Will depleted funds put an end to Russia's war in Ukraine? | Conflict Zone
my guest this week on conflict Zone was one of the most prominent members of Russia's well-connected power elite former Kremlin advisor and Economist Sergey guriev was head of a top Economic University and was being re-elected to the supervisory Board of sparebank Russia's largest lender when he suddenly fled to France 10 years ago saying he feared for his safety I'm not a I'm not a brave person so I prefer to leave we know that people who do not laugh these people are now in jail and they will remain in jail as long as Putin is in the climate now as a professor of economics and Provost at Seance Poe his work illuminates how authoritarian regimes like Putin survive how does he assess Putin's grip on Power and how much longer can Putin fund his War amid military setbacks and sanctions Sergey guria welcome to conflict Zone thank you Sarah for inviting me the fighting continues as the invasion of Ukraine is now in its second year how long can Putin hold on and continue to fund this war so this is a question which depends on many factors and many of these factors we don't know so Putin is already facing major Financial constraints once the oil sanctions were introduced in December they were late but it's better to have it late than never he is now finding um difficult to finance his work but he still has a lot of resources including the resources he accumulated during 2022 when the West has actually Frozen the reserves of the Russian Central Bank will continue to buy Russian oil and gas thus given put in more money and yet we see that in recent months Putin has difficulty to find funds to buy uh by technology to produce weapons to produce artillery shells so we see that for example the front line doesn't really move in the last half a year and that's also an impact of economic sanctions economic sanctions limit Putin's ability ability to kill ukrainians so then tell us because Putin is said to be using the country's reserves to cover the Gap in the budget and you mentioned it there that a big chunk of that some 300 billion dollars are already Frozen by sanctions how long do you think the money runs out the money that he does have access to so once again it's not clear because a lot of economic data are now classified by Putin we don't know for example how healthy is the banking system so if there is a lot of cash in the banking system he can borrow from Russian Banks and continue to finance the war it is also not clear at which cost he buys the military technology through third countries like turkey India China Kazakhstan internet so many of this data we don't know but we see that every additional billion he gets he spends on buying weapons recruiting soldiers and so in this particular case I would say the war will continue as long as Putin is in power but intensity of this war the number of Ukrainian soldiers killed the number of Ukrainian civilian skill the number of Ukrainian cities destroyed this depends on how much money we give him but we see already that in the recent months the intensity of sharing in the front line has been much lower and we see that Putin's soldiers and Generals themselves and putting himself start talking about the artillery hunger they have a hunger for artillery shells they don't have enough shells to kill these Iranians and that's already good we also see that intensity of using Rockets to undermine ukrainian's ability to provide electricity has diminished and in that sense the sanctions which were introduced in December for oil and in February for oil products has been quite effective when we look at the overall picture of the economy though um you know the the sanctions they were expected to to lead to a macroeconomic instability and you have spoken before about this reported decline in GDP that was smaller than expected and I'm just wondering if you're looking at the overall situation if you've been personally impressed with how well the Russian Central Bank has handled the Fallout of sanctions well uh indeed when people saw the introduction of unprecedented sanctions in the end of February actually on the third day of the war against Russian Central Bank uh many experts thought that Russia will follow the way of Iran or Venezuela and will have a major macroeconomic disaster now these sanctions were unprecedented and so they created the unrealistic expectations but Russian macroeconomic team as you mentioned is much more competent than uh Central bankers and finance Ministries in other sanctioned countries so Russian Central Bank managed the inflation manage the capital uh capital outflow and in fact uh and in fact avoided the macroeconomic collapse that said I should say that Russian economy is in recession uh in spite of very high oil price which is usually very good for Russian economy in spite of high oil price that we observed last year Russian economy went into recession and if you look at the quality of life if you look at living standards if you look at consumer expenditures these numbers are minus ten percent this is not trivial and some people would say well Russians don't notice that well any um uh fashion to explain how unhappy they are to show how unhappy they are because it's also a very repressive regime now and I would like to get a little bit more into a little bit later about about what Russians think about what's happening but um when we do look at the Russian Central Bank and you've just acknowledged it um that they are key in helping the economy weather the sanctions are the people who run it therefore complicit in the invasion of Ukraine and the horrific war crimes that we have seen committed there well um I'm not I'm not a judge I myself would uh if I were