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.
31 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.
Clive, I am heartily amused you put my "throwaway comments" to Grok for validation. Looks like I passed the test. But hey, it's just a blog - I'm not going for my doctorate here! Just spouting stuff I know (I used to stay in Moscow a lot and can still tune into that wavelength, to a degree).
Pity you didn't put Arday through the Grok wringer on Cambridge's behalf, eh?
Sorry, I was being flippant with the AI! You were on to somthing with what you said.
Don't get me wrong, I'm generally impressed with AI (and it keeps getting better) but it does tend to adhere to what are prevailing narratvies until the bitter end so I've a hunch it would have clung on to a "there are some concerns about Arday's competence at the highest levels of academia but a risk that his detreactors are motivated by other prejudices" line... right up until the whole sorry truth of the matter emerged.
(I've enteratined myself with a weeks long ding dong with Grok about how the oil price didn't reflect a complete blockade of the Strait of Hormuz, with Grok insisting -- based on the conventional coverage, which of course was meta, reactive and third-hand rather than having genuine expertise on the ground and in the sea -- I was wrong and only when I presented it with maintream reporting that the Strait isn't really that blocked at all with up to 50% of the normal volume of cargos making it through did it relent with an "oh, well, yeah, there might be some clandestine shipping going on..." and I could almost here it harrumph making me swear it was like my wife when presented with incontravertible evidence she is in the wrong)
Google's AI lied to me again yesterday. I've caught it lying several times on things I know about: how often does it lie on things I know little or nothing about? A bit like newspapers, eh?
Google A.I. Is quite poor on everyday answers.
Does the bus run from Brompton to Bagwatch after 6pm?
Which number bus is it?
Is it free?
Is there even a bus at all?
Google A.I. Will give a confident, commanding, authoritative response to all those questions. With only a 25% success rate on the overview.
Listen to any queue at any public customer assistance counter. The internet told me…
Google A.I. Has a dismal record in separating what is true in some cases. At some locations in some instances. From what is not.
I don't think it's general Russian policy (unlike UK in WW2 with "dehousing" ) to flatten residential buildings, or civilian casualties would be much higher, and you wouldn't see reports like "Eight dead as over 300 Russian missiles strike Kyiv" - very low body count per missile.
But there's a propaganda war on, so every missile (or more likely a cheaper but more vulnerable drone) that hits an apartment block reinforces the invincible ignorance of the Mail/Guardian readers.
I see it's being reported that AB is taking long-range missile blueprints to Kiev. He must be very confident in their security. Surprising.
OT but I missed this. Is 2026 another Year Of The French?
https://foreignpolicy.com/2026/06/18/ireland-france-military-protectorate-outsourcing-defense-procurement/
"Ireland Is Becoming a French Military Protectorate- Literally defenseless, Dublin is outsourcing security to Paris."
https://en.wikipedia.org/wiki/French_expedition_to_Ireland_(1796)
Invoking the UK’s “dehousing” policy (the deliberate area-bombing strategy, associated with the 1942 Lindemann/Cherwell paper and Bomber Command’s campaign against German cities, aimed at destroying housing stock and civilian morale) does not morally neutralize or excuse contemporary Russian strikes.
Historical context differs sharply: WW2 was a total war of national survival against a genocidal regime that had itself pioneered city bombing and conducted the Holocaust. Modern international humanitarian law (post-1949 Geneva Conventions and Additional Protocols) imposes stricter rules of distinction, proportionality, and precautions against civilian harm.
Even if one views Allied area bombing as morally fraught or wrong (a position many historians and ethicists take), “they did it too” does not generate a permission for others. It is classic whataboutism that shifts attention from the agency and choices of the actor under discussion.
The argument “casualties would be much higher if it were policy to flatten residential buildings, therefore it isn’t” is logically weak and morally incomplete.
Low deaths per munition can result from Ukrainian air defences (when interceptors are available), people taking shelter, weapons missing or being less accurate than claimed, choice of warheads not optimized solely for maximum civilian lethality, or a mix of military and dual-use targets. It does not prove the absence of reckless disregard, insufficient precautions, or a coercive strategy that accepts (or seeks) civilian suffering as a means of pressure.
Cumulative harm matters. Verified civilian deaths from Russian long-range strikes, drones, and related attacks run into the thousands over the course of the war; individual barrages still kill and injure dozens in residential or civilian settings. A “very low body count per missile” in one reported incident does not erase the absolute numbers or the pattern of urban strikes.
Labeling reports of apartment-block hits as fuel for a propaganda war that keeps Mail/Guardian readers in “invincible ignorance” is condescending and morally corrosive.
"China is also particularly vulnerable right now "
I've been told how China's going to hit the buffers for 20+ years now, yet they just keep on keeping on with growth rates the West would kill for.
When Hormuz closed they just started digging up more coal and opening new power stations.
China’s predicament is best illustrated by passenger car production — a priority industry for the CCP (which is where the problem began…).
