Russia’s chief of the general staff Valery Gerasimov has triumphantly reported to President Vladimir Putin that 31 Ukrainian battalions have been encircled in Pokrovsk and 18 battalions in Kupyansk, in what Ukrainian President Volodymyr Zelenskiy has described as the hottest region of the war.

The Russian Armed Forces Command issued an ultimatum to the Ukrainian Armed Forces Command in Pokrovsk and Mirnohgrad, as Russia tightens the noose around the key logistics hub. 

"Leave the Pokrovsk agglomeration by Monday, October 27. If you refuse, the encircled Ukrainian Armed Forces units will be destroyed," it said. 

“That’s not to say that Russia is not advancing in both cities. But the fighting is done with small groups on both sides, there is no cauldron, and street battles in both Pokrovsk and Kupyansk have been under way for months — with the Ukrainian situation worsening over time,” says Yaroslav Trofimov, the Wall Street Journal correspondent in Ukraine, in a post on social media.

In 2022 most Western and Russian analysts expected Pokrovsk to fall. Three years and tens of thousands of Russian casualties later, it’s safe to say the Ukrainians did a great job defending it against overwhelming odds.

The Armed Forces of Ukraine (AFU) remains under relentless pressure on the battlefield as its European allies dither over seizing the $300bn of frozen Central Bank of Russia (CBR) reserves to provide the funds to continue the war, now that the US has de facto pulled out.

EU leaders met last week, but deferred the decision on seizing this money that will form the core of the so-called Reparation Loans until December that would allow Europe to pay the US for new weapons supplies for Ukraine. The money is key to continuing the war. As bne IntelliNews reported, Europe can’t afford to take over the entire burden of supporting Ukraine, as most EU countries are either in recession or approaching a crisis.

The talks failed after Belgium, where two thirds of the frozen money is held in Euroclear, demanded greater assurances that it wouldn’t be held liable for risks linked to the €140bn Reparation Loans.

“If immobilised CBR assets are not to be used then: a) European taxpayers are on the hook for the $100-150bn pa financing cost of keeping Ukraine in the war to secure Europe’s defence; b) Ukraine loses which will likely force Europe to increase defence spending from the 2% of GDP threshold to the 5% long run target immediately, and that’s an extra €1 trillion per European defence spend per year,” Timothy Ash, senior sovereign strategist at BlueBay Asset Management in London, said in a note.

Pokrovsk is a key battle zone as it is the nexus of several important roads and rail lines that form the backbone of the AFU’s supply chains on the Eastern frontline. If it falls then it could lead to the sudden collapse of Ukraine defences. There are already kilometre-long holes in the defences already caused by Kyiv’s flagging recruitment campaign that are currently being plugged by increased drone defences.