Dear BWR Subscribers,
This is the first New Year’s eve edition of “Barbershop Whispers….Russia”, a weekly work of passion launched in July 2023 and supported by the BWR subscribers.
I want to take this opportunity to thank all of you for your continuing support and ideas, and I wish you good health, prosperity, and peace in 2024!!
In last week’s BWR, in the good spirit of Christmas and Hanukkah, I took a break from Russia and discussed an eclectic variety of books I have read over the years, some more than once, as suggested holiday reads or for your 2024 list.
In this week’s BWR, I will summarize the key Russian events that took place during 2023 and refer back to a select number of BWR publications during the year.
Summary:
2023 has not been a good year for Putin and the Kremlin junta. His power was challenged by Yevgeni Prigozhin, a successful mercenary, exposing the regime’s weaknesses - corruption and incompetence and more of both. This corruption and incompetence has been a contributing factor in making Ukraine the most powerful army in Russia.
The driving factor in Ukraine’s war success has been the people’s need to fight for their lives and existence - family, home, and country.
The Potemkin village war economy is driven by an unsustainable sugar high - limited government revenues - and will come to an abrupt end in 2024. The Russian economy has essentially been excluded from the global economy and now relies on China, Iran, and India for trade and arms. However, Putin has successfully expanded NATO and was an instrumental catalyst in uniting all Ukrainians against Russia.
Key Russian events in 2023
Yevgeni Prigozhin’s Petition to the Tsar Denied
The liquidation of Prigozhin, the quintessential Russian war entrepreneur, was the most significant Russian political events of 2023.
Prigozhin was a rising power, supported by Putin and billions in Russian government contracts and battlefield “victories,” but also drawing eerie scrutiny from other Kremlin power centers, among them Nikolai Platonvich Petrushev, Putin’s muse and powerful Secretary of the Security Counsel. In short, Prigozhin’s “March for Justice” from Rostov on Don to within 200 km of Moscow earned him a fireball final flight in his private jet.
The plane crash took place exactly 90 days after the March on Moscow. According to the Wall Street Journal, the plane crash was organized by Petrushev with Putin’s consent.
My takeaways from the Prigozhin ordeal was and still is:
PRICE OF BETRAYAL: Putin sent a message re-enforcing what should have already been clear to all – traitors will not be tolerated. Putin publicly described Prigozhin’s action as a stab in the back and a betrayal to Russia. Once designated as such, there is no return;
LOYALTY v COMPETENCE: Prigozhin spoke the truth about the incompetence and corruption of Shoigu and Gerasimov. But loyalty trumps competence in an authoritarian regime. How this will sit with the “Party of War,” which demands escalation and victory, remains to be seen;
MARTYR IN THE MAKING: Prigozhin – Patriot of the Motherland – is a martyr in the making among the nationalists, as they call for revenge for Prigozhin’s death. Onto whom the Kremlin spins the blame for Prigozhin’s death will determine whether this martyr status benefits Putin or not;
EROSION OF POWER: Putin’s power is based on instilling and projecting fear, and the Russian nationalists’ are becoming immune to it. Putin is playing a risky game of chicken between Western fatigue with Ukraine and nationalists demand for victory.
Selected BTR readings:
Prigozhin is Dead - Martyr and Patriot of the Motherland? (25 Aug 23)
PMC Wagner Betrayal Saga Continues….Meetings in the Kremlin (15 Jul 23)
Wagner Betrayal (7 Jul 23)
The Russian War Economy – A Heavy Price
On the surface, the Russian economy performed much better in 2023 than expected in the face of G7 sanctions. The reasons for the better-than-expected performance can be attributed to three main variables:
TECHNOCRATS – Competent, seasoned technocrats who have prepared and dealt with crisis management of the economy for the past 25 years.
SANCTIONS ENFORCEMENT: Western Political will to enforce sanctions, including the oil price cap, has been weak. Businesses are exploiting these market distortions created by the sanctions and the weak enforcement thereof in jurisdictions that are not parties to the sanctions.
ALLIANCES OF CONVENIENCE: Sanctions evasion knowledge and networks developed over the past 30 years by Iran and North Korea are now being exploited by the Kremlin. The Kremlin has found partners of convenience to evade sanctions and feed the war machine.
This economic performance is unsustainable and comes at a significant cost. The cost will be two generations of future economic growth and development. With the war, Putin has created an economic environment of uncertainty that has resulted in a brain drain, mass exit of foreign investors, and government takeover of the economy. This has caused persistent inflation, a weakening Ruble, and labor shortages.
Selected BWR readings:
The Sanctions-Immune, Teflon-Coated Russian Economy (26 Nov 23)
All For the Front, All for...What? Russian Military-Industrial Production (8 Oct 23)
The New Russian Émigré - Massive Brain Drain (10 Sep 23)
Weakening Russian Ruble (RUB) and Rising Inflation (19 Aug 23)
Russia’s Diminishing Global Influence and Power
Putin’s war has united and expanded NATO and the Western economies. Today, Russia does not have the economic, military, or political influence of the Soviet Union or the Russian Empire.
The formerly occupied territories of Eastern Europe, the Caucasus, and Central Asia see greater economic value in aligning with Western economic and military blocks. For example, Putin’s abandonment of Armenia in the conflict with Azerbaijan has sent a clear message to member states of the CSTO that the Kremlin can not be trusted to deliver on security. Azerbaijan’s growing alignment with Türkiye comes at the Kremlin’s expense.
Russia’s near abroad is in play, and the economic and security vacuum is being filled by China, the US, and Türkiye.
Selected BWR readings:
“No Limits” Limits of the Putin and Xi Friendship (29 Oct 23)
Why Did Russia Sell Out Armenia – Inability or Unwillingness? (1 Oct 23)
Russia’s Near Abroad is in Play – Influence Competition (23 Sep 23)
Follow-ups & Quick Bites:
Follow-ups:
Nothing to report this week.
Quick Bites
The Kremlin Plans to Recruit 400,00 Contract Soldiers in 2024
The Kremlin is trying to avoid a second round of mobilization. but the pool of potential contract recruits is drying up.
The Kremlin plans to recruit contract servicemen for the Russian army next year, primarily from the regions, and the quota is approximately the same as in 2023 – approximately 400,000.
Money is the primary decision variable in attracting contract soldiers. While the average salary in Russia is about 70,000 rubles ($760), the monthly salary of a contract serviceman starts at 204,000 rubles ($2,200).
The Almost Naked Party
Russian celebrities and pop stars have started issuing on-camera apologies for attending a scandalous “almost naked” party that was condemned by the Kremlin as unpatriotic and disrespectful of Russian soldiers.
In short - idiots - Filipp Kirkorov and Kesina Sobchak - believed it to be appropriate to party while the Kremlin bombs Ukrainian civilians every day. Silence is complicity, and this will be remembered.
Vol 1, No 26 - BWR 31.12.2023
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.