Ukraine's escalating drone and missile attacks, striking deep within Russia and targeting critical infrastructure like oil refineries and the online marketplace Wildberries, are contributing to growing economic instability and public dissatisfaction with President Vladimir Putin's war, according to recent reports. The psychological impact of these strikes is reportedly causing some Russians to withdraw savings amid fears of economic collapse and the potential seizure of funds for the war effort.
Anastasia, a 70-year-old pensioner from Moscow, has begun withdrawing cash, a practice she once scoffed at. "Now I'm doing the same. I am so concerned and, honestly, scared," she stated, echoing sentiments of distrust in the government's handling of the economy and the war. This sentiment is reportedly widespread, with a recent report indicating a £21.3 billion increase in cash circulating within Russia this year, suggesting a move away from traditional banking by some citizens.
The attacks have crippled vital oil refineries and depots, and hit major logistical hubs of online retailers like Wildberries, dubbed the 'Russian Amazon.' These strikes have caused an estimated £9 billion in damages to Wildberries, forcing Putin to announce a bailout for the company, which is reportedly part-owned by his close associates. The disruption has also impacted suppliers, with some facing bankruptcy and over 400,000 sellers affected.
Beyond infrastructure, the war's economic toll is felt in rising prices, with potato costs increasing by nearly 40% this year. Ukraine's disruptions to Russian grain exports, worth £11 billion annually, have also led to significant losses for farmers. Attacks on ports and commercial vessels have further exacerbated these issues.
The economic pressures are compounded by internal analyses suggesting Russia is losing ground technologically and economically. A leaked speech by Andrei Klepach, chief economist at VEB.RF, reportedly warned Putin that he would not win the war of attrition and that Russia is losing ground to the US, China, and even Ukraine. Klepach allegedly likened the current conditions to those preceding the collapses of the Soviet Union and Tsarist Russia, a warning that reportedly led to his dismissal.
Public dissent, though often suppressed, appears to be growing. The recent banning of the anti-war Yabloko party from upcoming elections, despite initial allowance, has been seen as a sign of the Kremlin's concern over the party's rising anti-war momentum. Political strategist Alexei Chaadaev, a former proponent of the war, noted that the sentiment of "peace is better than war" has broader support than marginal parties, even among those loyal to Putin's United Russia party.
Chaadaev also criticized Putin's rationale for the war, the "de-Nazification" of Ukraine, in light of the reality that Ukraine's expanded drone and missile capabilities are now inflicting tangible damage within Russia. He argued for negotiations and diplomacy, stating that there is "no good reason" for the continued bloodshed.
The cumulative effect of these challenges has led some analysts to refer to the current period as Russia's "August Curse," referencing historical Augusts marked by political upheaval and national crises. While Putin has acknowledged the damage caused by Ukrainian attacks, he has maintained that there is no crisis. However, reports suggest a potential for further mobilization efforts, with some men reportedly facing increased scrutiny when attempting to leave the country.
The situation presents Putin with a complex challenge, balancing the demands of a protracted war with growing domestic economic strain and a simmering public unease. The long-term implications of these combined pressures on his leadership and the stability of Russia remain a subject of ongoing analysis.