As Putin escalates war, some in Russia's business elite despair
The Washington Post October 13, 2022
When Vladimir Putin launched missile strikes targeting Ukrainian cities and critical infrastructure this week, the move seemed to earn the Russian president a reprieve from hard-liners who had been demanding more decisive action.
"Run, Zelensky, run," cheered Ramzan Kadyrov, the Chechen leader who has sent militias into Ukraine to fight in the war, referring to the Ukrainian president. Kadyrov declared himself to be "100 percent happy" with the conduct of the war after weeks of lambasting Russia's military leadership over recent disastrous retreats.
But some senior Russian officials and people within the business elite are drained and depressed - and the expectation is of a worsening political and economic climate. If Putin's military escalation was partly aimed at putting the lid on turmoil bubbling up over the war's mismanagement, then its impact may only be temporary, several officials and business executives said in interviews.
"On the battlefield there are other problems," said an influential Moscow businessman who, like others interviewed for this report, spoke on the condition of anonymity because of personal security fears. "I don't think it will lift the pressure," referring to the missile strikes.
In addition, the business executives and officials said, even if the strikes succeed in damaging more of Ukraine's electricity and energy networks with the fighting dragging on into the freezing winter, there are questions over how many missiles Russia has left and how long it can sustain a bombing campaign. The missiles "are being produced. But in single units. And the old reserves are running out," one state official said.
Ever since the Ukrainian army began recapturing swaths of territory in Ukraine's south and east, Putin has been scrambling, forced to send hundreds of thousands of barely trained reservists to try to fortify Russia's exhausted army - a move that sparked protests across Russia and sent at least 300,000 Russian men fleeing across the country's borders to avoid the draft.
As signs of discord within Putin's inner circle began to surface, Saturday's humiliating attack on the Kremlin's prized Kerch Bridge to Crimea seemed the final straw.
"No one is happy with the status quo," the Russian state official said. "It is clear that a military or political victory will not be possible. But a loss is not possible either. This is turning into the situation in chess known as zugzwang, when each step is worse than the next and yet it is impossible not to move."
The optimism of the summer when, according to a second state official, many in the country's elite believed "we'll turn everything around and find a way" has completely evaporated. "People see there is no future," he said.
The forced mobilization has already dealt a blow to Putin's popularity, one of the main bases for his legitimacy as president, and when the dead bodies of reservists begin to return from the front, the situation could worsen, the Moscow businessman said.
"In several months, there will be a very negative dynamic in Russia: a worsening of the mood in society," he said. "Everything depends on the front."
"Putin's arsenal of possible action is very limited," said Sergei Aleksashenko, a former deputy governor of the Russian Central Bank who is now living in exile in the United States. "Apart from striking civilian infrastructure, he only has the option of using a tactical nuclear weapon. If the Ukrainian counterattack continues, the question of what to do further remains in front of Putin."
But few in Moscow say Putin will resort to deploying a tactical nuclear strike, despite the Kremlin's statements, the Moscow businessman said, because "then he won't have any cards left," while China could block that kind of escalation. "This is a Pandora's box [the Chinese] don't want opened," he said.
Saudi Arabia's support for oil production cuts this winter seemed to have emboldened the Russian president, said the same Moscow executive, who maintains contacts with political officials. Even if energy prices remain at the same level, Putin "thinks Europe will be in crisis and will have no time for Ukraine."
"This is still a war of attrition, until one side is not able to continue the war," he said.
Gazprom's chief executive, Alexei Miller, on Wednesday warned "entire cities" in Europe could freeze and said there were no guarantees Europe could survive the winter with the current levels of gas reserves.
Economists and business executives say sanctions are beginning to hit the Russian economy harder, with budget cuts already being imposed - while a proposed price cap to be levied by the Group of Seven nations on Russian oil sales from December would be a further blow. The Russian president "will run low on cash . . . He needs cash to pay Iran and North Korea for weapons. But we will see in December a completely new reality," said Sergei Guriev, the provost at the Sciences Po university in Paris.
Amid expectations of more and tougher sanctions, every piece of bad news from the front line is a new blow for the Russian economy, a second member of the Moscow business elite said.
"All of business is suffering from what's happening. Everyone has frozen their investment plans," he said. The previous belief that Russia could redirect trade flows away from the West through China, Kazakhstan and India is fast melting away, two of the business executives said. Kazakhstan has begun to block cargoes carrying European goods into Russia, while the Chinese were beginning to stop certain supplies, too.
"Everyone is completely frustrated. The mood is very bad," a third senior Russian businessman said.
Members of Moscow's elite are beginning to speak about potential leadership change in a way they have never done before in more than 20 years of Putin's rule - though no one can say how or when this might happen.
"We have begun entering a revolutionary situation," the first state official said. "Everyone is waiting for something other than what is happening now: a different leadership, a different war. The hawks want tougher action. The doves want no war at all. The time for a change of the political system is ripening. But how it will happen, I don't know."