists to flag the phenomenon, said external shocks such as clogged supply chains and soaring gas prices had created a “window of opportunity” for companies to raise prices without losing market share.

Consumers, meanwhile, could not switch brands owing to shortages of goods and struggled to tell legitimate and excessive price increases apart.

Four years on, supply chain chinks have been ironed out and energy prices are down. Demand is no longer strong. And rates still remain relatively high.

“The overall Eurozone economy is rather weak and we are seeing a margin squeeze as manufacturers are currently unable to pass on higher wage costs to their clients,” said Ulrike Kastens, an analyst at DWS.

Others say the central bank will still have to keep a close eye on how long the momentum for bumper pay deals persists. Research from the Düsseldorf-based Macroeconomic Policy Institute (IMK) shows the gap between profits and labour costs has all but closed.

“At the euro area level, there is not a lot of catch-up potential left,” IMK’s research director Sebastian Dullien told the Financial Times.

US confectionery giant to pay $83.50 per share for snack rival

Mars, the confectionery, food and petcare giant, has reached an agreement to acquire Pringles and Pop-Tarts maker Kellanova at a more than $29bn valuation, marking one of the largest deals of the year, said people briefed about the matter.

The US conglomerate, known for sugary snacks such as M&M’s, Snickers and Skittles, plans to pay $83.50 per share for Kellanova, the people said. 

An announcement unveiling Mars’s all-cash deal is expected on Wednesday morning in New York. Mars will also take on $6bn in net debt, added the people.

The offer made by the privately held company represents a significant premium to where Kellanova’s shares were trading just a few months ago.

The price Mars is offering to pay is unusual in the consumer sector, especially for a company making products that have fallen out of favour with health conscious customers. 

Mars’s expected acquisition also comes as consumers have recently reduced their spending following several years of inflation, which has pushed prices for many staples above pre-pandemic levels.

However, Kellanova has so far managed to navigate the slowdown in US consumer spending and it recently raised its full-year sales forecasts after exceeding expectations with its latest earnings. 

The New York-listed company, which also makes Cheez-It, Rice Krispies Treats and Eggo, was created in 2023 after Kellogg separated its breakfast cereals and snacks businesses.

Mars, which is one of the world’s largest family-owned businesses, boasts annual sales exceeding $50bn and a workforce of more than 150,000 employees.

The proposed deal is likely to face significant antitrust hurdles as competition watchdogs appointed by President Joe Biden’s administration have been aggressively challenging big mergers and acquisitions.

Dealmaking has slowed sharply over the past few years, although it has started picking up in recent months. If Mars’s acquisition of Kellanova is approved it is likely to usher a new wave of deals in the sector. 

News about a deal being announced on Wednesday at $83.50 per share was first reported by The Wall Street Journal. 

Funds have taken aim at US regulator’s authority in challenge to rule that would have forced greater transparency

In February 2022, the chief legal officer of hedge fund Citadel, Shawn Fagan, rang Eugene Scalia, a top lawyer who has made a career out of taking on US regulators.

Fagan wanted Scalia’s help in challenging a newly aggressive Securities and Exchange Commission, which under chair Gary Gensler was proposing rules that would bring private equity firms and hedge funds — part of a “shadow banking” sector whose rapid growth has alarmed regulators — under closer supervision.

It was a natural choice. Fagan had known Scalia for many years, having been a clerk at the US Supreme Court in the days when Eugene’s father Antonin Scalia, a conservative justice idolised by Republicans for his steadfast opposition to perceived government over-reach, was on the court.

Following the call, Citadel and the other hedge funds and private equity firms opposing the plans decided on a strategy altogether more drastic than simply quibbling about individual aspects of the rule they did not like — challenging in court the SEC’s very authority to introduce such regulation.

The lawsuit led a wave of legal challenges launched against federal agencies by lawyers like Scalia who sought to take on President Joe Biden’s broad regulatory agenda. That trend now threatens to undermine a whole swath of rules brought by Gensler’s SEC.

“This is not just an attack on the private funds rule and it’s not just an attack on the SEC, but it’s part of a broader attack on the scope of agency rulemaking and the scope of their power,” said Jill Fisch, professor at University of Pennsylvania’s law school.

Market participants have been emboldened by more pro-business judges sitting in higher courts. The Supreme Court, which is split 6-3 between conservative and liberal justices, in recent years has handed down decisions that have dramatically curbed agencies’ rulemaking powers.

To help their cause, rather than bringing a case in Washington, where SEC rules are traditionally challenged, the private fund industry groups chose a venue more likely to be sympathetic to their views: the conservative New Orleans-based Fifth Circuit Court of Appeals.

