Russia’s war of aggression in Ukraine is beset by a confluence of several factors, some apparent and others not so much, each with their own dynamic and shifting significance. The thing about chaos is its relative unpredictability in acute circumstances. The consequent unpredictability makes it difficult to foresee where and when a point of criticality is reached that will dictate an end to the conflict or determine a clear and inevitable path to that end.
Any adequate discussion attempting to predict the outcome of a war must extend beyond arguments regarding relative military strength (i.e., numerical superiority of combatants and armament) and consider factors that relate to economic sustainability, public sentiment and will, historical grievances brought to the surface, trust in leadership, supportive alliances, and the geopolitical arena. Their individual impact, permutation or combination and the timing of delivery bear significant consequence for the aggressor. Vladimir Putin’s war is just such a matter at hand. It has ground itself down into an apparent military stalemate in a killing field we call Eastern Ukraine, the territories of Donetsk, Luhansk, Kherson and Zaporizhia, which Putin foolishly rushed to proclaim as Russian federal subjects much in the way he considered Crimea to be. The blame for the stalemate falls to Russian military incompetence and the West’s tepid response to Ukrainian requests for timely delivery of critical offensive armament.
The war approaches its two-year mark this February 24th and predictions are for a continued brutal back-and-forth, ending in an inevitable “negotiated settlement” which by published account involves the actual surrender of vital Ukrainian territory and its people to an international criminal, his kleptocratic regime and a failing system of governance. Before reaching this less-than-ideal settlement, some clarity must be given to the entirety of the current situation, and that is by considering the details of several consequential elements held in the balance.
Military Engagement
Absolute reliability upon the numbers of war casualties from the current myriad available sources is not possible for reasons that relate to actual reporting error, duplication, and incentive bias. A reasonable approximation of the widely variant magnitude of loss can at times be achieved through comprehensive assessment of data from multiple sources while weighing the impact of bias within individually reported source data. A Stanford University study, completed in February 2023 following the first year of Russia’s war, for instance, identified in its model that Russian personnel losses greatly exceeded Ukrainian losses by a rate of 5.53 to 1 (76,687 vs 17,223). By September 21, 2022, seven months into the war, Russia reported a personnel loss of 5,937 combatants while the Stanford model, based upon reporting from a number of sources, had already estimated a loss of 31,532. Finishing out the year five months later, the model added another 45,155 Russian dead arriving at a number that was a much closer approximation of the 110,000 casualties (i.e., dead and wounded) from leaked United States (U.S.) Intelligence documents citing the Russian Federal Security Service (FSB). Actual U.S. estimates of Russian casualties at the time amounted to 200,000.
Of note in the study is the absence of systematic bias in any of the Ukrainian reports of their own military deaths. Updated estimates to the present day of Russian losses for the purposes of this essay are drawn from those reported by the Armed Forces of Ukraine (AFU), as the more reliable, with the caveat that some overestimation is to be understood. The justification here must look to the likelihood that it is more vital for Ukraine to accurately report Russian losses, either witnessed or estimated, in order to assess its own military effectiveness, given limitations of its own resources. On the other hand, it is more likely for Russia, as the aggressor, to provide its own public with evidence of a presumed and expected tactical superiority to maintain the support it needs, promote recruitment efforts and avoid exposure to the world of its less-than-adequate military performance.
Although the Russian military has shown signs of improvement in conducting war in the past year, the change has been, of late, largely in defensive strategy, an odd feature for an aggressor but understandable given the threat of losing even further ground due to the failures of its offensive. Recent reporting by the AFU has indicated Russian combat mortality approaching 371,000 as of January 14, 2024. Declassified U.S. intelligence documents assessed Russian casualties, as dead and injured, to be 315,000 by December 2023, adding that losses in personnel and armament saw its military modernization set back 18 years.
In order to regain some momentum, Russian recruitment standards were lowered with “partially fit” men now becoming eligible for conscription along with convicts and formerly blacklisted individuals. To worsen matters, the limited training provided inevitably lessened chances of survival in battle and now appears to have accelerated combat mortality over time. Average survival of a newly recruited Russian soldier falls to within 4.5 months. The increased effort with recruitment threatens to turn public sentiment in a negative direction, particularly, when regional and racial inequities become manifest among those actually enlisted.