there I would quit my job right away because indeed every additional dollar every additional billion dollars that you save for Russian budget you save it to give it to Putin to kill more ukrainians and this is of course immoral but uh of course these people managed to convince themselves that they save Russian uh population from poverty from hyperinflation and so you can always look into the mirror and explain to yourself why you're still there but of course these people who continue providing resources for Putin's War Machine they actually undermine the long-term future of Russia and in economic terms they save Russian regime this year but they of course destroy Russian economic political Social Democratic future in the long ground and in that sense it's uh economically that's also bad policy it's just in the long run it's a bad policy and here and there right now in 2022 in 2023 they avoid macroeconomic collapse but they help Putin to continue destroying Russia's future do you think that they can leave that's a different question I think some of them can leave but we've seen that many Russian business people for example committed suicide under a very suspicious circumstances some fell out of Windows so we don't know Putin's regime is very brutal Putin has killed the people who betrayed him Putin has killed people who have always been opposing them the this regime himself so we shouldn't forget the murder of Buddhist himself in 2015 we shouldn't forget the attempted assassination of Alexander Valley in 2020 and right now we are in the middle of the Judiciary process Judiciary in quotes quote unquote against Vladimir cameras are whom Putin's regime tried to kill twice so if Putin's regime tries to kill its enemies of course it is going to be very brutal towards people whom Putin considers traitor so I would not judge these people but if I wear them I would I would try to run away as soon as possible and this is something I actually did in 2013. here are how the Russians are are framing the situation foreign minister lavrov saying the West plan to isolate Russia has been a fiasco he said that Russia is strengthening good neighborly relations with the international majority and I'd like to ask you if there is some truth there because you have China's leader just standing by the side of Putin on a state visit recently many countries in the global South including in Africa where Russia is a major arms exporter have refused to condemn the invasion of Ukraine this is correct um if you look at the vote at United Nations you'll see that a lot of countries abstained but those who supported Russia are very very few and we talk about Syria Eritrean Nicaragua literally five countries which expressed the support for Russia now on China this is extremely important and I'm really happy that China doesn't provide weapons to Russia if China decided to provide yeah to Russia then we know that's right but if China wanted to follow this idea of friendship Without Limits China would have provided weapons Without Limits and cash Without Limits and sanctions would not work now we see that Russia is forced to buy Munitions and weapons from Iran and North Korea which is a much lower quality than Chinese weapons and Chinese technology so we see that there are some limits to Russian Chinese friendship and moreover after uh Xi Jinping left you know you could see the interview of Chinese and ambassador to the EU who said that friendship Without Limits is a rhetoric and China is not supporting a violation of territorial sovereignty Integrity of Ukraine so there are nuances here yes this is right China is not a West's Ally on this war in this war India is continued to buy Russian oil but uh still we shouldn't say like Minister lavrov said that the rest of the world majority of the world supports Russia this is not so then let me then ask you then from the economic point of view because Russia has been pivoting as we've been highlighting Putin says that he is looking for markets belonging to friendly countries where he can reorient energy supplies how far do you think that those Partnerships can go to prop Putin and the Russian economy key question is if other countries observe the oil price cap you mentioned oil price cap imposed by the West this is the most important issue now the West said we want to keep Russian oil in the market so we are happy if India buys rationality why because if Russian oil quits the global market you will have a crisis in the world market oil price will go up uh so the goal of the best the goal of oil price cap is that India buys rational but buys it at a low price so Putin doesn't have enough money to continue financing this war so coming back to our first question if oil price cap is at 60 Putin doesn't have enough money to balance his budget and to continue the war with a high intensity if oil price cap is lowered and I hope it will happen this year from 60 to 55 from 55 to 50. uh Russia will have less and less money as long as the rest of the world India in particular pays less for Russian oil and that's the critical question and so far we see and we see that India buys more Russian oil but Russian budget is a major deficit so it looks like this approach does work how bad does the economy have to get for Putin's position to look shaky so it's already shaky in the sense that Putin doesn't have enough weapons to uh to occupy Bahamut for half a year for half a year uh now eventually this war is not about economy this war is about uh the Battleground you have pointed out a dip for example in consumer spending last year how much do you think households are feeling that pinch and do you think that that can translate into real Grassroots resistance for the Kremlin we don't know because