September 29, 2022

1. A step that changes nothing

2. War is expensive

3. Visible shift

A step that changes nothing

A ceremony for signing treaties on the accession of new territories to the Russian Federation will be held on Friday, September 30, presidential spokesman Dmitry Peskov said.

In the Grand Kremlin Palace in the St. George’s Hall at 3:00 p.m., the ceremony of signing treaties on the accession of new territories to the Russian Federation will be held. There will be a voluminous speech by President Putin at this event... This is not the President’s address to the Federal Assembly; it is essential not to be confused; this is a different format.

The President’s Press Secretary clarified that the matter concerns the signing of agreements “with all the four territories that held referendums and applied to the Russian side with the corresponding request.”

Just like the “referendums” held in the occupied territories, the signing of agreements and the subsequent adoption of Russian laws on the annexation of Ukrainian territories do not, by and large, change anything. These steps do not bring Putin any closer to victory, by which he means the capitulation of Ukraine. Ukraine is unlikely to agree to recognize the annexation and cease hostilities. “Selling” the annexation of Ukrainian territory to the Russian population in the context of a dramatic change in Russians’ attitude toward the war caused by mobilization will be difficult. The West will respond to the Kremlin’s escalatory moves with new arms shipments to Ukraine and new sanctions, further entangling the Russian economy in a cobweb that hinders its development.

There is little doubt that Russia will have to return the occupied lands to Ukraine, and that this will happen only after Putin leaves the historical scene makes little difference. The actions of the Russian dictator, starting with his autumn ultimatum to the United States and NATO, carry a sadness of despair—one gets the feeling that Putin, realizing that his earthly term is not eternal, has decided to do maximum damage to Russia and the Russian population, which will live after him. Herostratus complex...

Tomorrow, after Putin’s speech in the Kremlin, I will lay out my impressions and share them with you. 

War is expensive

The government’s 2023 draft federal budget, submitted to the Parliament, lifts the veil of secrecy over how much money Russia spends on the war in Ukraine. Of course, there is no accurate penny estimate in the bill, but the overall magnitude of the numbers can be understood.

In the submitted draft, the rapid growth of spending in 2022 and 2023 is noticeable in two items— “National Defense” and “National Expenditures,” which finance current expenditures on the army and production and repair of weapons and production of ammunition.

The first thing to look at is the 2022 spending: An increase of 50% for “General Government Expenditures” and 31% for “National Defense.” The total is almost 2 trillion rubles, or about 6 billion rubles daily. This amount is about two-thirds of the annual budget of Moscow, the wealthiest region of Russia, or the combined annual expenditures of the subsequent four most-significant budgets: St. Petersburg, the Moscow region, Tatarstan, and Krasnodar Krai.

According to Russian law, when approving the budget, the government must present its vision of spending for the next three years (in this case, from 2023 to 2025), although second- and third-year expenditures are not final but indicative. In the draft budget, the Ministry of Finance laid the hypothesis that already next year, the intensity of military operations will decrease dramatically, and in 2025 the government will not have to allocate money for military operations—expenditures on both items are “normalized” and lowered to a level that annual indexations can explain.

The bill submitted to Parliament stipulates that the combined excess of spending on these two items over the “normalized” level is 3.85 trillion rubles ($66 bln.), with almost half of this spending, 1.8 trillion rubles ($31 bln.), in 2022. In 2023 and 2024, these amounts are 1.8 trillion rubles and 0.8 trillion rubles, respectively.

Even though the bill provides for the cessation of hostilities, the government understands that the occupied territories must maintain the occupation army. The corresponding expenditures will be financed by the article “National security and law and order.” To obtain the “normalized” level, I increased the 2022 expenditures by 13% (Rosstat deflator) from the 2021 level and indexed the 2023-2025 expenditures by 8%, 7%, and 6%, respectively. The aggregate excess spending over the “normalized” level amounted to 4.1 trillion rubles ($70 bln.).

That’s it: 3.85 + 4.1 = 7.95 trillion rubles ($137 bln.), or 55,000 rubles from each Russian citizen. Is it a lot or a little? In August, the average Russian spent 32,500 rubles, slightly more than 1,000 rubles a day, on goods and services. According to Putin’s decision, the income of Russians will be spent on aggressive warfare for almost two months.

In conclusion, I would like to reiterate, of all the above figures, only the 2022 numbers are the final; spending in subsequent years can be increased at any time at the whim of Vladimir Putin, and, as we have seen this year, he has no intention of obtaining a parliamentary resolution for this.

Visible shift

The Levada-Center conducted another poll of the population about the events in Ukraine, after which we can confidently say that a reassessment of values has begun in the public consciousness of Russians.

The percentage of people who “very closely” follow the situation in Ukraine has noticeably increased to 32% (in August, it was 21%). At the same time, the growth of attention mainly occurred at the expense of a decrease in the proportion of those who follow the situation “without paying much attention,” from 34% in August to 25% in September. At the same time, the proportion of respondents who are “very concerned” about the events in Ukraine increased sharply (from 37% in August to 56% in September).

The increase in attention and concern did not lead to a change in Russians’ attitude toward the war of aggression: Overall support for the actions of the Russian army exceeded 70%: 44% “definitely support” and 28% “rather support” (46% and 30%, respectively, in August). The September opinion poll showed a change in the ratio of forces between those who think that the war should go on and those who believe that peace talks should be initiated: In August, the balance between the former and the latter was 48%/44%; in September it changed to the opposite, 44%/48%. It should be stressed, however, that this change cannot yet be considered vital—the changes in both indicators are slightly outside the statistical error margin.

After seven months of hostilities and a successful offensive by the Ukrainian army in Kharkiv Oblast—of which 77% of respondents are aware—the proportion of Russians who believe that the “special military operation” is progressing successfully decreased sharply. Whereas in May there were 73% of them, in September there were 53%, but only 9% believe it is going very successfully. The proportion of respondents who say that the “special operation” is not successful has increased by one-and-a-half times, from 15% in May to 31% in September. The main signs of the unsuccessfulness of the “operation” were the fact that the military action took more than six months (" has no end in sight" - 27%), the announcement of mobilization and the beginning of compulsory military conscription (23%), and that the Russian army had stopped advancing (“we are losing, giving up our land, not advancing, retreating”—22%).