Russian armament has similarly suffered the consequences of ill-advised Russian offensive strategy with the AFU reporting losses of more than 11,300 armored personnel vehicles (APV), 6,000 tanks, 8,700 artillery systems, and almost 1,000 multiple launch rocket systems (MLRS). Estimates again vary widely with other sources; however, a meta-analysis of reports of military losses during the first year of the war showed an estimated loss of 3,380 Russian tanks in keeping with the AFU estimate reported for the war as it approaches the two-year mark. Consequently, several aging Soviet-era models have been taken out of storage to be refurbished in order to supplement deployment in Ukraine.
The Russian aerial campaign has likewise not proceeded well with the loss of over 320 aircraft and an additional roughly equal number of helicopters. Included here has been the destruction of 26 Sukhoi Su-34 fighter-bombers out of a fleet of fewer than 150. At least five fourth-generation Su-35S fighters have been lost and one other eliminated by “friendly” fire from a Russian S-300 air defense system missile in southern Ukraine. In August 2023, a Ukrainian special operations team destroyed a Tupolev Tu-22M3 strategic bomber and disabled two others in a ground operation deep in Russian territory. By the summer of 2023, between 84 and 130 of Russia’s approximately 900 tactical aircraft had already been lost. In January 2024, a highly valued Russian Beriev A-50 airborne early warning and control aircraft (AWAC), used in targeting long-range missile strikes and to detect when air defense systems are activated, was destroyed over the Sea of Azov. An accompanying Ilyushin IL-22M command aircraft, used also to oversee military operations, sustained extensive, possibly irreparable, damage to its tail fin and fuselage in the same attack. Russia’s Wagner mercenary force itself was responsible for shooting down an IL-22M aircraft in addition to several transport and attack helicopters during its mutiny in the late spring of 2023. Another Beriev A-50M AWAC was destroyed by a drone attack carried out by Belarusian partisans on an airfield near Minsk in February 2023. Only nine such strategic aircraft had been reported to be in active service in the Russian Aerospace Defense Forces.
Despite the absence of Ukrainian warships in the Black Sea, a variety of strategies used by Ukraine have effectively depleted Russia’s naval presence with the elimination of 24 warships, including the Rostov na Donu, a Kilo class diesel-electric submarine commissioned in 2014. Among the other notable losses were the Moskva, a guided missile cruiser and flagship of Russia’s Black Sea Fleet, sunk in the spring of 2022, the Novocherkassk, a large amphibious assault ship, as well as a minesweeper, three landing ships, three smaller landing craft and nine patrol boats. The Russian frigate, Admiral Makarov, was made flagship of the Black Sea Fleet after the Moskva was sunk but it too was badly damaged in a separate attack in October 2022 and, as of September 2023, remained unmaneuverable.
As if to keep pace with the loss of their combatants, Russia’s military leadership has been seriously affected with the loss of as many as seven generals. In July 2023, Lieutenant General Oleg Tsokov of the 58th Combined Arms Army and deputy commander of the Southern Military District was killed in a missile strike. To worsen matters, on the following day, Major General Ivan Popov, commander of the 58th, was removed from command for his criticism of the conduct of the war. Popov went on to criticize senior Russian military officials including the Russian military’s Chief-of-Staff, Valery Gerasimov, and Minister of Defense, Sergey Shoigu. This fiasco followed upon the mutiny of the Wagner mercenary group led by Yevgeny Prigozhin in the preceding month and that ended in Prigozhin’s highly anticipated assassination by Putin. Another fallout of the mutiny was the removal of General Sergey Surovikin, head of Russia’s Aerospace Forces and previous overall commander of Russian forces in Ukraine, for his association with the recently deceased.