we are talking about when the collective Collective perception then we cannot continue like this will result in the mass protest and the police will uh join the protesters this is something which is very hard to predict Putin is very worried about this he pays more and more to the right police he doesn't send right police to Ukraine right he looks for soldiers among uh civilian Russians he doesn't use of what's called National Guard for for the war because he needs National Guard to beat up potential protesters now if you think about this if you are in Germany or UK and you have minus 10 percent uh change in your quality of life you would have enormous protests in the streets Russia is already different because if you protest in Russia you get beaten up torture and sent to jail for 10 years and in case of Vladimir caramoza that I mentioned the demand of the state is actually 25 years in jail for speaking opening against the war so it's a very repressive State it's not Russia of 2020 it's not Russia of 2013. it's a very different country uh
we're now talking about about level of repression we've not seen since Soviet times I would like to ask you a little bit more about the decision that you made to leave the country back in 2013. when you fled you were widely quoted as saying the following that you had no issues with Putin or mediev despite being the target of investigators do you regret saying that I think it was not a well-formulated uh What uh what I meant actually I didn't need Putin or midvalev to give me um to give me a personal treatment to protect me from Russian Law and Order quote unquote Law and Order system I I had issues with putting in with video for creating a system where person speaking up his mind would have to leave would be harassed would be threatened and that is that is an issue I would have I would have uh with the Russian government the quote that you mentioned is I don't have issues with Putin and midwed if for not interfering personally and protecting me from their own apparatus that's uh that's what this quote was about it was taken out of contents Putin was consolidating power what do you think might have happened to you if you had stayed well I've seen various signals and uh at some point at some point actually people who were common uh well sometimes Putin would send me a signal that nothing can threaten me sometimes the signal would be I can be arrested and sometimes uh people would say that his real source of unhappiness is my support for alexina Valley and you know what happens to people who support Alexander Valley in he himself so I I'm not a I'm not a brave person so I prefer to leave we know that people who've not laughed like Alexa navalny himself who actually came back like eliayashan who didn't leave last year like Vladimir caramoza who came back these people are now in jail and they will remain in jail as long as Putin is in the crime but I hope that will not take long Dimitri paskov Putin's spokesperson confirms that Russia had tightened the restrictions on foreign travel for some who work in sensitive areas such as is what you were doing when you were living in Russia there are reports of demanding the surrender of travel documents from some prominent figures and former officials how much dissent do you think that there is right now and how many of Russia's officials want to leave you think I think you have very widespread descent there are very few happy people in Russia's inner circles because this war has destroyed everything they've done in their lives imagine you're building a business you're building a company for 30 years now it's gone imagine you have a career within Putin's bureaucracy and the top of this career is to be actually to get a warrant of international criminal court so you are a wanted person so all these people are extremely unhappy on just recently a couple of weeks ago we had this recording of a conversation between two people who publicly support Putin but in this conversation between them one musical producer and one uh energy energy business person they are using words I would never words uh would never use for criticizing putting everybody's unhappy of course everybody's unhappy but you're right uh I I started to speak about this a long time ago but than 10 years ago and already 10 years ago the last few months when I crossed the border I would have a special procedure to enter Russia you've written extensively about Putin's style of leadership more than 20 years ago Putin came to Berlin and gave a very famous speech in German before the bundestag where he said the Cold War is Over do you think that that was just a charade back then do you think that he always had a master plan bent on Empire or has his aims changed over time well I think it's very hard to it's very hard to guess now we know that he's always been corrupt he is also ran his Entourage he's also always around his Entourage as a Mafia Boss so the moment he arrived at the Kremlin he started building his galenjic Palace the Black Sea Palace so we know that he started all these schemes right away so he's not an imperial Imperial Empire Builder he is more of a palace Builder right and there's a different different thing but over time he saw that in order to guard his palaces and he has about 20 palaces right uh he needs to create a narrative which has become this Narrative of Empire Building of reconstructing Soviet Empire and if you repeat this narrative for 10 years you eventually start to believe it yourself and I think now he believes believes that herself himself but he started off with this idea that Live and Let Live so I build my palaces but economic growth is so strong that everybody will happy with my my corruption in my centralization of