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Vladimir Putin bet his economy on a long war, ramping up military production and raising wages.
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An expert told Insider keeping Russia’s economy stable is critical to prevent regime collapse.
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But in so doing, Russia is “chewing up its future,” Professor Robert English, a USSR scholar, said.
Vladimir Putin has fully transitioned the Russian economy toward wartime production, betting his country’s financial and manufacturing systems can outlast the West’s until Russia sees a military victory in Ukraine.
As the Kremlin continues pumping money into its fragile but booming economy, an expert told Insider Putin’s grip on the financial levers of the country also serves to prevent civil unrest that could lead to his ouster.
Insider previously reported Putin has boosted his country’s production of military equipment and subsidized mortgages to keep the economy stable during the first year and a half of the war. In addition, the Russian state has responded to the inflated value of the ruble by raising pensions, salaries, and other benefits for people who are not well-off. At the same time, household consumption, real estate, and business activity have fallen in Russia since the invasion of Ukraine began.
Putin said Thursday the country will continue to increase its production of military equipment “not by some percent, but by several times,” indicating the Russian president is settling in for a long war, The Wall Street Journal reported, which some warn will have dire future effects.
“The longer the war lasts, the more addicted the economy will become to military spending, raising the risk of stagnation or even outright crisis once the conflict is over,” Vasily Astrov, an economist at the Vienna Institute for International Economic Studies, told the Journal.
Representatives for the Government of the Russian Federation did not immediately respond to a request for comment from Insider.
Russia’s economic strength as an indicator of unrest
While the long-term financial impacts of the war remain to be seen, an expert on Russia says keeping control of the economy now is Putin’s best bet at maintaining power and preventing the country’s elite and civilians alike from turning on him.
Professor Robert English, an associate professor of international relations at the University of Southern California, who specializes in foreign policy and defense analysis of Russia and the former USSR, told Insider he’s skeptical that mass disorder or protest will occur unless something “really significant” changes in the Russian economy — but then “all bets are off.”
“Putin is kind of an evil genius at having figured out how to keep his country sort of afloat and, I won’t say satisfied, but not so deeply dissatisfied that it does descend into rebellion, and so that the military losses are sustainable,” English told Insider. “But as far as social stability and socioeconomic unrest, their current state tells us that the status quo is sustainable. That sounds terrible because, of course, Russia is chewing up its future, but I would say that for another year or so the regime can hang on and keep the dissatisfaction down.”
As long as the country maintains some semblance of the status quo in the economy, English said he doesn’t expect to see things changing.
“If it gets much worse, if they lose huge chunks of territory, if the military is sent reeling backwards, if many more are dying, then all bets are off. Then a lot could change,” English said. “And it could change surprisingly quickly, as it always does. No one ever expects a coup or some kind of internal reshuffling right until it happens, and then in hindsight, it ‘oh it was inevitable.'”
Eventually, though, English said economic pain will make it impossible to keep civilians satisfied if they face a lack of essential supplies. Living standards will degrade, inflation will skyrocket, the value of the ruble will continue to drop — and “then it’ll get difficult” for Putin.
“Then we might see some Wildcat kind of action, spontaneous civilian outbursts,” English said. “We might see more emigration, more brain drain, all of that will suddenly start spiraling. Then, once it starts snowballing, it won’t stop.”
Read the original article on Business Insider
