Transcript: Why Russians are still backing Putin

This is an audio transcript of the Rachman Review podcast episode: ‘Why Russians are still backing Putin’

Gideon Rachman
Hello and welcome to the Rachman Review. I’m Gideon Rachman, chief foreign affairs commentator of the Financial Times. This week’s podcast is about the future of Russia. My guest is Alexander Gabuev, director of the Carnegie Russia Eurasia Center, based in Berlin. ‘Sasha’, as he’s known to his friends, used to live in Moscow, but he left shortly after Putin’s full-scale invasion of Ukraine. Two and a half years after that invasion, Russia’s still bogged down in fighting and Ukrainian forces have made a bold incursion into Russian territory through the Kursk offensive. So what’s the mood in Putin’s Russia and how long is this war likely to last?

[MUSIC PLAYING]

News clip
The Russian city of Sudzha is now under Ukrainian control, part of the territory it conquered starting on August 6th in a surprise operation that it claims took more than 1,200 square kilometres in the Kursk region.

Gideon Rachman
Ukraine’s Kursk incursion came as a shock to Russia and the wider world. But on the surface, at least, it’s not shaken the Kremlin’s determination to press on with the war. In fact, Sasha Gabuev believes that Putin still thinks he can win, as he explained to me recently.

Alexander Gabuev
Putin has not really reacted in any serious, dramatic way. He didn’t pull much of forces that are now advancing in Donbas in the east of Ukraine were the major axes of Russian effort is around the city of Pokrovsk. He really has scrambled various units from all over Russia and put a patch on the breach in Russian defences in its internationally recognised borders and continues with pushing in Donbas because most likely — and he was on the record talking about this — he believes that that blow to Ukraine, if he is more successful in Donbas, will really set the stage for the campaign and the war in 2025.

He will probably run into the wall on hardware, tanks, armoured vehicles, but that will be towards early 2026. So in the 12 months ahead, he’s not short of tools to inflict more pain on Ukraine. And his hope is that that will be sufficient to really change the trajectory into steady Russian gains and the goalpost he’s obviously waiting is the US election on November 4th. And after that, he may calibrate his strategy again according to the political reality in the west and the situation in Ukraine itself.

Gideon Rachman
Now, Richard Moore, the head of MI6, British intelligence, speaking actually at the FT Weekend Festival recently, said that his view was that the Kursk incursion had, as he put it, triggered doubts among the Russian elite. Do you think that is the case?

Alexander Gabuev
Obviously, UK intelligence has various ways to monitor and to know what the Russian elites are thinking, which I don’t have. But people I talk to among rich people, some senior officials and various contacts, I would say they were more or less in the same territory where people have been very early on from the first day of all-out invasion. People who don’t support this war are quietly expressing that this is another testament on how much this horrible strategic blunder that Mr Putin made is bringing costs back home. So this is bad. But they have been holding this view for quite some time. And people who are in the war supporters camp or who say that they are ignorant and they’re just out there living their lives making money, say like, yeah, we can ignore this. And the benchmark — that’s propaganda talking point — is that in world war 2, we lost 28mn people as Soviet Union, and the Germans came to the gates of Moscow and then we repelled them. So this breach into Kursk is a tragic setback. We are very sorry for the people who are trapped there under Ukrainian occupation, but we will manage to liberate these territories and extort price from both Ukrainians and their western backers.

Gideon Rachman
When we talked a couple of years ago, just after you left Russia, you said that Russia risked turning into a giant Iran of Eurasia, that it was going to be this huge isolated economy that would function but it would be permanently a bit poorer and a bit more dangerous to the outside world. How is that prediction looking?

Alexander Gabuev
I think that more or less was an accurate prediction. Russia is indeed much more isolated, far more dangerous for its neighbours. And you look at the sabotage campaign or all of the dangerous incidents that Vladimir Putin has ordered in order to revenge western support to Ukraine, extort the price and also scare western decision makers and western public. That continuous support to Ukraine, pushing the Russian red lines will have a cost that probably people are not ready to pay. What I wasn’t good at predicting is that actually, the Russian economy coped with the sanctions much better than we anticipated.

In 2022, there was a real tsunami of sanctions unleashed against Russia. Policymakers in the west reacted to many horrible events that happened, the invasion itself, butcher massacre, the tragedy on railway station in Kramatorsk. And now Russia is perhaps the most sanctioned country, at least in a short time limit of two years. And then Russia did pretty well. Its economy is growing. If you look at cities in Russia, many of them are awash in cash. And that’s a result of several factors.