The plan worked to perfection. In June, the appeals court threw out the so-called private funds rules — which would have required firms to be more transparent with their clients about earnings, expenses and side deals with large investors — on the basis that the agency had overstepped its authority.

It is crucial to put forward strong arguments during the public consultation that could convince a court “as if you are going to trial” to lay the groundwork for a lawsuit, rather than simply giving your views, Scalia said in an interview with the Financial Times in reference to his advice to clients in contentious rulemakings.

“Litigation must be a part of any advocacy strategy in today’s environment,” said Drew Maloney, president of the American Investment Council, which represents private equity firms such as KKR, Blackstone and Apollo and also participated in the case against the SEC.

The court rejected the SEC’s argument that it had powers to introduce rules to protect not just retail customers but also investors in private equity and hedge funds, who are often more sophisticated clients.

“The commission has exceeded its statutory authority . . . no part of [the rule] can stand,” the court ruled. It also said the SEC had failed to specifically link the new rules to its traditional fraud-prevention authority.

Gensler told the FT that the SEC is “updating our rules to benefit investors and issuers alike within the laws and how the courts interpret those laws”.

“In the last few years, we’ve finalised 40 rules, the majority of which are being implemented. These projects are making our capital markets more efficient, transparent and resilient,” he added.

The focus on hedge funds and private equity comes as international regulators grow increasingly nervous about the rapidly expanding shadow-banking sector, its opacity and its relative lack of regulation.

The industry has used similar legal tactics to challenge other SEC rules. These include a proposal to impose banklike regulation on some hedge funds and trading firms in the US Treasury market, and another rule that would force hedge funds to disclose more information on short positions against companies.

“Will we be looking at final rules with a closer scrutiny based on statutory authority? Yes, I think we will do that,” said Bryan Corbett, president and chief executive of the Managed Funds Association, which represents some of the world’s largest hedge funds and joined Citadel in the private funds lawsuit.

Even before his confirmation as SEC chair in April 2021, Gensler was well known to the industry from his tenure as chair of the Commodity Futures Trading Commission, the US derivatives regulator.

There he had adopted a hard-charging style in the wake of the 2008 financial crisis, implementing the Dodd-Frank Act to clean up the derivatives market.

“His approach to the world is to load up the agenda . . . you can only pick so many things to fight,” said a former regulator who worked at the SEC and CFTC. “It’s what Gary did with Dodd-Frank and [derivative] swaps and it has been what he’s doing with the securities world right now . . . he’s picking a fight with everybody.”

The private funds lawsuit was the first time the MFA or AIC had sued the SEC, and came after other options appeared to have been exhausted.

Between Gensler’s confirmation and March this year, the MFA and the Alternative Investment Managers Association met him nine and four times respectively, according to public records, in addition to other commissioners.

Hedge fund Citadel and its sister firm Citadel Securities met him six and 12 times respectively. These included a meeting with the firms’ billionaire founder Ken Griffin, who has been publicly scathing about the SEC’s agenda.

But the hedge funds and private equity firms felt that the lobbying efforts encountered a cold reception, according to multiple people who attended meetings with the chair.

Hedge funds were particularly irked by the sheer volume of new rules proposed with just a one month comment period. They pointed to a rule intended to improve transparency of the securities lending market and proposed in November 2021, despite overlapping with Thanksgiving and Christmas.

The comment period was reopened twice, however, in February and October 2022. In the past two years, the SEC has reopened 18 rules for further public comment, and comments are often still submitted after the deadline.

The agency ultimately tweaked parts of the proposal before adoption. Nevertheless, by February 2022, when Citadel called Scalia, it had become clear to much of the industry that Gensler was unlikely to fundamentally overhaul the proposal, and that only the courts would be able to resolve their disagreement with the SEC.

“Citadel is proud of our constructive engagement with the SEC, supporting rules and reforms that strengthen market efficiency, resiliency and integrity. Through thoughtful and deliberate regulation, the SEC has historically fostered the creation of strong capital markets that promote growth and stability and expand the economic pie for everyone,” said Stephen Berger, Citadel’s global head of government and regulatory policy, in a statement.

Investor groups argue that dismantling Gensler’s ambitious regulatory agenda is bound to harm investors.

Gensler’s plans were “designed to ensure that the rules keep pace with the changes that we’ve seen in the market, so that investors can continue to be protected”, said Benjamin Schiffrin, director of securities policy at the Better Markets campaign group.

