Putin Has To Make Hard Choice Very Soon
- 29.01.2025, 17:04
The Kremlin is facing a serious dilemma.
CNN said that the image of a stable Russian economy that Putin uses in an attempt to prove that he has overcome the effects of Western sanctions is to a certain extent a mirage. Now we are beginning to see the real picture of Russia's economic condition.
Western Sanctions Hitting Russia
This picture is far from stable and the prospect of sustainable development. CNN notes that Russia is hiding its true war spending and that there is a whole shadow budget that the government is not disclosing so as not to show the huge expenditures. However, all this spending is affecting the Russian economy.
The publication speaks of a serious labour shortage in Russia, which has arisen as a result of losses in the war in Ukraine. The Russian leadership understates the real figures of losses. We can only rely on the figures that have been made public by Western and Ukrainian politicians.
Even if they are overstated, the very fact of the labour shortage in Russia is not refuted either by official statistics or by Russian economists.
The results of Western sanctions are now beginning to really take effect, as they have intensified over the years of war. In the final weeks of Joe Biden's presidency, sanctions were imposed on Russian energy giants and the so-called shadow fleet, which was a major blow to Russia's oil supplies to India and China. Both countries have refused to accept in their ports tankers that have fallen under US sanctions.
This means that Russia will be forced to find new ships to carry its oil, as well as the ongoing fear that they will fall under sanctions. India and China will be looking for new suppliers of oil for their economies, meaning the Russian energy market will start to shrink. If oil prices start falling, this will also become a serious problem for the Russian economy.
Also, the publication reminds that Ukraine has refused to transit Russian gas. This historic decision, which effectively put an end to Ukraine's status as a transit state for Russian gas, has affected Gazprom's profits. The company is now a loss-making enterprise that is forced to produce gas to demonstrate Russia's energy capabilities rather than bring money to the budget.
Dilemma That Putin Will Face
The question arises as to what Putin will choose in 2025. There are two options:
Maintaining social stability in Russia,
or continuing the war.
This dilemma will confront the Kremlin in the coming months.
However, it should be remembered that the presentation of the American publication's conclusions is based not on objective statistical data, which we do not have, but on subjective economic assessments. For alternative material, we can find economists who will convince us that everything is not so bad with the Russian economy and Putin can continue the war and not worry about problems of social stability.
Certainly, this second group of economists may be wishful thinking. However, what matters to us is who Putin will listen to as he tries to figure out what choices to make.
For example, the Soviet leadership persistently ignored the collapse of the Union's economy and the problems that were associated with the war in Afghanistan. Everything ended badly for the USSR, which eventually disappeared from the political map of the world. However, the war in Afghanistan was continued without any hope of actually winning it. Soviet troops entered Afghanistan under Leonid Brezhnev and left the country during Mikhail Gorbachev's perestroika period.
To say that Putin would even consider that the war in Ukraine would lead to the destruction of Russian statehood is to fail to realise how the Russian president perceives reality. Yes, he may lead his country to collapse during a few hard years of confrontation with Ukraine, but it is important for us that Ukraine does not turn into ruins during those years.
Pro-Putin political analyst Dmitry Trenin, who once headed the Carnegie Endowment of America's Moscow office, recently said that Russians are willing to live poor but they will not accept the West's dictates and will continue their actions against Ukraine.
Obviously, this does not guarantee that Putin will take this view, but we should be aware that there is an option.
It is also worth considering the option of Putin realising that his economy is a mirage. Then he has no choice but to lay his cards down now and use Trump's willingness to negotiate with the Kremlin to end the war in Ukraine on the most favourable terms.
That is, even Putin's sober understanding of the problems that exist in his economy creates many serious and dangerous challenges for Ukraine in the future. Yet there will be even greater challenges if Putin does not take into account the state of the economy and is ready to continue this war until the final destruction of Russia's economy and Ukraine's statehood. This is a much more serious danger that must be prevented.
Vitaly Portnikov, Channel 24