Cracks under the surface: How resilient is Russia?

LibMod’s Maria Sannikova (left), OSW’s Maria Domanska and soci­ol­o­gist Alexandra Prokopenko.

LibMod’s Maria Sannikova (left), OSW’s Maria Domanska and soci­ol­o­gist Alexandra Prokopenko.

With its over­ar­ching theme “How fragile is the Putin system?” the recent meeting of LibMod’s Expert Network Russia at the Eastern Studies Centre in Warsaw sent a clear message: A fragile Russia is a realistic scenario and Western poli­cy­makers need to prepare for this rather than fearing instability.

To read more about our Inter­na­tional Expert Network Russia, click here!

Editor’s note: We do not attribute quotes because the meeting was held under Chatham House Rules.

At first glance, the kickoff panel discus­sion “Cracks in the Ruling Elite: Oligarchs, Tech­nocrats or the Siloviki?” brought a lot of evidence to the contrary: The experts agreed that the regime has consol­i­dated consid­er­ably since last summer, when the revolt of the Wagner merce­naries failed and their ring­leader Yevgeny Prigozhin was subse­quently killed in a plane crash that bore hallmarks of a Kremlin-orches­trated assas­si­na­tion. “Even the Siloviki (the military and all other armed security services) showed resilience … and the armed forces adapted to the Ukrainian coun­terof­fen­sive” one panelist said.

Portrait von Nikolaus von Twickel

Nikolaus von Twickel is a member of the Center for Liberal Modernity’s Russia Team and editor of the web­site „Russ­land verstehen“.

Since then, domestic repres­sion in Russia has increased even more, espe­cially against LGBT commu­ni­ties and the few remaining dissenters. There are growing fears that Vladimir Putin will use the pres­i­den­tial “election” in March not just to secure himself another six years in office but to further weaken any internal opponents.

Also, the personal sanctions against Russian busi­ness­people are not working as intended: While those targeted may be unhappy about the sanctions, they are o.k. with Putin. And a seemingly strong Putin makes splits less likely: “The elites only confront the President with uncom­fort­able truths when they feel he is losing. When they feel he is winning, nobody dares”, one panelist argued.

Never­the­less, there clearly is fragility below the surface. Russian business is unhappy with the Kremlin’s impo­si­tion of capital controls and the growing number of asset redis­tri­b­u­tions. Panelists also noted that the Kremlin fears a radi­cal­iza­tion of mass sentiment for social reasons as well as dissat­is­fac­tion with the lack of resources and decision-making compe­ten­cies in the regions.

The Prigozhin revolt caught the regime off guard to some extent, because it was carried out by nation­alist hard­liners. However, Russia’s nation­alist oppo­si­tion was soon exposed as being overrated. When Igor Girkin, their most outspoken figure, was arrested on 21 July, protests were at best muted.

Many panelists iden­ti­fied the so-called tech­nocrats as the strongest elite group to emerge from the war. Unas­suming but effective bureau­crats like Prime Minister Mikhail Mishustin and Central Bank Governor Elvira Nabi­ul­lina are credited with keeping Russia func­tioning despite sanctions. Mishustin is emerging as a potential successor to Putin: “The tech­nocrats’ adaption is so strong that they can remain in place even without Putin”, one partic­i­pant said.

Russia’s economic resilience – an illusion?

The Russian economy presents a similar picture. While on the surface, GDP has been growing since the sanctions regime’s impo­si­tion, a closer look tells another story: The “new Russian economy” that emerged this year, actually is less resilient than the previous one: There is a massive labour shortage and the arms sector could expand only at the expense of civilian indus­trial produc­tion, which has stagnated since May 2023.

Also, labour produc­tivity is 6 to 11 times lower than in Western Europe. Exports are less diver­si­fied (non-energy exports are down by 50 per cent) and the country is more dependent on imports while at the same time diver­si­fying its import sources. The tran­si­tion towards a war economy means that GDP growth no longer reflects increases in the quality of life. Any further brain drain, like the 2022 exodus that followed the Kremlin’s mobi­liza­tion, will directly affect Moscow’s arms produc­tion. Russia will emerge from the war as a poorer country with a more backward economy (at least outside the arms sector).

Russia also has rela­tively few currency reserves of just under 600 billion dollars. “If the oil price falls below 40 dollars it will be difficult to defend the rouble” one expert concluded. But if oil remains expensive, Moscow can keep funding its military. It is therefore vital that the sanctions – espe­cially on oil and gas exports and high tech-imports ­– are imple­mented more effec­tively. Among the panel’s proposals were improved moni­toring and mech­a­nisms to restrict Russia’s oil and gas sales.

But while sanctions hurt, they won’t kill the economy, nor will they stop the onslaught against Ukraine. “The only way to stop the war is defeat on the battle­field” and “sanctions won’t bring down the regime, just look at Iran”, where two notable comments. However, main­taining economic sanctions could put pressure on any future Russian leader who succeeds Putin one day.

Why the West should not be afraid of regime change in Russia

If no construc­tive arrange­ment is possible with the current regime, should the West promote political change in Moscow? Experts on the third panel, who discussed this question, were adamant that while only Russians can make regime change happen, the West could create the condi­tions for this. A crucial factor would be to make Russia lose the war and to create a situation in which the elites lose hope that Putin will be successful in the long term.

A central theme was that Russia does not have an invari­able author­i­tarian DNA and that past western policies often perpet­u­ated the country’s path depen­dency by doing far too little to foster democracy. Another argument is that a demo­c­ratic Russia is in our interest because an auto­cratic Russia will always be aggres­sive towards its neighbors.

The challenge, of course, is how to influence Russian society. Some argued that, para­dox­i­cally, despite the internet it is harder to reach Russian domestic audiences today than during the Cold War years, when Radio Liberty made inroads against the Communist Party press.

Another challenge lies in Western capitals, where there is not only wide­spread fear of esca­la­tion of the war and post-Putin insta­bility, but where certain leaders would happily have a trans­ac­tional rela­tion­ship with Putin.

But resig­na­tion is not the way forward. “Even if it is hard and not a rewarding job, we have no other way: The alter­na­tive is to allow this regime to succeed”, one panelist concluded.

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