OPINION: Putin’s Dead-End

The Russian invasion seems to have stalled.

Ukrainian forces managed to stop Putin’s troops in Kharkiv oblast. The Russian army is also stuck in Donetsk oblast. If there are any advances, they are minimal.

It’s possible, of course, that the Kremlin is up to something else. In any case, its losses in materiel and manpower are enormous – the Russian command historically is accustomed to spare no resources. It turned out, however, that the women didn’t give birth to enough new men and the factories were failing in producing and repairing the needed number of tanks and armored personnel carriers (the Economist wrote about this in greater detail).

In the meantime, Valerii Zaluzhny, Ukraine’s new ambassador in London, estimates that soon, neither Ukraine nor Russia will be able to obtain the technology that would be decisive in the ongoing war. “This means that the sole solution may be to increase the manpower engaged in military activities,” Zaluzhny proposes.

Over two years after the full-scale Russian invasion, few people are left in the RF (Russian Federation) who are willing to die voluntarily in Ukraine for pay. In one region – Tatarstan – the authorities are offering 100,000 rubles to whoever can convince anyone to sign a contract with the Defense Ministry. In Yaroslav oblast, they did the same. The regions of the RF are enticing men to war, promising all kinds of payments to those who sign contracts. Nevertheless, there is a constant shortage of men; wounded soldiers who have not fully recovered are sent back to fight.

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The influx of contract soldiers is hardly sufficient to compensate for losses. Indications are that by autumn; Putin will face the need to carry out a new mobilization if he wishes to continue his war and is considering a large offensive. There are no political obstacles to such a move; he can refer to the decree issued in the first stage in September 2022. If necessary, the completely subservient Duma and Federation Council will approve anything. Protests are unlikely: opponents either are afraid or have left; only loners speak out publicly.

The question arises however, will Putin be able to afford a mobilization from an economic point of view? It is not a question of money – he still has that – and if that isn’t enough, he will cut expenditure on medical needs or education. Nevertheless, the economy is the Russian Federation’s most vulnerable point. And a new mobilization could seriously undermine it, as a shortage of the working force is what now concerns Putin’s economists. According to the data of the Bank of Russia, three-quarters of the enterprises in the country face that problem.

The dispatch of recruits to war, the emigration of those who opposed it or who don’t want to die for Putin (according to the calculations of The Bell, after February 2022 a minimum of 660,000 people left the RF and have not returned), simultaneously a struggle with migrants – means that the shortage of workers in the RF is already becoming critical. It could be compensated for by an increase in labor productivity, but this is hindered by technological retardation. Cut off by sanctions from world technologies, Russia will undergo further degradation.

The regime operates, therefore, according to the simple method of forcing the available workers to overwork. That is, they endanger safety at work. And then they will say that it was sabotage. For example, Aeroflot canceled over 300 flights at the end of June because of the non-appearance at work of flight attendants who are working “to the limit of their capabilities,” as the channel Aviatorshchina wrote. Another option is bringing in new workers from Africa. According to statistics from the consulting agency RBK, these workers come primarily from Kenya, Zimbabwe, Cameroon, and Zambia.

The shortage of workers has led to a sharp rise in salaries. A consequence is a growth in consumer demand and soaring prices because of the impossibility of satisfying it. Russians cannot compensate for the production shortage by increasing imports because of sanctions. Or else these goods are very expensive. Phasing out imports is also not the solution. It results in the growth of inflation, and Putin’s economists and financial experts have not been able to handle it successfully for a long time.

Tightening monetary policy, such as raising the prime rate is the basic tool to combat inflation. In Russia, however, this no longer works. In 2023-2024, the Bank of Russia raised the prime rate six times, and it rose from 7.5 percent to 18 percent now. But inflation is not letting up. Moreover, the price of gasoline accelerated, which can cause the price of many other goods to rise. That means that Ukrainian drone strikes at Russian oil refineries have a great impact and are very effective.

Although the RF economy is still growing, this is occurring at the expense of increasing budgetary expenditures and enormous government contracts, that is, servicing Putin’s war. New sanctions are thus needed, which would prevent the utilization of a shadow fleet, which enables the RF to continue to earn money from oil exports.

In any case, practically all possibilities for the Russian economy to grow have been exhausted. As German Gref, one of Putin’s financial experts, acknowledged, the level of plant capacity utilization reached 84 percent, which is a historical maximum. This means that, in effect, there is practically no more free space, equipment, or available workforce.

Toward the fall, Putin thus will have to choose war and mobilization or the economy. The decision in a normal state would be obvious. In the case of Russia and Putin, however, common sense does not apply. They would wreck everything to kill the residents of a neighboring country. But they must understand that the consequences will be catastrophic. The main tool here is sanctions. No matter what Russian authorities say, sanctions are working, and this is felt more and more in Russia every day. However, there still are not enough sanctions. It is therefore important immediately to undertake measures that will make it more difficult for Putin to carry out a mobilization and compensate for losses in equipment.

The views expressed in this opinion article are the author’s and not necessarily those of Kyiv Post.