Dear Subscribers,
“Barbershop Whispers….Russia” begins with “My Takeaways” on the main topic, followed by the main topic discussion. The last two sections of “Barbershop Whispers…Russia” will be follow-ups from previous publications and emerging events.
In last week’s BWR issue, I discussed the resilience of the Russian economy in the face of economic sanctions. The source of this resilience, among others, is astute crisis management by the technocrats who run the daily operations of the Russian economy, an international sanctions evasion support system feeding the Russian industrial war machine.
This week, I will discuss the upcoming Russian presidential election landscape. Putin’s likely campaign agenda, the risks to his election victory, and the goal of the elections.
My Takeaways:
ELECTION METRICS: Voter turnout will be the most critical metric for legitimizing the upcoming 2024 presidential. Even authoritarians and autocrats need affirmation.
OPPOSITION RISK: Putin will win unchallenged. The nationalist super-patriots such as Igor Girgin (AKA Strelkov) and his followers, who are demanding total victory in the war, represent the greatest risk to Putin. Any Kremlin action towards peace negotiations before the presidential elections to satisfy growing public support would be met with stiff opposition from the super-patriots. Liberal challengers are either in jail, in exile, or dead.
ECONOMIC RISK: Tightening and more sanctions may impact the Russian treasury. However, there is not enough time for such action to impact the presidential election.
WAR RISK: Unless Ukraine is able to breach the 1,500KM defensive Surovikin line or launch massive drone strikes deep into Russia proper, this risk appears to be low.
Background
Consolidation of Power:
Russia changed its constitution in 2020 to allow Vladimir Putin to run for another two six-year terms after his current term expires in March 2024.
The process began in January 2020, when Putin proposed constitutional amendments that included removing the prohibition on serving more than two consecutive presidential terms, as well as provisions on:
State Council of the Russian Federation – The State Council was strengthened from its previous advisory role into an entity with real power that may potentially be headed by Putin after leaving the presidency;
Territorial Sovereignty – Russian territory cannot be ceded to foreign entities.
Citizenship/Residency Restrictions – Top Russian government officials are banned from holding dual citizenship or foreign residency permits.
These amendments were passed by the State Duma and the Federation Council in March 2020 and July 2020, respectively. A national referendum approved the constitutional changes with about 78% and 65% voter approval and turnout, respectively.
Before the amendments, the Russian president was limited to two consecutive six-year terms in office. The constitutional changes reset Putin's term limits, allowing him to run for president again in 2024 and 2030 under the amended constitution. Effectively, the changes pave the way for Putin to remain in power until 2036 (when he would be 82).
The amendment restricting the ceding of Russian territory has significant implications for any future negotiations over the occupied Ukrainian territory that Russia has illegally annexed. It effectively makes any land concessions constitutionally impossible.
On 30 November, Kremlin Spokesperson Dmitri Peskov confirmed that Putin will hold his annual live “Direct Line” forum and press conference in tandem on 14 December. He is expected to use the event to announce his presidential candidacy and outline his agenda.
Putin’s Campaign Agenda, Risks, & Goal:
Agenda:
Putin’s 2024 presidential campaign agenda will likely focus on stability. The “healthy” state of the Russian economy will be at the center of this stability narrative. In the face of Western economic aggression, he will claim to have delivered economic prosperity, as evidenced by well-paid jobs, low unemployment, and higher pensions. Despite Western attempts to undermine Russia’s economic and territorial sovereignty, Russian citizens' living standards have remained stable, and Russia is again a respected global power. Economic trade and alliances with China and the global South are strong, and they have replaced the “unfriendlies,” led by the United States and Britain with true partners.
This message of economic stability will resonate with the older generation who experienced the humiliating chaos of the early 1990s. It will also appeal to the workers in industrialized cities such as Samara, Nizhny Novgorod, Ulyanovsk, and the like, who comprise the bulk of the military-industrial machine. As discussed in BWR’s “All For the Front, All for...What?” issue, Russia’s defense budget for 2024 has tripled over the 2021 budget to fund Putin’s war. The Russian government is pouring money into this industrial sector to meet the weapons demand generated by the war in Ukraine. Those in the impoverished regions of the North Caucasus are given the opportunity to fight in Putin’s war and get paid handsomely, compared to the work opportunities they may have at home. As for the hydrocarbons sector, production remains strong thanks to new Asian markets, ineffective sanctions enforcement, and applied and systemic sanctions evasion schemes supported by opportunist global arbitragers and fellow sanctioned countries.