The naval headquarters of the Black Sea Fleet in Sevastopol was struck in September 2023, killing several officers. The recent loss of a high-ranking officer, Major General Vladimir Zavadsky, dispatched by a Russian landmine in November 2023, was deputy commander of the 14th Army Corps in Eastern Ukraine. Included among lesser-ranked officers killed since the onset of war are 58 colonels and 176 lieutenant colonels. Among the latter was Colonel Vadim Nailievich, commander of a Signal Intelligence Regiment, in western Crimea where the concentration of radar and anti-missile systems was reportedly at the highest level. The command structure of the Russian military is such that the loss of unit leadership results in a degree of temporary disarray as the units are not trained to function autonomously. When leadership is lost with such regularity and inexperienced officers are elevated to ranks for which they are ill-prepared, Clausewitz’s “fog of war” descends quickly upon the battlefield leading to catastrophic consequences as perhaps has already been witnessed.
Morale within the Russian military has been compromised with soldiers speaking openly about their misery on the front line, incompetency of their leadership and their willingness to surrender. Desertions have doubled and tripled in 2022 and 2023, respectively, from prewar figures; some deserters even ready to testify to Russian war crimes in Ukraine. Russian activists in Tbilisi, Georgia have created the Idite Lesom (“Go by way of the Forest”) project to help those Russians wishing to desert and have noted an 89% increase, from 305 to 577 requests just from the summer to the fall of 2023.
Russian Economy
A detailed review of Putin’s performance on the domestic front as it relates to health care and to other socioeconomic concerns is available in earlier essays. An overview of the economy as it may relate to Russia’s war effort follows.
Controversy exists over the reporting of the state of Russian economy and how it is perceived by the West. It has largely to do with Putin’s refusal to disclose those economic indicators that would validate reports of Russia’s economic status while he engages in his familiar practice of disinformation. A lack of transparency, characteristic of most authoritarian regimes, is foundational to their intent to mislead. A necessary aspect of Putin’s charade in this regard has been to undermine Russia’s federal state statistics service, Rosstat, by placing control of the agency in the hands of his political operatives. As a consequence, the effect of global sanctions imposed upon Russia in 2022 was made to appear weak and, to little surprise, in the immediate interval at least, Russia’s economy, according to the reported accounting made available to the International Monetary Fund (IMF), contracted only 2.2%, far less than what was predicted.
The result led to the expected early criticism regarding the ineffectiveness of sanctions and the inability to alter the course of events that was unfolding. It became a platform for those friendly with Putin to promote the resiliency of Russia’s economy and lament the inconvenience of implementing sanctions for their own nations. In truth, as reported by Agathe Demarais, a senior policy fellow on geoeconomics at the European Council on Foreign Relations and columnist at Foreign Policy, Russia’s growth figures were based upon select forecasts that only favored positive outcomes to mislead the IMF. The latter actually had initially anticipated a contraction of 8.5% for Russia’s economy. Certainly, in part, the predicted outcome was mitigated by increased Russian war production although the new armament obviously did nothing to improve Russia’s living standards, particularly in its rural communities, and has not provided any real return on investment for the extent of materiel losses suffered.
Concerns regarding the IMF’s assessment of the Russian economy have persisted into the second year of the war. Its estimations may have had more to do with the influence of a sitting senior Russian member of the IMF Executive Board than a desire to investigate, as much as has been possible, the several proxies that underlie the health of a nation’s economy – capital flow, electricity consumption, oil and gas output, foreign investment, loan data, corporate financial statements and foreign trade – to gain an independent measure of status. The Organization for Economic Cooperation and Development (OECD), in fact, raised issues over the declining export of goods, reduced revenue from fossil fuels, the departure of several major multinational companies and the freezing of 70% of assets of Russia’s banking system amounting to $326.13 billion (USD) and an additional $21.74 billion (USD) of assets belonging to more than 1,500 sanctioned individuals and entities.
An astounding loss of Russian armament has taken place in the last two years. To gain some measure of the price tag for this war in terms of military hardware, a review of the cost in USD of production of some of the more notable elements of war lost in the conflict will provide perspective. The Black Sea Fleet has suffered a loss of approximately 20% of its pre-war strength. Estimates for the loss of major naval vessels such as the Moskva guided missile cruiser ($750 million), the Rostov na Donu Kilo-class submarine ($300 million), and the Novocherkassk amphibious assault vessel ($85 million) amount to well over a billion USD. When considering replacement of such vessels at present-day costs, a noteworthy example would be the Novocherkassk which was commissioned in 1987. Its updated cost would come to about $280 million, a three-fold increase of the original price. The loss of tonnage to date of the Black Sea Fleet has been substantial with some or all of it irreplaceable under the present circumstances.
