Russia’s economy will ‘die by winter’ because of military mobilization

In the seven months since Russia invaded Ukraine, some have argued that the international sanctions imposed on Russia weren’t strong enough, as Russians continued to travel, shop, party — and generally lead normal lives.

Now, an action by Russian President Vladimir Putin could be the catalyst that will bring war to Russia and plunge the economy into a real catastrophe.

Last Wednesday, Putin announced “partial” mobilization – Russia’s first mobilization decree since World War II – and ordered 300,000 able-bodied men aged 18 to 30 in the military reserve to fight in Ukraine, sparking protests across the country.

“I consider it necessary to do [this] Decision that is fully proportionate to the threats we face…to protect our motherland…to ensure the security of our people and the people of the liberated areas,” Putin said last week.

In the days that followed, Russian police arrested over 2,300 citizens for protesting, and tens of thousands of Russians have now fled the country to avoid conscription.

Now, Russian economist Vladislav Inozemtsev, director of the Moscow-based think tank Center for Research on Post-Industrial Studies, warns that Putin’s mobilization will have “truly disastrous consequences,” including the decline of Russia’s economy and the fall of Putin’s regime.

“The Russian economy will die by winter,” I wrote in early March. Now I think I was right. The mobilization announced on September 21 was a milestone that truly divided Russian history into “before” and “after” — an event that ushered in the final countdown to Putin’s era,” the economist wrote for the Russian publication on Sunday The Insider.

“I don’t want to die for someone else’s ambitions”

Putin’s mobilization decree has already proved extremely unpopular in Russia, prompting mass rallies and protests.

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On Monday, a gunman opened fire at a military recruiting office in Siberia’s Irkutsk region, wounding one person. The shooter’s identity and motivation were not disclosed. In Ryazan, a city 185 kilometers southeast of Moscow, a man set himself on fire and shouted that he did not want to fight in Ukraine. At least 400 people – mostly women – protested in central Yakutsk over the weekend, calling on the police to “keep our children alive”.

Multiple reports from independent media publications and researchers indicate that the Kremlin is likely aiming to conscript over 1.2 million men to fight in Ukraine — four times the 300,000 the government says it is recruiting. The Kremlin’s press secretary, Dmitry Peskov, has denied this claim.

Police and recruiting officials have also rounded up students after Putin specifically said university students studying full-time would not be called up for service in Ukraine. Meanwhile, anti-war activists have denounced the government for sending a disproportionate number of ethnic minorities from its Siberian and Caucasus regions to fight in Ukraine. According to independent media reports, almost half of the male population in Buryatia, an eastern Siberian region colonized by Russia in the 18th century, was taken from rural villages to military collection points.

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“The mobilization is not partial… in Buryatia. Subpoenas go to students, pensioners, large fathers, people with disabilities, said Alexandra Garmazhapova, president of the Free Buryatia Foundation CNN.

In a move that shows just how far the Kremlin is willing to go to ensure its mobilization demands are met, Putin signed an additional law on Saturday that would carry prison sentences of up to 10 years for draft evaders and up to 15 years for desertion during of war envisages .

disastrous consequences

Before Putin’s mobilization decree, Inozemtsev agreed with predictions that Russia’s GDP would fall by about 4-5% this year. But now he believes Russia’s GDP will fall that sharply in October alone, and the “next few months will only solidify the trend.” Now my spring forecast of a 10% decline seems almost too optimistic,” he said.

The Kremlin’s exclusive focus on mobilization and war efforts means state money will flow into these initiatives at the expense of corporate and economic investment, the economist predicts.

Investment in companies will fall sharply and the Moscow Stock Exchange could fall below 1,500 points before the end of the year, Inozemtsev wrote.

“And all of that doesn’t take into account… the inevitable new wave of [western] Sanctions to be announced in the near future. We are talking about a much more radical than expected displacement of Russia from the energy markets and a new wave of restrictions on the supply of critical energy [imports] for the country,” he said.

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The “financial impact of mobilization – in the medium term – will be significantly greater than the consequences of the war in Ukraine,” Inosemtsev said.

In Russia’s poorer regions like Buryatia, the economic consequences will be catastrophic, as “thousands of families will be left without income and local medium and small businesses will simply die out,” Inozemtsev wrote.

Russia will also lose at least hundreds of thousands of men to the war front, and another 3 to 4 million will “disappear” from the labor market, he wrote. In Russia’s wealthier cities like Moscow and St. Petersburg, residents generally have more means to leave the country. But Inozemtsev predicts that over the next few days, army officers will start issuing recruitment papers at people’s workplaces, leading many to quit or simply not show up at their offices to avoid a subpoena.

“This will be the strongest blow to the economy. Several million people will choose to quit their jobs to avoid doing this [serve] in the army. In large cities, on the other hand, the loss of just a few employees can cause disproportionate damage to the economy. Russia is the economy of big cities and companies,” he said.

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