The war against Ukraine and the Ukrainian counter-offensive has ebbed into a pause. The fighting has slowed as fall and winter set on the battlefield. Russia managed to dig itself a formidable 1,500KM defensive line (the so-called Surovikin line) in the Russian-occupied Ukrainian territories, thanks in large part to Western foot-dragging in supplying the required weaponry in a timely manner.
Any truce or peace negotiations with Ukraine before the Russian presidential elections will be spun by the Kremlin as a win. According to a recent survey by the Levada Center a non-government Russian pollster, less than half of respondents say they follow the war closely.
On average, support for the military remains high, about 75 percent; however, surveys also show more than half of respondents now favor starting peace negotiations rather than continuing the war.
The picture below is a homemade camouflage netting made by a BWR reader whose son is now serving at the front. It is common for Russian families to send uniforms, coats, and other items to the front because the Russian defense ministry is unreliable in providing clothing and materiel to the soldiers.
Risks:
The Russian economy is strong today, yet fragile and vulnerable to global crude oil prices, tightening and enforcement of economic sanctions, and the monetary policies of China, India, and UAE — its new markets.
The Western alliance is taking steps to tighten existing economic sanctions against Russia and take action against evaders. For example, insurance underwriters covering Russia’s aging shadow oil tanker fleet are under greater regulatory scrutiny in the UAE. Ship management companies are also coming under increased scrutiny, as evidenced by the US Treasury’s notices to several such companies, regarding some 100 oil tankers under their management suspected of violating the oil price cap. Meanwhile, the EU is preparing to pass a 12th package of economic sanctions that may include Russian diamonds, metals, and liquified natural gas.
The purpose of the Western sanctions is to deprive Russia of revenues that will be used to fund the war. The strength of the Russian economy is evidence that the sanctions are losing their effectiveness. In the end, the Western sanctions will ultimately depend on the political will of Western countries to absorb the costs associated with the market distortions created by the sanctions. For example, the German industry was heavily dependent upon cheap Russian natural gas, and now, in the absence of this cheap energy, the cost of production has significantly increased.
Jailed nationalist and former Russian commander Igor Girkin (AKA Strelkov) announced his intent to run for the presidency in 2024 and is collecting signatures to do so. Girkin was recently jailed for publicly criticizing Putin and the military leadership's handling of the war in Ukraine. He also called for Putin’s removal. Girkin has a following within the security services and the growing nationalist super-patriots who are calling for more resources to prosecute the war. While he does not represent a real risk to Putin, he can be an annoyance, particularly if any peace or truce discussions begin to occur.
Other likely presidential candidates will be those chosen and cleared by the Kremlin and the usual suspects from the Communist Party, Yabloko, Liberal Democratic Party, and a few others.
Yekaterina Duntsova, a 40-year-old mother of three and former TV journalist, recently announced on her Telegram channel her intentions to run for president in 2024. Her stated agenda will be to end the conflict in Ukraine, free political prisoners and undertake major reform to halt the slide towards a new era of "barbed wire" division between Russia and the West.
Duntsova needs to collect 300,000 signatures to be allowed to run, but the larger question is whether the Kremlin allows her to run.
Goal:
The Kremlin’s ultimate goal for the March presidential election will be to achieve a voter turnout greater than 2018 to legitimize Putin’s win in 2024. Those targets are a 77% vote for Putin and 67% voter turnout.
Putin’s victory is a given. All serious potential presidential challengers are either in jail, exile, or dead. The election will be no more than a formality of a “democratic” process affirming Putin’s popular support.
Follow-ups & Quick Bites:
Follow-Ups:
The Sanctions-Immune, Teflon-Coated Russian Economy
It should be noted the Kremlin tripled the defense and security 2024 budget over the 2021 budget. In addition to astute management of the economy by seasoned technocrats and weak sanctions enforcement, the cash the Kremlin is pouring into the industrial sector is creating the sugar high of a strong economy. At the end fo the day, this is not sustainable.
Quick Bites:
Turkish Exports of Military-Linked Goods to Russia Soar in 2023
The Financial Times reported that Turkish exports of military-related goods to Russia have surged this year, making a NATO member a significant transit point for dual-use Western goods.
According to the FT, Türkiye reported exporting $158 billion worth of such goods to Russia and five other former Soviet countries in January-September 2023 — significantly more than the pre-war average for 2015-2021, $28 million.
Vol 1, No 22 - BWR 03.12.2023
Thank you for reading “Barbershop Whispers....Russia” written by Adam A Blanco! “Barbershop Whispers…Russia” is a product of e8Q Technologies, a consultancy with insights on all things Eurasia. Subscribe for free to receive new posts.