Things are getting quite ugly for Putin - who faces "elections" shortly - and Russia generally. High on his list of irritants is the ever more visible and effective campaign of economic and psychological warfare being waged from the skies by Ukraine, adroitly conceived and impressively executed. The initial phase of this was targeted against oil and gas infrastructure, which has had the desired two-fold effect: genuine economic harm, and extremely visible with it, in terms of both enormous and persistent plumes of black smoke, not least around major cities, and the pockets and P&Ls of all who need to buy oil products. (We had a truly risible troll BTL a few weeks ago suggesting the Ukrainians were histrionically putting a tank of kerosene in with the drone warhead to create a more photogenic explosion. Errr, and better combustion on the target, maybe?)
The even more cleverly conceived campaign is that being waged against the mega-depots of the WildBerries chain**, often likened to Amazon. If anything, relative to the Russian economy WB is even more economically significant than Amazon, because a vast number of Russia's extensive raft of small businesses uses WB as not only a route to market in marketing terms, but also as their sole storage and distribution means. The impact is every bit as big and more, as would be systematic disruption to Amazon in the West; and, again, the smoke plumes are black, enormous, and visible to much of the population, either first-person or extensively on social meejah. Needless to say, with enormous, combustible, static targets like refineries and depots spread across the vastness of the Russian land mass, there's not much realistic prospect of shooting down everything that is coming their way, much as efforts are being made.
From studiously ignoring it all in the early phases, pre-election Putin has felt obliged to make oblique references to indicate he does really know what's going on as it affects the Russian in the street, and that it's all being brought under control. Right.
So much, so obvious - to even the casual watcher of the BBC News. But there's something else going on that you may not be aware of.
A clever little psychological campaign has been running for several months now, using social meejah in Russia to suggest that bank deposits will inevitably be frozen once the "elections" are over. It's been nicely understated: a word to the wise, a tap of the nose, nudge nudge wink wink. But it's starting to have the desired effect - the early signs of a run on the banks. This of course could easily become a self-fulfilling dynamic, and it is reported that powers have been taken to effect a freeze whenever L'il Volodya is willing to give the word. A very high-profile Russian economist has just been fired for having the temerity to state publicly - in plain but very measured terms - that an economic crisis for Russia is around the corner on a scale that can be survived, but not without extreme steps being taken by the state.
It is against this background that Putin's posse has announced "there will be consequences" for the UK, our having supplied Ukraine with drones. Given that we supplied Storm Shadow missiles, very much more effective (and expensive) several years ago, it cannot be said that we've crossed any particular red lines just recently. The list of Putin's red lines that we and the West generally have blithely crossed since 2022 is long indeed, so this recent huffing and puffing is clearly to be assessed in today's precise context. My guess would be that right now, they really don't want any more interference on the banking front and are hoping to deter us from anything that might exacerbate the aforesaid nascent run on the banks. Russia has long been obsessed with the dark powers they associate with the City. Watch this space.
Finally, and anticipating what might be the trolls' response to this little update; OK yes, Ukraine is suffering badly, too. Of course it is! Ukraine has been suffering badly - very badly - every day since February 2022! As we well know. The point is, everyday life in Russia is hurting now, in ways that can't be ignored, even as Putin clamps down on the internet. The introduction of a bit of symmetry is a big, big difference in the overall situation.
ND
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** As ever with big, prominent enterprises in Russia, there is a lot of politics and organised crime associated with WildBerries, by far the biggest of several such chains. WB itself is run by very well-connected Armenian interests: its connections in very high places are just as well because it is at daggers drawn with the Chechen mafia. The other, lesser chains have been left more or less unmolested, which stirs up Russian politics even more.
11 comments:
I've been wondering for a while why Putin uses expensive missiles to knock down lots of militarily irrelevant residential buildings. It occurs to me that he has to expend lots of expensive missiles to destroy each strategic target (plus lots of non-strategic targets) because his missiles aren't very good at hitting the actual target. So, a large financial drain for no actual gain.
Regarding Amazon, it's online sales arm is pretty much the gift shop glued to its primary source of income - AWS. WB looks to have replicated just the sales and logistics bits.
CH
@decnine - there are social differences in waging war too. Much of the modern rights and wrongs for who qualifies as a valid target are the result of the US and UK post-WW2 implementation of our views.
The left and progressives remain curiously quiet on that particular piece of colonial western imperialism...
Russia - and if they didn't need the west, Ukraine too I suspect - have a greater appetite for civilian targets.
Much the same with Israel too, their outrages upset us more as they're perceived to be more like us, whereas Arabic and Muslim atrocities attract slightly less opprobrium, when it could just be seen as When in Rome.
CH
As for Russia, says it all when the previously tolerated anti-war party is now taken off the board. Even if the election results are pre-ordained, I've no doubt the actual results will be calculated and reported upon, and this saves both blushes and work.