The situation on the ground has been similarly punishing. Three Russian S-400 missile systems priced at more than $600 million apiece have been destroyed. Of Russian tanks deployed in Ukraine, a substantial number have been the T-72 and the more advanced T-90 models with purchase prices of $1.2 million and $4.5 million, respectively. During the first 19 months of the war, 50 T-90M and 34 T-90A tanks of the total number were lost amounting to approximately $378 million. Loss of armed personnel vehicles (APVs) appear to correlate with estimates of casualties and, in the case of Russia, according to the AFU, more than 11,300 APVs have been taken out of action. A number of the more recent Russian APVs used in Ukraine are the BTR-80 and BTR-90 models although several of the much older Soviet-era models such as the BTR-50, first fielded in 1954, have been recognized also. With the BTR-80 now out of production, the unit price for the BTR-90 from a decade ago amounted to $340,000. Added to such figures, is the cost related for the reported loss of more than 11,600 Russian support vehicles and fuel tankers required to sustain the war effort. The investment required to replace the ongoing loss of vehicular elements alone in the ground campaign, whether produced internally or purchased elsewhere, challenges any offensive preparation when more than a quarter of Russia’s stockpiles of ground forces equipment has been lost. Equally challenging may be the limitations in the manufacture of new armament with any shortage of parts because of sanctions.
In the air war, the loss of two Beriev A-50 AWACs at a cost of $330 million apiece, an Ilyushin IL-22M command and control aircraft with an estimated cost of $36 million in the spring of 2023 and another more recently, six Su-35 fighters with a unit price of $85 million accruing to $510 million and 26 Su-34 fighters with a unit price of $50 million accruing to another $520 million provides some notion of the expense incurred for conducting an air war in Ukraine. Losses of this magnitude based only upon a partial assessment of Russia’s aerial campaign leads to questions regarding the use of its remaining and more costly aircraft.
Ongoing military expenses will be largely committed to the production or purchase of military equipment as well as payments to wounded soldiers and to families of those killed in action. The inefficiencies and corrupt practices of Russian industry and the accompanying lack of profit of several of its state-owned companies will contribute to the expenses required for the upkeep of the war. Surprisingly, the defense industry giant, Rostec, made less in profits in 2022 during the war than it did in 2020 and the United Shipbuilding Corporation also lost an estimated $224 million in 2022 following upon a profitless 2021.
In keeping with his attempts to paint an image of Russian economic well-being while better reasoned economists would think otherwise, Putin maintains the economy is, “better than previously expected,” citing favorable trends in GDP and inflation in the summer of 2023 again without sufficient reporting of details underlying the announcement. To date, gains in Russia’s GDP have been fueled largely by increased government spending on the war and infrastructure. The defense budget rose from 2.7% of GDP in prewar 2021 to 3.9% in 2023 and is increasing by more than 70% in 2024 to 6% of GDP or a revenue of $349 billion with about a third of it ostensibly to be paid for by the oil and gas sector. Global sanctions have been very punitive with financial and several export markets for Russian commodities closed. A depressed economy has come about with growing costs of business activity. Oil and gas revenues within the first half of 2023 had fallen almost 50% from the same period in 2022 because of reduced pricing for Russian crude and lower natural gas volumes. The budget deficit in the January – May 2023 period was reported as 17% above that planned and approved for the entire year.
Despite a rise in global oil pricing in the latter part of 2023, increased enforcement of the price cap upon Russian crude by the European Union (EU) kept export earnings down and forced discounts upon exports elsewhere. The year 2023 ended with Russia’s oil and gas revenue falling 24% or $99.4 billion, although expectations of recovery are set for 2024 with the redirection of oil to China, India and Turkey and a modest increase of natural gas transit into Europe through the new TurkStream pipeline. Gas shipment to Europe for 2023 overall dropped 55% with closure of transit through Ukraine. The problem was made that much worse with the recent attack upon the giant Baltic Sea oil and gas export terminal that caused significant damage to the Ust-Luga complex located on the Gulf of Finland west of St. Petersburg. Novatek, Russia’s largest liquefied natural gas producer, suspended operations at the facility that processes gas condensate into jet fuel, fuel oil and other products for Russia’s military and the international energy market.