He added that the private funds rule was “tremendously important” as it would have provided more insight into funds as their investors “are increasingly pension funds that represent teachers, firefighters, police officers, everyday Americans”.

Gensler, meanwhile, warned in an interview with the FT about the risk of bets by non-bank financial institutions spilling out across asset classes and into the real economy.

After the upheaval in US government bonds in March 2023 following the collapse of Silicon Valley Bank, greater scrutiny of hedge funds and other parts of the shadow banking system was “more important than ever”, Gensler said.

Hedge funds and private equity firms see things very differently. In Gensler’s actions, they see an effort to clamp down on the industry without a mandate from lawmakers in Congress — a claim Gensler has repeatedly rejected.

“We knew when he was appointed he would be an aggressive chair, what we didn’t expect was that in light of no statutory authority directing him to take these rulemakings . . . he implemented a massive agenda targeting private funds on his own,” said the MFA’s Corbett.

The SEC last month let a deadline for a rehearing of the appeals court’s decision on the private funds rules pass. It could still ask the Supreme Court to reinstate the measures, but the US’s highest court has been highly sceptical of administrative power in recent years.

The Supreme Court in June overturned a landmark legal doctrine known as “Chevron deference”, which for 40 years had given federal agencies significant latitude in crafting rules in spheres ranging from climate to the securities market.

That could make pursuing a broad regulatory agenda even more challenging.

“Chairman Gensler and some of his colleagues at the SEC decided to push the envelope on their authority at exactly the wrong time,” Scalia told the FT.

Acquisition would push Mars, known for M&M’s and Skittles, into supermarkets’ chips and cracker aisles

Mars is expected to unveil a nearly $30 billion deal for foodmaker Kellanova K 0.69%increase; green up pointing triangle on Wednesday, according to people familiar with the matter, assuming talks don’t hit a last-minute snag.

The privately held Mars is expected to pay $83.50 a share for Kellanova in the all-cash deal, some of the people said.

Kellanova shares closed Tuesday at $74.50 and had been trading in the high $50s before the company reported better-than-expected earnings and news of the deal talks surfaced earlier this month.

The Wall Street Journal reported Aug. 4 that the two were in advanced talks and could reach a deal imminently.

Kellanova was spun off from Kellogg last year and sells brands including Pringles, Cheez-It, Pop-Tarts, Eggo and MorningStar Farms, as well as some cereals and noodles. Its snacks-heavy business was split from Kellogg’s slower-growing North American cereal business, which sells brands such as Frosted Flakes and Froot Loops, and was renamed WK Kellogg.

Acquiring Kellanova would push Mars, known for M&M’s and Skittles, into supermarkets’ chips and cracker aisles, giving it a bigger share of the snacking pie when consumers are eating fewer sit-down meals and more snacks throughout the day.

Since 2020, privately held Mars has scooped up snack-bar maker Kind’s North America business, Nature’s Bakery and Trü Frü, which makes chocolate-coated fruit snacks, part of an effort to expand in snacks.

The McLean, Va.-based company is family-owned. Beyond candy and snacks, Mars also sells food products like Ben’s Original rice and runs a substantial pet-food business. In 2017, it paid $7.7 billion for veterinary and dog-daycare company VCA.

Ukraine was sending in reinforcements Tuesday to bolster its foothold in the Russian border region

SUMY, Ukraine—Russia is withdrawing some of its military forces from Ukraine to respond to a Ukrainian offensive into Russian territory, U.S. officials said, the first sign that Kyiv’s incursion is forcing Moscow to rejigger its invasion force.

The officials said the U.S. is still seeking to determine the significance of Russia’s move and didn’t say how many troops the U.S. assesses Russia is shifting. But the new U.S. assessment bolsters claims by Ukrainian officials who said last week’s surprise invasion of Kursk province had drawn Russian forces away from Ukraine, where Moscow’s advantage in manpower and equipment is allowing them to grind forward in several places.

Ukraine, meanwhile, sent tanks and other armored vehicles to reinforce troops that have stunned the Kremlin by seizing a chunk of Russian territory.

Ukrainian forces have advanced at least 20 miles into Russian territory since launching the surprise assault last week, quickly overrunning the lightly defended border. Russian President Vladimir Putin has ordered his military and security forces to eject Kyiv’s military, but Russia is struggling to mount a coherent response.

On Tuesday, a Ukrainian soldier raised his fist as he rode a tank toward the Russian border. Heavy equipment and trucks loaded with logs used to reinforce bunkers and trenches trundled the same way. In the opposite direction, a pickup truck raced by carrying a half-dozen Russian prisoners with tape over their eyes.