China has an annual production capacity of about 50–55 million vehicles. The total global market for passenger cars in 2025 was 71 million units. China has build manufacturing capacity capable of supplying 2/3rds of the world’s total car market.
But those markets do not (and are not) simply willing to soak up all of China’s malinvestment. The US (the main market) has banned Chinese car imports. The EU has swingeing tariffs. India (another important market) plays the Chinese game better than China (import restrictions and insistence on local manufacturing for collaborative joint ventures with overseas companies). This leaves the rest of the world — way way too small to absorb all the Chinese production plant output they’ve built out.
So there’s going to have to be a restructuring and a winding down of all this excess capacity. It’s like British Leyland on steroids. There’s probably some decent, viable companies in all the Chinese over-expansion dross. But how — institutionally and socially — is the excess to be unwound? Where is the capital going to come from for the inevitable write-offs?
Turing back to US dollars, how is it possible a country literally awash with dollar assets have companies unable to obtain them? Well, private-sector and corporate demand for dollars exists (driven by ongoing write downs of investment bubble assets in real estate and emergent needs to resolve insolvent companies such as are detectable in the auto sector like I’ve described) and can create visible pressure or market stories, particularly around capital controls and outflows.
In a capitalist society and system, insolvencies are easily identified (although there’s always a lag; underwater borrowers can hide the truth for a time anyway) and there are transparent well-worn processes for resolving them and forcing investor / lender write-downs.
But how will this work in China? Most of the particularly troubled entities are state owned enterprises or princelings of local governments. Exactly like British Leyland. No-one wanted to face the truth of the unsalvageable situation, which made the eventually resolution much more painful and disruptive.
You're short of workers for your strategically vital care home and kebab shop industries. Your people aren't having enough kids after 30 years of accelerating house prices and girlboss feminism. What do? If you're a Conservative PM, you import millions of Africans and Indians, and their families, who will be net tax recipients not contributors.
But if you're China you send the kids to Robotics Tech.
https://www.bbc.co.uk/news/articles/c62m4zn1q6mo
"By 2035, more than a third of China's population will be over 60, according to official estimates. The country will also lose nearly 60 million people in the next decade - almost equivalent to the population of France - according to some estimates. The hope is that increased automation will fill this looming gap in the workforce before it starts to affect an already sluggish economy. "
So sluggish it only grew 4.96% in 2025
https://www.worldbank.org/ext/en/country/china
There are truths. There are half-truths. And then there are China’s declared GDP figures.
https://grok.com/share/c2hhcmQtMg_a24df20c-673f-47a0-bc1f-d2b8ac887061
To be fair you could say that about Japan, except they've understated GDP for decades to keep the West from noticing where their producer goods are now coming from.
But it's I assume harder to fiddle Chinese life expectancy stats. (up 6 years since 2000) or maybe their CO2 emissions (more than tripled since 2000).
I just wonder Clive, why is it China, not the US, that holds Robot Olympics?
Because businesses there (and the government, which is at least vaguely accountable to the people, who take a dim view of their taxpayers dollars being spent on boondoggles) has no need for frivolous vanity projects?
And where's the UK "Robot Tech?"
Nowhere to be seen. Without an ecosystem, scale, marketing and distribution networks and so on, there’s little incentive to try to compete.
Fintec is a much more attractive proposition for investors, with an established legal and regulatory framework, mature (both deep and wide) capital market, advantageous geographical position and substantial talent pool to draw on, there’s little similar competition and thus good prospects for both growth and profitability.
@anon - the UK has a robust robotics industry, and has for decades. They're just not humanoid robots, of which I'm waiting on a use case.
Bipedal robots require a lot of effort around balance, quadrupedal or wheeled makes much more sense as processing power can be used at the tasking, not remaining vertical.
CH
Thanks, I'm aware of that. I know someone in the industry. But energy costs kill our manufacturing, plus where's the ecosystem? Dyson moved to Singapore when he found that only one component of his machines came from the UK and the rest from Far East. From the BBC report:
"China has the edge over the US due to its enormous manufacturing base. Motors, batteries, electronics, gears, sensors - everything needed to build the body of a robot is all at hand."
Incidentally for ND, there are reports of a major fire at the Amur Gas Chemical Complex, a Russian/Chinese polymer plant way out East.
@anon - what ecosystem are you after? They're present in nuclear, warehousing, and manufacturing.
China is very image orientated, much of what we see is surface with little depth, so it's easy to trot out numbers and videos in isolation, rather more difficult to divine if those numbers and clips will translate into anything meaningful in the long term.
CH
Anon CH - by ecosystem I mean the manufacturing ecosystem which we have to a great extent lost here. Where are all the things a hi-tech consumer or military manufacturer needs? They are all in the Far East. That's why Dyson moved.
I don't see anything image oriented about the stark facts of Jaecoos, BYDs, XPengs on our roads, that your ferry to St Malo is Chinese, or the fact that nearly everything in the shops comes from there. Germany was our one hope and energy prices are killing them.
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