Several factors point to an uncertain future for the Russian economy in the current year and a more certain decline in the long run with Russia’s lack of implementing measures to balance its economy. Jeffrey Sonnenfeld and Steven Tian of the Yale School of Management have pointed out that Putin is “cannibalizing” Russia’s state firms, extracting their wealth through taxation in order to sustain his military campaign in the face of considerable losses. Between the start of the war in February 2022 and June 2023, $253 billion in private capital departed Russia, foreign direct investment has effectively ended, and Russian assets valued in rubles have lost significant worth on global markets. More than 1,000 foreign-owned companies have either curtailed operations or left Russia entirely; of the latter, large U.S. enterprises include McDonald’s, Ford, General Motors, International Business Machines (IBM), Microsoft, Intel, Goldman-Sachs, Amazon, and others.
Foreign Russian banking assets valued at more than $300 billion and the private assets of oligarchs and other officials of Putin’s regime, frozen at the time of outbreak of the war, are now being targeted for confiscation to help aid Ukraine. Likewise, the lack of access to much of the global market denies Russian companies the ability to issue new stock or bond. The Russian manufacturing sector has expanded to meet domestic demands, largely for the defense industry, as new export orders contract. However, the high cost for imported goods enhanced by the weakened ruble and high inflation will hamper this process for the foreseeable future. Circumvention of sanctions, facilitated by China, Turkey, Cyprus, the United Arab Emirates, Georgia and Armenia, has allowed for the import of controlled commodities although further sanctions may close such loopholes before too long.
Russia’s inflation rate has been increasing since April 2023, arriving at about 7.5% by November, forcing the Central Bank to keep interest rates high. In fact, the interest rate had already been raised to 16% in December as a fallout of the continued surge in military spending and Western sanctions worsening the inflationary forecast. As a result of the significant drop in foreign investment, the economy has also become increasingly dependent upon the state. At the same time, a mounting government deficit threatens to deplete Russia’s sovereign “rainy day” National Wealth Fund (NWF), valued at $100.4 billion at the time of outbreak of the war, with few viable options available to avoid this seeming inevitability. Liquid assets in the NWF have already fallen 44% since February 2022.
A “windfall tax” was introduced upon certain industries targeted for excess profit made in 2022. An altered tax upon the oil industry was imposed and based upon what the government believed to be a “fair” price for that sold, forcing exporters to negotiate for better pricing with buyers in Asia in particular. This came with the backdrop of the EU oil embargo and a $60-per- barrel price cap upon oil sold forcing a global discount for Russian oil. More recent measures have been taken by the U.S. Treasury to tighten the price cap through new sanctions targeting shipowners and other traders identified transporting Russian crude oil above the cap after flaws were identified in the execution of the restrictions. Bloomberg Economics has predicted that the liquid assets remaining within the NWF could possibly last, at best, another one or two years if oil export prices fell below $50 a barrel.
Increasing military expenditure is forcing the Russian economy onto a perpetual war footing that will serve as the main driver of growth until that growth is no longer serviceable. Spending on education, health care and other social benefits meant to attend to the nation’s welfare will be comparatively less. The latter may prove to be another casualty of the war should projections for earnings in the oil and gas sector fail to attain the level required to hold up the proposed budget. Dependence on imports to sustain a war economy will continue to add to the inflationary trend causing interest rates to rise even further and investments to finally grind to a halt.
The lack of military progress by Russia over the past year, despite the considerable expense of personnel and loss of armament, coupled with the increasing economic burden fueled by desperate attempts to sustain the war effort are just two factors in the grand circus of events that threaten Putin’s dictatorship. These factors, in turn, will impact another yet more threatening concern and one which all authoritarians must ultimately face when their delusions meet with reality.
More to come.
Copyright @Kost Elisevich, MD, PhD 2024. All rights reserved. Any illegal reproduction of this content will result in immediate legal action.
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