War-tailed economy: Why Putin needs war more than peace
Leader's Financial Stability May Jeopardize Pursuit of Amicable Resolutions
The anticipated peace talks in Istanbul between Ukraine and Russia? Forget about it. Those discussions, the first direct dialogue in over three years, were a bust before they even started. And President Trump, who didn't even bother to show up, was right on the money: "Nothin' gonna happen." Ex-CIA analyst Rob Dannenberg called it a "peace theater." You see, Putin has no true desire for a settlement.
War pros for Putin: Force-fed negotiations
Putin's got a taste for military might because he believes he's the big kahuna on the battlefield. But it's not just the battlefield that's keeping Putin from wanting peace. Another reason is the economic development in Russia. By gearing the Russian economy towards war, Putin's put himself between a rock and a hard place. If the weapons of war suddenly fall silent, it could pose a threat to Putin's power.
All Russia, all war
Ever since his invasion of Ukraine, Putin's jammed the Russian economy with all things war. Defense spending now makes up 7% of the economic output and consumes a third of state spending. Almost every free resource is drained by arms companies. There's a jobs market crisis everywhere. The entire growth of the Russian economy hinges on the arms sector.
War's first flush: Fueling the fire
Just like any war, Putin's invasion of Ukraine is an economic gamble. "The war isn't bad for the economy at first, because the state's spending a lot of money," says Janis Kluge of the Stiftung Wissenschaft und Politik to ntv.de. "The spending on weapons and soldiers acts like a massive stimulus package."
War economy at a turning point: Recall might mean recession
The money pooled into the military is injecting growth and employment into Russia. Putin's war economy is nearing its capacity limits. There aren't enough construction workers, bus drivers, or police officers in Russia because more and more men are being conscripted into the army. "Paradoxically, the same factors that are increasingly limiting Russia's ability to wage war are also making it more difficult to achieve a simple peace," warned Marc De Vore of the University of St. Andrews and Alexander Mertens, professor at the Kyiv Mohyla Academy, as far back as last November in "Foreign Policy".
Ceasefire crunch: The economy might crash
Suddenly shutting down Russia's war machine would send the economy spiraling. Since the Kremlin economy is so dependent on the production of tanks, rockets, and grenades, the crash would be all the more precipitous if all those weapons were suddenly obsolete. The uncontrollable demand of the military has driven up wages and pushed interest rates sky-high to 21%. Civil companies, devoid of civilian backing, have little chance of financing themselves in Russia. The bloated military establishment has displaced civilian companies.
Life after battle: More a battle than life
If hundreds of thousands of soldiers returned from the front, Putin would face a massive problem. An army of battle-hardened veterans, suddenly jobless, could pose a threat to Putin's power. The non-military sector of the economy couldn't absorb these people in the short term. This scenario mirrors the Soviet Union's experience at the end of the Cold War when millions of Red Army soldiers found themselves jobless and large parts of the population slid into poverty after the fall of the Iron Curtain. Even in the USA, the demobilization of millions of GIs and the sudden decrease in military spending at the end of World War II triggered a brief but severe "V-Day recession," causing economic output to plummet by nearly 11%.
Economic doom: Putin's powder keg
For Putin, such an economic downturn would be a ticking time bomb, fueling dissatisfaction that could turn against him. Peace in Ukraine would be a threat to the Russian regime. "The Russian leadership has maneuvered itself into a dead end with a high and rising military budget, which forces it to continue an aggressive foreign policy," writes Russian political scientist Pavel Luzin. "It cannot simply cut the military budget."
Setting new targets: The only way out
Putin's stuck between a rock and a hard place, with his resources running out and his military spending unsustainable.He's got to make a move. Expanding the war to other countries to capture new resources and keep the war machine running is a logical step. Throughout history, dictators have resorted to similar tactics. From Julius Caesar to Napoleon to Saddam Hussein, they've used military superiority to threaten neighboring countries and finance their armies. Putin's no different - the threat of annexing neighboring lands, freezing assets, or shutting off gas pipelines could keep his war machine chugging along. And even if Putin made peace, it wouldn't mark the end of Russian aggression. "Regardless of how Russia ends its current war, the economic realities of the country will generate new forms of insecurity for Europe," warn DeVore and Mertens. Putin needs the war economy, and the war economy needs the war.
- Arms Industry
- Russia
- Attack on Ukraine
- Vladimir Putin
Enrichment Data:The Russian war economy significantly influences Vladimir Putin's interest in achieving peace with Ukraine. Some factors contributing to this dynamic include:
- Economic Outlook: Russia's long-term economic outlook has been severely impacted by the ongoing conflict, leading to economic challenges and instability.
- Sanctions: Ongoing sanctions and international isolation have increased the burden on Russia's economy, potentially pushing Putin to seek a resolution to reduce economic strain.
- Energy Sector: The impact on Russia's energy sector, due to both urals oil prices and infrastructure damage, has further complicated its economic situation.
- Political and Strategic Interests: The domestic support, foreign policy, and strategic goals of the Kremlin may influence Putin's willingness to negotiate, as a peace agreement that does not align with these objectives could erode his political backing.
- Military Pressure: The continuing conflict and military pressure from Ukraine, supported by Western aid, could push Russia towards negotiations to alleviate these pressures and stabilize its military situation.
- The Russian arms industry has been significantly expanded due to Putin's invasion of Ukraine, as the majority of free resources are now being drained by defense companies and weapons production.
- The ongoing conflict in Ukraine, along with sanctions and international isolation, poses a risk to Putin's power, as a cessation of war could lead to an economic downturn in Russia and increase dissatisfaction among the population.