power but eventually when economic growth disappeared and this was obvious that it would he thought I need a new narrative and so here next Crimea he said to Russians you know you will have no income growth but you are going to be part of the Empire and then of course kovid played a major role he was very isolated during two years of covet he talked to just a few people who reinforce his pro-imperial narrative anti-western narrative and I think by now he believes that believes it himself you you've also written about uh when Putin came to power in 2000 you say that he worked to preserve Democratic appearances and that when he resumed the presidency in 2012 his Playbook it changed it more closely resembled rule by intimidation rule by fear was that inevitable what did it change so what has changed is in the first 10 years he presided over unprecedented economic growth so Russian economy pretty much doubled in the first year first 10 years of Putin's in power and so he created the social contract where he was popular because he delivered on income growth wage growth growth of consumption and everybody was happy and he was corrupt and he didn't want to have checks and balances he didn't want to have Democratic accountability eventually economic growth disappeared and if you just look at the numbers of economic growth we had a major decline of GDP in 2009 during the world economic crisis and then the economy has recovered to pre-crisis levels and then it stopped growing because economy was driven by the state chronic capitalism of Putin's friends controlling the whole the whole economy and so he needed a new narrative and that was the principal change so in that sense it was inevitable but it was also a choice by Putin not to reform not to fight corruption not to become transparent and well governed and of course that eventually resulted in this Choice which he made and next Crimea become anti-western and step by step increase the level of repression you've said that that Putin built the regime in a way that without him the system will not function and that you think eventually it will collapse how long can Putin last and what happens thereafter if he falls that's exactly true this system is built on personality of Vladimir Putin he wants to send a message to his Entourage to his inner circle that they will not be able to function without him they will kill each other they will destroy each other if Putin disappears which means and Putin is a mortal person and he's not young then when he's gone the system will have to change how will it change initially they will try to coordinate among themselves but indeed eventually they will see that none of them has Putin's Charisma none of them has genuine support from the public don't forget that Putin has a certain base of support because he has presided over economic prosperity of first 10 years in power and so in order to get this popular support either they will install something like North Korean regime of ultimate repression and I doubt it will work because Russia is not North Korea it's a much more sophisticated and industrialized and educated Society or the they will need economic prosperity and for that they will negotiate with the best and with Ukraine to remove sanctions so we will see something like a new peristroika if Putin is gone now we'll Putin die himself or they will kill him or they will remove him from Power that's a very difficult question which is very hard to predict but if Putin loses the war in Ukraine for example if Putin if Putin loses Crimea this will drastically reduce his chances to stay in power because he bet everything he had on this war so it's very hard to predict right non-democratic regimes change in an unpredictable way so still this is a system built on Putin once he's gone the system will change what about reparations and Justice the ICC says Ukraine is a crime scene that encompasses a complex and broad range of alleged International crimes do you think that we will see Putin brought to Justice I think Putin will do everything he can to avoid that and yet we've seen for example that Slobodan milosevic was brought to the Hague so things happen yet I think all Russian Civil Society and opposition are united in understanding that the real peace with Ukraine is return to the borders of 1991 so give back all the territory Russia's occupied in 2014 in 2022 in 2023 so give back Crimea give back East Ukraine pay reparations and send war criminals to the international tribunals either ICC or other International tribunals set up for the war crimes of this war there is no disagreement on this Alexei navalny has written a letter uh announcing that this is his view this is his vision of peace with Ukraine the same was done by the Russian anti-war Committee of which I am a founding member in Russian action committee of which I'm also a founding member how can Society process and deal with the horrors committed in Ukraine do you have any hope that change will happen anytime soon it's not going to be easy you talk to me from Germany Germany has gone through this process after 1945 it's not been easy it's not been easy it was not immediate it was not obvious how to do it in the right way but now Germany is a free Democratic peaceful country some people would even say too peaceful but I think Germany has done it other countries have done it and Russia is not genetically inferior whoever says that Russia always has to stay autocratic is a russophob and racist I hope that we will be able to rebuild the country and create a free Democratic pro-european Russia Sergey Korea we have to leave it there thank you so much for your time thank you for joining us on conflict Zone thank you sir [Music] thank you [Music]
2023-04-16 15:45