With any luck the economic juggling that Russia has done so well will come to an end before long, although I suppose that comes with its own risks. Will Putin settle for a BS victory, or will he get desperate?
CH
It used to be said that ballistic missiles with conventional warheads were no use because they are too inaccurate to do serious damage. It seems the Iranians have found ways around the problem. It's therefore odd that the Russians haven't.
Comparing WW2 V1 and V2 missiles the kill rate then was about 0.6 dead and 1.8 injured per launch for the V1s and about 2.7 dead and 6.5 injured per V2. A pretty expensive way of fighting. Some 80 years later the rate seems to have dropped, recent assaults send about 620 drones (to either side) for a kill of about 10 (on either side). A rate of 0.016 per launch. Maybe each launch is fairly cheap but it still looks a pretty ineffective way of fighting - maybe that is intentional.
London may ponder what is the the risk of supplying Ukraine. Seems unlikely Putin would send a ballistic jobby to London. A bit obvious but hardly likely to provoke a Full Tonto reply. A bit of cable snipping more useful perhaps or sinking some tin tubs. An unhelpful escalation. A game of stretching and reaching.
The game has reached an impasse, Russia want Ukraine but can't be allowed to have it. No one is going nuclear - useless toys. Europe does not want a full scale fight but a bit of gentle bloodletting seems acceptable. The trick will be to convince Putin and supporters they are going nowhere. Snag is bloodletting does not bother or cost Putin and his mates.
The western banking system is more vulnerable now than I’ve seen it in 20 years and as usual, history repeats itself but doesn’t rhyme.
This time, the banks’ balance sheets are fine. Defaults are low, credit risk management systems have extraordinary sophistication (hopelessly underwater borrowers are rapidly identified and put into realisations while the temporarily solvency challenged but viable ones given largess and rescheduling which ultimately benefits everyone; credit recoveries is industrialised and effective — I remember the dark days when we used to consider getting 10 pence in the pound back a good average, now 70% is a baseline).
But unlike 2006, it’s the sovereign debt (which everyone ended up fleeing to) where the prospects are shaky. The sovereign can’t default of course. But it can expand debt levels to unsustainable situations.
The transmission mechanisms for such destabilisations in the debt market aren’t immediately obvious. But triggering runs on commercial paper could place central banks in a bind — needing to cut interest rates to restore liquidity but unable to do so because of sovereign, if not insolvency, then investors’ confidence.
China is also particularly vulnerable right now so triggering a supply chain crunch would have a chilling effect on trade. As would ForEx operations (China is quietly desperate for dollars, if the word on the street is to be believed).
Just my starters for 10…
Jim, are you comparing cross-border 'strategic' missile casualty rates with battlefield rats? If so, that's apples vs oranges.
Ukraine is genuinely uninterested in human casualties from its cross-border salvoes. Intrinsically, any human casualties in a hit on a refinery or a WB depot will be collateral damage, almost accidental, and not particularly likely anyway. Yes, Russian refineries are staffed in very much larger numbers than at a western equivalent, but they are still essentially capital assets, very sparsely populated. I don't know how many folks work in a WB - a lot more per square foot, obviously - but it takes a while for those epic blazes to take hold. Incidentally, Russia routinely claims there are no fatalities! (though we needn't accept any of their official pronouncements at face value - most of them are laughable).
BTW, casualty rates per tonne of bombs dropped on England in WW1 were far higher than those of WW2. Reason? Almost no defensive or protective measures in place in WW1.
Interestingly, in the run-up to WW2 the PTB extrapolated unthinkingly from WW1, multiplied by the (hugely increased) number of German bombers, and came up with astronomical figures. It was anticipated there would be a quarter of a million (sic) casualties in London alone in the early weeks of a new conflict: the debate was whether to bury the bodies in the gravel pits around Heathrow, or dump them in the Thames at high tide.
In that light, it's pretty amazing Chamberlain was willing to go to war at all.
My interest piqued by Nick’s comments I sense-checked my understanding of Russia’s often erratic relationship with financial matters and this is what I got back https://grok.com/share/c2hhcmQtMg_70237597-abab-414c-9a59-434e6c45bb85
To which the only observation I have is that while the “dark arts” framing was rather casually poo-poo’ed by the pattern matching AI, what it probably didn’t pick up was that Russia is literally the home of the occult (esoteric theosophy) in what is modern-day Ukraine, irony or ironies. Beliefs in the City of London washing the trading desks in virgin’s blood (okay, I’m jesting here — everyone knows you can’t find a virgin in the City of London) are much more widespread in Russia that you might imagine.
I concluded years ago that at Munich Chamberlain was right. He had no realistic alternative. When I once canvassed for an alternative on a blog comment thread all I got was vacuities "He should have stood up to Hitler", that sort of tosh. Nobody gave an example of any military, or other, action he could have taken that would have been a good idea. Nearly two decades of the British and French populations being rather pacifist left him with no options.
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