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By Denis Grekov
The question of Russia’s post-war future arose with the outbreak of full-scale war on 24 February 2022. As soon as he took that decision, Putin was a political corpse.
The hopelessness of the invasion became clear after the failure to take Kyiv, the retreat of Putin’s forces, and the discovery of their war crimes. The subsequent loss of momentum of the attack, the collapse of the attempt to take the bridgehead on the right bank of the Dnieper and the retreat eastwards demonstrated that the regime would pay any price to not admit its mistakes. Indeed, the continuation of the war after this largescale defeat of Russian forces can be seen as an attempt to prolong the life of a political zombie.
Yet these measures worked, and there was no domestic political crisis or loss of stability. Sanctions did not have an immediate effect. To some extent, the regime reinforced its domestic political positions during the first year of the war. By exploring how that happened, we can attempt to evaluate the immediate prospects for regime change in a post-war, post-Putin reality.
Several key features of the regime’s economic policies are significant in supporting its stability. It is important to note that much of the population is very poor. According to recent Federal State Statistics Service (Rosstat) data, in the first quarter of 2023 the poverty line was 14,026 roubles per month ($5.50 per day), or $169.78 at the rouble-dollar exchange rate at the time of writing. The number of people living below the poverty line was 19.6 million, or 13.5% of the population.According to the UN, destitution begins at $1.90 per day at 2011 prices. Taking into account inflation and considering how Rosstat counts ‘the poor’, we can confidently state that at least 20 million of Russia’s 146 million people are approaching destitution or are destitute.
The word destitution refers not only to property or quality of life but also to state of mind. People experience constant stress and are dependent on external conditions or circumstances and thus unable to break the vicious circle of destitution. They acquire a sense of hopelessness. They lack the energy to break out because they are not only unable to invest in education but also psychologically exhausted and depressed. This is just the tip of the iceberg. The underwater part contains the so-called “middle class,” who would be defined as poor by the standards of developed economies.
In Russia it is only people who are in great need but not destitute that are considered poor. Yet here, the “middle class” fits the definition. In actual fact, around 60-70% of the population of Russia lives in some degree of poverty or in destitution – or possibly even 80%, depending on how one counts.
There is a nuance. Outwardly, the majority of households appear to be much better off than their real economic situation suggests, as for many years Russians have maintained their level of consumption by using credit. They are caught up in a vortex of ever greater economic and psychological dependency.
In 2020, the volume of individual credit rose by 13.5%, while Russians’ actual income fell by 3.5%. Naturally, this led to the growth of bad debts. At 1st of March 2021, Russians owed banks
20.8 trillion roubles, of which 976 billion roubles of loans were overdue. Plus, in February 2021, banks had restructured (i.e., refinanced) 896 billion roubles of personal debt.
Immediately before the war, loan debts stood at 24.7 trillion roubles, having grown by 23.2% or 4.7 trillion roubles. In the year before the war, the average total debt per economically active individual increased by 64,000 roubles to 328,000 roubles, meaning that 55.6% of the population was indebted.
Before the war, the number of bankruptcies was growing every year. In 2019, 68,980 were declared bankrupt. In 2020, the number rose to 278,100. By 2023, the number of bankruptcies had more than doubled to 753,200.
Furthermore, in the most indebted regions of Russia, the debt burden indicator had long exceeded 100% of the average wage – and around one-fifth of all applications for credit were from people with four or more active loans. The destitute population of Russia had a level of consumption which it could not actually afford, thanks to a slow but steady immersion into debt. This process had gained momentum by the beginning of the war.
However, the indebtedness of the population can also be seen as a political management tool. For example, it lowered participation in pre-war public protests. A person will not attend a protest if there is a chance that they will lose work as a result of administrative arrest. If they have several loans, loss of work will be critical. Plus, one-third of Muscovites and half of people in the regions have no savings. Accordingly, loss of regular income or an onerous fine can mean an immediate drop in living standards and the risk of losing their property. This can also account for the apparent apathy of many Russians toward the war or their tacit support of it.
Economic dependency also allowed various private military companies to recruit Russians, especially Wagner, which has been fighting since 2014 in eastern Ukraine and in Syria and Africa.
While at least 500,000 Russians have fled conscription, destitution – and the accompanying psychological dependency and the passivity of people in the regions – were the foundations of mobilization after 24 February 2022. For many mobilized men from the provinces, a short-term contract was the only way to end their credit slavery and even have some money left over.
On average, their “enormous debts” represent the equivalent of two or three thousand dollars. In other words, the cost to the Putin regime was relatively small and it can exploit the “consciousness of destitution” and economic dependency for a long time to come.