First, Russia cashed in a lot in 2022 when the commodity prices were very high and Europe was still buying a lot of that stuff. So Russia managed to compensate about $200bn in reserves that were frozen — 300bn have frozen, but 200bn have been earned in Europe. And then it turned out that many countries are willing to buy Russian discounted oil, fertilisers, metals and Russian products have found their markets. And then it turned out that the global shadow economy has enabled Russia to find ways to source many critical components that it needs for its military machine and many consumer goods that keep the population happy. And the surplus of money in the economy, the incoming cash flow plus, the ability of the government to pay handsomely to people who are mobilised into the fight, to the family, who have lost their loved ones or have somebody wounded, that generates another engine inside economy. For example, average salary in Russia is $1,000.

Gideon Rachman
A month?

Alexander Gabuev
A month. People who get mobilised get paid twice that and then among people who are recruited, their salary would be less than average. So they have a fourfolds, sometimes fifthfolds income compared to what they earn in their normal life. If they’re killed, the family gets between $60,000 and $80,000. That’s the amount of money that these families in Russian regions have never touched.

Gideon Rachman
So let me just restate that, because it’s so extraordinary to think about it. Basically, you’re saying the Russian economy is undergoing a mini-boom because so many Russian soldiers are being killed and the compensation payments are fuelling a kind of consumption.

Alexander Gabuev
That’s part of that. There is another part that since Russia is an ageing society with pretty bad demographic situation to start with. So because of structural shortage of labour, one of the avenues where this labour gets sucked out of the economy is the war effort and now there was migration. So people like myself and many others have moved out of Russia. That’s an outflow of competent workers and Russia is rapidly trying to expand its military industry by refurbishing the existing plants and introducing three, four shifts. So 24 hours a day, these plants are producing or repairing tanks, armoured vehicles and stuff that Russian military needs.

With that, workers in those plants will need to be attracted by higher salaries. Civilian industries are also competing for workers. So the labour cost goes up and that delivers the consumption drive that is very much visible in the Russian economy for now. It’s unsustainable but in the short to medium run, that’s indeed creating a mini-boom that Putin is capitalising on for his war support, and that’s keeping the population actually happy and increasingly supportive of the war effort or at least of this confrontation.

Gideon Rachman
Yeah. Let me just pick up on that idea of a happy Russian population, because one of the things you hear from some people who are bitterly angry with Russia, you know, whether they’re in eastern Europe or Ukraine or whatever, that’s often made me a little bit uncomfortable, is that the Russians, they’re different from us. They don’t care if their kids kill because they get a free car in compensation. And some of what you’re saying sounds a little bit like that. But on the other hand, if you think of the Afghanistan war, the casualties were actually lower, much lower than the people suffering now. That seem to leave a lasting scar on Russian society. So is Russia really capable of just shrugging off these very high casualties? And actually, while we’re on the subject, what are the casualties, as far as you know?

Alexander Gabuev
I think that the hangover and the heavy price that Russia will pay for this war will come later on. Now, we are in the stage of the party that people are consuming a lot of booze and they’re happy about that. And talking about your point, the difference between Afghanistan, Chechnya and now is indeed that the government is paying handsomely and that keeps people happy. But also during Afghanistan, the end of this campaign coincided with perestroika and Gorbachev. The press became much more liberalised. The overall atmosphere in the society and ability to discuss whether this war out there in Afghanistan is worth it.

Same in Chechnya. The amount of casualties was huge. And the discussion about merits of this war was happening in a country that had a parliament dominated by the opposition, the communists in the ’90s, you remember that? Really the free press, various TV channels belonging to the state, to the oligarchs and an ability to have a free discussion that will lead to political consequences for the Yeltsin’s Kremlin. It’s very different from what we are seeing now.

Mr Putin has been boiling the frog of the Russian civil society very successfully for nearly a quarter century. Harassing people and journalists, closing down media, taking control over them, pushing some people out of the country. So right now, people are unhappy about the war, but they don’t have channels to talk about that. Criticism towards the war effort has been criminalised. So people are taking the note and just trying to be below the radar.

