More repression is not the only option for Putin

Russian President Vladimir Putin announced a “partial” mobilisation in Russia at the end of September after forcibly annexing four occupied regions in south-eastern Ukraine following fake referendums. As many have pointed out, this mobilisation broke the informal social contract between Putin and the Russian population, in which the Russian President guaranteed a tolerable, if not high, standard of living in return for political passivity.

Many expect that mobilisation will now change everything. Soon, the bodies of poorly trained soldiers sent as cannon fodder to the battlefield to stop the Ukrainian counter-offensive will begin to be returned to their families, sparking public outrage. According to such thinking, this, together with the economic consequences of sanctions, could lead to public riots, which would require further repression.

The Kremlin would not last long with pure coercion. To achieve a military victory, Putin might be tempted to use tactical nuclear weapons or some other escalatory option that would probably deprive him of his unreliable allies around the world. Then he would either take the whole world down with him or be removed by the Russian elite in fear for their own lives.

The problem with this way of thinking is that greater repression is not the only option for Putin, nor the only basis for his regime. In order to understand which other direction he might take, it is important to consider the political economic dimension of recent events.

High fees for mobilized soldiers

Putin stressed, when announcing the “partial” mobilisation, that the mobilised Russian soldiers would be paid the same as the contract soldiers who have been the backbone of the Russian forces. This means that they should receive at least $3000 per month, depending on military rank, bonuses, insurance and a generous social security package. This is five to six times the average salary in Russia. The recruitment of 300 000, and especially more than a million, soldiers – which, according to some media reports, could be the real target – would require the reallocation of billions of dollars from the Russian state budget.

In the first weeks of mobilisation, chaos was reported in the payment arrangements. However, at a meeting of the Russian Security Council, Putin ordered: “All problems with military salaries must be solved, which shows that high compensation for mobilised soldiers and support for their families are an important part of his strategy.

Add to this the money that has gone to rebuild the destroyed Mariupol and other badly destroyed Ukrainian cities in the newly annexed regions of south-eastern Ukraine. Workers from all over Russia are currently employed in the reconstruction work and have been offered twice as much as they would earn at home. Even an unskilled construction worker earns more than $1000 a month.

Recently, Russian Deputy Prime Minister Marat Kushnulin said that more than 30,000 Russian troops are involved in the reconstruction of occupied Ukrainian territories and that the government intends to increase this number to 50,000 to 60,000.

Over the next three years, the Russian budget is expected to allocate at least six billion dollars for the reconstruction of the newly annexed Ukrainian territories. It remains to be seen how much of this will be lost by crony capitalism.

Growth in spending on ‘national defense’

A lot of money is poured into the military-industrial complex. As the demand for arms and ammunition has increased sharply, so have the number of workers and wages. At least part of the growth in the military-industrial complex is offset by a decline in production in industries that depend on Western components and suffer sanctions. In other sectors, employees who were conscripted into the military have left vacancies to be filled by new workers, reducing unemployment.

Overall, government spending on “national defence” has already increased by 43% from last year to this year, reaching $74 billion. A planned cut for 2023 has been cancelled, and Moscow plans to spend around $80 billion instead. Spending on “national security and law enforcement” is set to increase by 46 percent to $70 billion next year.

If we look at all these developments, we see that something akin to military Keynesianism is taking shape in Russia. Millions of Russians, whether mobilised to fight in Ukraine, employed in reconstruction or military industry, or involved in the suppression of unrest in the occupied territories and in the homeland, or family members, have become those who benefit directly from the war.

This means, among other things, the creation of a positive feedback loop that did not exist before. The Russian ruling elite launched a war to pursue its interests and succeeded only in gaining the ritual and passive support of the Russian population.

However, this redistribution of state wealth through military efforts creates a new basis for more active and conscious support in an important part of Russian society, which now has a material stake in the conflict.

“Bribing” part of the population

The fact that a complete invasion and occupation of a large part of Ukrainian territory would require fundamental changes in the Russian socio-political order was foreseeable even before 24 February. Shortly after the invasion began, I wrote: “The Russian state will have to buy the loyalty of Russians and subject peoples with a less fiscally conservative and more Keynesian economic policy.” […] Instead of the empty rhetoric of “denazification”, which was clearly insufficient to arouse enthusiasm for war in Russian society, it would have required a more coherent imperialist-conservative project, linking the interests of the Russian elites with the interests of the subordinate classes and peoples.”

The Kremlin’s strategy of combining coercion with bribery of a significant part of the population has helped to keep anti-war protests relatively small, as most Russians have dutifully accepted mobilisation. The disproportionately large number of people recruited from the poorer parts of Russia may be linked not only to the Kremlin’s fear of protests by opposition-minded residents of the big cities, but also to the Kremlin’s calculation that the monetary incentive offered would be of greater value to the residents of the poorer peripheral regions.

The key question, of course, is how long military Keynesianism will be sustainable in Russia. The classical imperialist positive feedback loops were based on technologically advanced industrial production. Conquered territories and colonies provided new markets and provided raw materials and cheap labour for further expansion of production.

The profits were then shared with the “labour aristocracy” at home, who benefited from imperialist expansion and subjugation. The bloc established between the imperialist ruling classes and segments of the working class became the basis of hegemonist regimes and prevented social revolutions in the Western metropoles.

Is Russia ready for a longer and more destructive war?

It is highly questionable whether Ukraine can provide any of the above to the Russian economy. Moreover, many expect that the long-term effect of sanctions will damage the Russian economy and lead to its primitivisation.

Thus, the inflow of petrodollars remains the main source of revenue for the purchase of loyalty. This depends on a successful reorientation and sufficient growth of the Chinese and Indian economies to sustain demand for Russian energy products. No less important would be the reform of Russian state institutions to manage revenues more efficiently, rather than losing them through incompetence and corruption.

But if the Russian regime is able to reform and strengthen itself in response to this existential challenge before it collapses, it means that Russia can be prepared for a longer and more destructive war.

Russia’s military Keynesianism is in stark contrast to the Ukrainian government’s decision to adhere to the neoliberal dogmas of privatisation, tax cuts and extreme labour deregulation, despite the objective imperatives of a war economy. Some top Western economists have even recommended policies for Ukraine that correspond to what the British historian Adam Tooze has called “war without a state”.

In the long war of attrition, such policies have made Ukraine even more dependent not only on arms from the West, but also on a steady flow of Western money to sustain the Ukrainian economy. Being totally dependent on Western support is not a very safe option, especially if your opponent is in this for the long term./AL JAZEERA