One might doubt that this is a conscious policy. However, the destruction of small business – the economic foundation of the real middle class and the driver of economics independent of the state budget – occurred in parallel with these processes. This fact is generally overlooked by Western analysts.
Despite declarations of support for small business, the state acted in the opposite way, choking it with new restrictions and sometimes physically eradicating it, as happened during the ‘Night of the Long Excavator Buckets,- when one night – by decree of Moscow mayor Sergei Sobyanin and with no court orders or compensation – hundreds of shops and office buildings were demolished in the capital, allegedly for building code violations. The economy’s dependence on the state sector grew in parallel. The state’s share of Russia’s GDP was calculated at up to 70% before the war. Clearly, from that point it can only increase.
The formation of a new class of war beneficiaries is connected to this. In many cases, economic need and not zeal for battle accounts for those who joined the military ranks. Mobilised and contract soldiers are offered not only substantial payments but also “credit holidays” and various other benefits. Even if they are killed, they remain beneficiaries. No matter how difficult their loss, the mobilised soldier’s family has the opportunity to pay off loans and receive payments, priority medical and social assistance and contributions to their children’s education.
For many this offers prospects that they did not have previously, and which they link to Putin’s policies. In principle, the regime is acting according to the old Soviet logic of centralised removal of resources from the population and their subsequent selective redistribution as a means of ensuring the loyalty of certain groups, or its own functionaries. But it comes with a warning. Such groups offer passive support, and only while the state fulfills its obligations.
In the near future, Putin and his inner circle will face other consequences of their own actions. During the war the regime has finally lost an important feature of statehood, the monopoly on force.
This process began under Yeltsin, who first fired on parliament and then passed a law that allowed counterterrorist operations to be implemented in Russia’s regions. After this law was amended under Putin, the security forces (siloviki) now had the right to introduce emergency powers as they saw fit. This was mainly practised in the North Caucasus, where more than 10,000 people were killed during “antiterrorist” operations. The result was a sphere in which local siloviki received almost unlimited emergency powers with no judicial consequences.
One can only guess how many “counterterrorist operations” masked the personal economic and political interests of the local elite. This removed control of force from the state rather than strengthening it. After Ramzan Kadyrov became the ruler of Chechnya, with his own thousands-strong army, an entire region exited federal control of both the use of force and domestic politics.
After the 2014 war in eastern Ukraine, the monopoly on force was swiftly eroded by the strengthening role of private military companies and numerous other paramilitary formations, such as the various pseudo-volunteer detachments that tried to take control of Ukrainian cities and which, in the end, formed the political entities known as the Donetsk and Lugansk People’s Republics (DNR and LNR).
Nevertheless, until 2022, the role of private military companies mainly involved the export of violence to conflicts in Syria, Sudan, or eastern Ukraine. Since the beginning of the full-scale war, the influence of private military companies has strengthened in proportion to the weakening of the army.
A number of multidirectional processes took place simultaneously. The role of Yevgeny’s Prigozhin’s company, Wagner, was reinforced and he was allowed to create assault units made up of prisoners, thus preserving the privatized backbone of his organisation.
The role of Kadyrov’s private army turned out differently. Having suffered losses at the very beginning of the campaign and, seemingly, understood that further activity would lead to the destruction of his military potential, Kadyrov removed his formations from the front, although as a result he launched a creeping mobilisation to benefit the Ministry of Defence. The separatist fighters of Donetsk and Lugansk became the main “expendable forces,” alongside mobilised Russians.
Today, the Russian army in Ukraine is thought to number around 200,000 men, but in quality and technical terms this army is considerably worse than the one that invaded. It has suffered enormous losses, including most of its reserves. It is demoralised, poorly supplied, and lacks not only modern weapons but even outmoded ones. Plus, it is suffering from the incompetence of a corrupt command structure.
Taking all of this into consideration, Prigozhin and Kadyrov have significant and competitive military forces. According to various sources, Kadyrov has upwards of 30,000 men and Prigozhin 30,000-50,000.
They are not the only ones to understand this. The news agenda of recent months reflects the sensitivity of various interested parties, reacting to their joint statements against the Ministry of Defence or their public pronouncements on social media.
The next important aspect of the Putin regime’s loss of the monopoly on force is a specific side effect of propaganda. The wave of vulgar “turbo-patriotism” that has appeared since 2014 has brought to the fore extremist “war correspondents” of various calibres, such as Vladlen Tatarsky, who was blown up in a café explosion, or writer Zakhar Prilepin, who survived an assassination attempt, and also pseudo-volunteer movements and their opinion leaders, like Igor Strelkov (Girkin).
