The Russian Federation Faces Serious Headwinds

I'll lead by posting a link to a blog post I think might be worth your while. The blogger I've known primarily as The Analyst on Telegram has been moving over to Bluesky and has hosted longer posts on his own blog. 

The Analyst's title is certainly intended to provoke a reaction. The reality is that all governments fall eventually. It's never a matter of if but when. Towards the end, The Analyst makes clear that predicting the exact moment that this iteration of Russia led by Putin is impossible. But if one reads through the post carefully, one will appreciate the various economic and geopolitical headwinds the Putin regime faces. 

The economic picture is grim. The ruble has been losing value for much of this year, and plunged recently to its lowest level since the start of Russia's full-scale invasion of Ukraine. Although the ruble recovered a bit, it is still north of 100 rubles to one US dollar, and there is little hope that aside from maybe another dead cat bounce that it will regain its value any time soon. Inflation is atrocious and interest rates are through the roof. That puts pressure on business owners who need to borrow to keep their businesses afloat, as well as consumers who need to borrow in order to make major purchases. Then there are all the shortages. There are of course food shortages, but also shortages of medical supplies. Saline solution, for example is very difficult to come by, which is bad news for medical patients in need. 

One of Russia's primary exports is oil and natural gas. Its natural gas business has taken a hit as its biggest consumer (EU nations) have mostly switched to other nations for natural gas. Finding a new customer has proven a challenge. The oil situation is not any better. There are very few places for Russian oil imports to go - at least legally. So, Russia has turned to a fleet of old vessels to ship oil - the so-called ghost fleet. These ships should have been decommissioned and they are not insurable. So expect some environmental damage when any of these vessels sink. If the OPEC cartel decides to increase production, which seems probable and if the US continues to increase its oil output (the incentives to do so will exist no matter who is in the White House), we should expect to see the price of WTI test that $67 per barrel mark and probably go below $67. How low is not known. Global demand for oil is not exactly overwhelming right now, especially given that the Chinese economy which had become a key driver of oil consumption has stagnated. And then there is the ever-present threat Ukraine poses. Ukrainian military have targeted oil and natural gas facilities, as well as oil refineries well into the interior of Russia. For much of this year, Russia has had to cease gasoline and diesel exports as its own consumers face shortages and the Russian military needs the lion's share of any refined products that don't go up in smoke due to drone attacks or partisan sabotage. 

Basically, Russia switched to a wartime economy at a time when its government's actions have isolated Russia from the very suppliers needed to keep the Russian economy at least creaking along. Its cash reserves are dwindling and that puts stress on more local governments who have to try to do the same with less money. That is a recipe for failure. Infrastructure failures and the collapse of basic public services will be noticed by Russian citizens and residents. These people are not stupid. They will put two and two together. It takes a lot to get its citizens to a point where they grab the torches and pitchforks, but Putin's regime seems hell-bent on trying the Russian citizens' patience. And for what?

The geopolitical situation also is looking grim for Putin's regime. The recent collapse of Syria's dictatorship places the Russian regime in a difficult position. It is not clear which (if any) military bases in Syria that Russia will be able to hang onto. Losing a vital warm-water port will definitely be problematic. So to will losing any other military base in Syria. My understanding is that Syria has been something of a location for the Russian government to supply its other military bases in northern Africa. Losing that supply line will make supplying those bases more complex and expensive, and may endanger those particular missions over the long haul. I am under the impression that there aren't any good alternative ports, at least like Tartus. The collapse of the Assad regime in Syria also is a black eye for Putin on the home front, as Russian successes in the Middle East and Africa are supposed to be propaganda points. Lose those, and lose the grudging respect of citizens. The collapse of Syria also reduces Russia's presence on the global stage and challenges the assertion that Russia is anything other than a regional power.

Speaking of being a regional power, Russia has plenty of problems in its own back yard. The Ukraine war did not go as planned, and aside from very small territorial gains has little to show for the whole debacle other than a lot of dead and wounded Russians, destroyed military equipment, and as mentioned above, some of its vital energy infrastructure. The south Caucuses are a headache for the Kremlin. Georgia is in the midst of a constitutional crisis that is arguably on the verge of descending into chaos. The Armenian government has begun to show an independent streak as the Russian military has proven far less reliable for Armenia than advertised. One of the so-called break-away republics that actually belongs to Georgia apparently is no longer receiving power from Russia. I did not know that. head a bit further west outside the Caucuses and the Russian presence in Transnistria is also apparently less viable. Russia is not a reliable ally and is too distracted by its war against Ukraine. Russian interference in elections is getting a fresh look in Europe after the recently cancelled Romanian presidential election. And one of the main drivers of Russian influence - the mass migration of Syrians to the EU dating back to 2015 - is likely over. In Germany alone, there are a couple million Syrian refugees and at least half are eager to return to their home country. It will be harder for fascists to run on immigration fearmongering, much to Putin's chagrin.

If you are going to invade another country, which I am strongly against as a matter of principle, one must choose allies carefully. Putin has not really done that. At least when the US started its "war on terror" in the early aughts, there was a "coalition of the willing" and in the case of the initial effort in Afghanistan there was NATO support. The US still lost plenty of international goodwill as a result. Goodwill for Russia has been in short supply for a while. Those who have stuck by Russia are either now deposed (Assad, formerly of Syria) or are facing their own headwinds. Iran has just lost a lot of its influence in the Middle East thanks to Israel's overreaction to that awful Hamas attack in October of last year. Hamas in Gaza still exists, of course, as does Hezbollah in Lebanon, but both are severely diminished as near as I can tell. Syria is no longer a reliable ally for Iran. I guess there are always the Houthis in Yemen. Iran is also an economic basket case and is constantly clamping down on internal dissent and discord. I don't know how many troops the Kim dynasty in North Korea can afford to part with, but North Korea's dictatorship is arguably brittle. Aside from being bullet stoppers, I am not sure how much value added North Korean troops provide to the war theater in Ukraine and in the Kursk oblast in Russia, where Ukraine successfully invaded this past summer. The fact that Russia needs to turn to North Korea to beef up its military numbers is not a promising sign for Russia. Does the Venezuelan dictator do much of anything of value for Putin? I guess Cuban mercenaries were a thing for a while, but Cuba's political and economic situation is precarious. China supplies components Russia needs to build its drones and bombs, but those are turning out to be less reliable than expected. 

That's a very quick and dirty summary, but that seems to capture my grasp of the situation. I won't say that a collapse of the Russian Federation is imminent. Heck, I didn't see the collapse of Assad's regime coming until it was literally happening. What I will say is that the Russian Federation is considerably weaker economically, geopolitically, and militarily than it was when Putin chose to start his full-scale invasion of Ukraine nearly three years ago. I am sure once a collapse happens, we'll all know and will be surprised. I have living memory of the last time a Russian regime collapsed, and that was the USSR. Within a short couple years of the Berlin Wall coming down, the USSR was no more - economic stagnation, low oil prices, its own war in Afghanistan, and of course the incompetence leading to the Chernobyl catastrophe (which cost the Soviet government dearly) were the nails in the coffin. It was only a matter of time before that regime collapsed. I certainly had some grandparents and great uncles and aunts who remembered that there was something called the Russian Empire when they were growing up. They also would have remembered the news of its collapse. What will fill up the vacuum once the current regime crumbles is anyone's guess. I expect another dictatorship and some redrawn borders. I guess we will find out eventually. Stay tuned...