Ukraine’s top military commander said Ukrainian forces were advancing and had taken control of 74 Russian towns and villages.

“There are battles across the front line,” Col. Gen. Oleksandr Syrskiy reported to Ukrainian President Volodymyr Zelensky in a snippet from a video call that was aired online.

The Russian Defense Ministry claimed Tuesday it was inflicting heavy losses on Ukrainian forces taking part in the operation, which Putin has blamed on Ukraine’s backers in the West, led by the U.S.

The Biden administration said it wasn’t given prior warning about the operation and has sought in recent days to understand Ukraine’s goals. One of the U.S. officials said Tuesday that Kyiv told the U.S. it had been looking for opportunities to exploit gaps in the Russian lines and found one in Kursk that was loosely defended. Ukraine was also hoping that the incursion would force Russia to pull troops out of Ukraine, which happened in the last day or so, the official said.

In Kyiv, Ukrainian officials gave their most detailed public comments yet on the reasons behind the operation, saying its aim was to destroy logistics and infrastructure that Russia uses to make war on Ukraine.

Russia “is sure that its territory is informally inviolable, and no one will destroy the logistics and infrastructure of the war” there, said Mykhailo Podolyak, a Ukrainian presidential adviser. “Today, Ukraine is showing that this is not the case.”

Russia has used the Kursk region to launch aerial and artillery strikes on Ukraine as well as to support its incursion into Ukraine’s Kharkiv province. Podolyak said in a post on X that ground operations were one way to destroy Russian war infrastructure. The other, he noted, was to use long-range missiles of the kind that the West has provided but not cleared for use against Russian territory.

Ukrainian foreign ministry spokesman Heorhiy Tykhi said Kyiv wasn’t interested in occupying Russian territory.

“The purpose of the operation is to save the lives of our people and protect the territory of Ukraine from Russian attacks,” he told reporters. “The sooner the Russian Federation agrees to restore a just peace…the sooner the raids of the Ukrainian defense forces on the territory of the Russian Federation will stop.”

Images of Ukrainian forces tearing down Russian flags have raised morale among troops after months of grinding attritional warfare that favors its much larger enemy. The incursion has also demonstrated to Kyiv’s partners that Ukraine is still capable of striking back against Russia after a failed counteroffensive last year. Ukrainian forces haven’t regained significant territory since the first year of the war, when they pulled off a surprise counteroffensive in the northern Kharkiv region and squeezed Russian forces out of Kherson in the south.

“We have proven once again that we, Ukrainians, are capable of achieving our goals in any situation—capable of defending our interests and our independence,” Zelensky said in his nightly address Tuesday.

Lightly-armed Russian conscripts surrendered en masse after Ukrainian forces burst across the border a week ago, and Zelensky noted in the call with his military chief that these soldiers—which he said numbered in the hundreds—could be exchanged for Ukrainians detained in Russia.

Ukrainian soldiers returning from Kursk on Tuesday said their forces were encountering greater resistance as they pushed to expand their foothold in the region. Some soldiers said Russia was pounding Ukrainian positions with aviation bombs.

“They are massing troops, bringing reserves,” said one soldier who was stocking up on cigarettes, gas and warm clothes to take back to his unit in Kursk. But he said Ukraine was pressing forward. “It’s go go go,” he said.

Still, analysts say Ukrainian forces will face serious challenges in sustaining its invasion as supply lines lengthen and Russia regroups. The incursion has also drawn scarce troops and military equipment away from the main front line in eastern Ukraine, potentially weakening Kyiv’s defense there. In recent days Russian forces have continued pressing gains toward the logistical hub of Pokrovsk.

Despite the bleak situation in the east, soldiers involved in the Kursk operation were upbeat.

“Everybody is quite positive,” said another soldier who was buying supplies to take back to his unit inside Kursk. Before the incursion, he had been holding back Russian troops in the neighboring Kharkiv region, which Moscow reinvaded earlier this year.

Outside a convenience store on the road to Russia, the commander of an artillery battalion who had just returned from Kursk said the fight there was ongoing. “So far, we’ve got the upper hand,” he said.

Ukraine’s thrust into Kursk has pushed Russian artillery out of range of villages along the border that have been under fire for months. Zelensky said on Saturday that Russia had shelled border villages in the northern Sumy region more than 2,000 times since June 1. But Mykola Toryanyk, a local official who oversees 14 villages along the border, said Russian planes were now dropping aviation bombs on them instead.

“They’re never going to stop attacking Ukraine,” he said.