The regime had used them as a convenient tool for breaking down civil society and simultaneously creating an atmosphere of fear, with the illusion of popular support for aggression against Ukraine. However, in the previous six months, the directions of the turbo-patriots and the Putinist kleptocracy have begun diverging. Resentment towards Putin’s elite has been building among turbo-patriots since 2014. They have increasingly loudly accused it of betrayal, spurred by military failures and the obvious incompetence of the kleptocratic administration, and amplified by growing political and economic appetites among patriotic leaders and associated interest groups.
They now want not only access to various government grants, but to distribute them as well. They would also like a share of the resource pie that is carefully guarded by Putin’s inner circle. And they have accumulated a particular domestic political capital, administrative and security resources, and an undefined mass of sympathisers in various security structures.
These competing groups, private military companies, and turbo-patriots have an uneasy relationship. They are partly in conflict, as in the relationship between Girkin and Prigozhin. Yet both are in opposition to the Ministry of Defence, openly criticise Putin and publicize trenchant political statements and initiatives.
Prigozhin’s media actively promote the theme of betrayal of Russia’s interests by Putin’s “deep state” and its openness to negotiations with the West. Prigozhin demonstrates his own political weight and ambitions in various ways. In his recent public statements, he appropriated the anti-war rhetoric of the opposition at the beginning of the war, presenting his attacks as ultrapatriotic and “veracious,” as if spoken by a true patriot.
This is probably an attempt to harness the strong resentment towards the Putinist elite and the high command, which is increasing at the lower levels with every day of the war – along with a demoralised army, disoriented security organs, and the turbo-patriotic public unhappy with the way the war is going.
All of these tendencies will be reinforced as Russia’s foreign policy position weakens. It is rapidly losing its status in the post-Soviet space due to economic and political isolation, loss of trust, and an acute weakening of its military potential. Against this background, the influence of Turkey and China is growing. After losing direct access to the European hydrocarbons market, Putin’s regime is becoming economically, politically, and technologically dependent on China and even India. This provokes greater domestic political tension. Putin’s elites will solve their problems by making concessions at the expense of Russian citizens and less important interest groups.
These factors suggest that against the background of an anticipated major military defeat the regime will react domestically. In order to save itself, it may undertake an internal purge, employing the machinery of repression against problematic leaders and interest groups. This will further weaken the military component of the regime or lead to open conflict.
This may not be far away, as indicated by the capture by Wagner mercenaries of Russian army Lieutenant Colonel Roman Venevitin, who was beaten and claims he was tortured. “The anarchism that the Wagner is breeding at the front is the result of a game of political elites who, instead of strengthening our president, are trying to weaken him,” he said, in a video.
Even this has not yet caused problems for Prigozhin. Considering that a certain section of the turbo-patriots supports Prigozhin and that he appears to have sympathisers in the army and the security organs, it remains unclear how this conflict will end.
Nor would the hope for a transformation of Russia through regime change, often expressed in the West, be realized under these conditions. Others believe that all of these divergent issues can be solved by a “palace coup”, resulting from a dead-end situation that could only end with changing the key members of the regime.
A coup would very likely lead to another cycle of internal aggression and a fierce power struggle. This will result in a lack of territorial stability. Some In order to regain the initiative, Putin will have to take extreme measures regions will demand greater autonomy, and some, independence. For some it will be more advantageous to integrate into the economies of China or Turkey, if these countries will offer a better guarantee of security than a Moscow riven by discord.
It’s likely that Moscow can only prevent the situation from drifting into such scenarios through a large-scale internal terror campaign against those groups that were not previously touched. But in order to regain the initiative, Putin will have to take extreme measures. There is a sense that neither he nor his kleptocratic, rent-seeking system, nor the resources at his disposal are ready to do this. Meanwhile he is threatened by the very outcomes that are the opposite of his grandiose vision of restoring a new Great Russia under his rule.
This may explain the paralysis of the system in recent months. It cannot adapt to fast-changing reality and reacts with frustration. Nor can it retreat from the Ukraine war without admitting a humiliating defeat. But this state of balance will not last long. There are too many deep cracks behind the façade. Behind them, the future of Russia looks increasingly murky
Denis Grekov is a leading political scientist, former senior lecturer at the Russian Presidential Academy of National Economy and Public Administration, and developer of an innovative course to teach critical thinking and mindset. He was dismissed after being denounced for a Facebook post criticizing the war against Ukraine. He now lives, writes, and teaches in Warsaw