The very final point, propaganda is also working and it’s very successful. The Russian narrative is that we are fighting fascists out there in Ukraine, that they adhere to Stepan Bandera, the nationalist leader in the second world war that co-operated with the Nazis, and that during world war 2, the Soviet Union sacrificed 28mn people and that the losses that are incurred now are really small-scale because Vladimir Putin, unlike yours of Stalin, really cares about people. That’s what the propaganda is trying to convince the Russians. And absent other narratives, some people are susceptible. They want to be left alone. They see that OK, some people are arriving back in body bags or a cripple traumatised by the war, but there are not too many. These losses are being paid for. Your ordinary life is not really disrupted and if you are unhappy about that, there is a prison sentence that awaits you.

In terms of casualties, we have documented casualties done by various media organisations, but it’s a very high bar. So they monitor and verify those casualties very carefully. It’s 68,000 people dead by now. It’s probably higher in the ballpark of 120. Western intelligence services don’t give a breakdown in killed-in-action and wounded, but probably overall casualties is in half a million territory. For a country of 147mn, it’s very high. It’s unimaginable for western societies, but it’s still manageable.

Gideon Rachman
That’s . . . yes, that’s pretty sobering assessment. But returning to something you said earlier in terms of just getting more troops, I mean, if you’ve got 500,000 people killed or wounded, even if the population is 150mn, are they gonna hit the wall at some stage?

Alexander Gabuev
They will definitely hit the wall. And we see that the troops are depleted. The official numbers is that they recruit about 30,000 people a month by cash stimulus. So they are volunteers who are paid inside the contract. We know that there have been difficulties in that because various regions had to hike their sign-up bonus. Some of them have hiked that fourfolds since the beginning of this year. So that means that they are short of men who are volunteering. So the government is ready to pay more, but they will not attract as many people as they need. And the losses are pretty staggering because the war right now, where the major focus is in Donbas, is that Russians are gnawing through Ukrainian well-prepared defensive positions at a very high cost. So at some point, if they want to continue and reconstitute the lines or build offensive capacity, they will need more men.

The tool that the Russian government has developed for that are the electronic summon notices. You remember that in September 2022 when Vladimir Putin realised that he’s gonna be in Kyiv in three days, strategy doesn’t work at all and he’s experiencing very humiliating setbacks, he had to mobilise to populate the defensive lines with people. That came as a surprise and a shock to the Russian society because initially he said that this war will be prosecuted by professionals only. People have fled Russia through the borders. Right now they passed a law somewhere last year that will become operational November this year that envisages a couple of measures to prevent the social shock.

The mobilisation officially has not been cancelled. They have introduced the electronic mechanism where you receive a draft notice and it doesn’t matter whether you read it or not. You are summoned the moment it’s in your email box. The same moment the borders of Russia are shut for you so you cannot leave the country. And then there is increased prison term for dodging the draft. So your options are either trying to hide inside Russia or to go to serve. And there are all of this monetary incentives. With current system, they can send quietly these 300,000, 400,000 draft notices and get the force that they need. It will take time to train them. And Russia is short of trainers and it will definitely be a blow to the workforce and so on. But the costs attached is much lower from the drastic measures that we have seen in September 2022.

Gideon Rachman
And what are your chances of survival if you get drafted and the circles that you used to move in, you know, educated people in Moscow, are their kids being affected yet?

Alexander Gabuev
I have very few people, probably none I know personally, who has been drafted. I know of friends of friends who have been drafted. But in Moscow, these are volunteers. These are people of high education who go to serve because they believe the government narrative. There are some people who got the draft notices but escaped on time. So there are few Moscow (inaudible). I know that Putin and regime are very careful in touching those demographics and those populations because they know that disturbance in the capital city has brought down the regimes throughout Russian history, going back to Peter the Great’s sister Sophia, of 17th century, all of the changes in authority in Russia have happened in the capital city, be it Moscow or Saint Pete. So they will be careful. But unfortunately, there are big reservoirs of people with very low salaries, with no ability to self organise and push back. So if they received this notice, they will have no other options as to go to serve. And I think that regime banks on just that.

Gideon Rachman
Just turning briefly to the international picture. The Americans and others, Brits as well, have put Russia in a bag of outlaw countries. So they say Russia’s now part of an axis with China, North Korea and Iran. Does Russia feel genuinely isolated or do you think that they think they’re making progress through, for example, the Brics, which they’re a member of, and which countries are applying to join?

Alexander Gabuev
I think that the toolkit available to the Russian foreign policy was much bigger. So Russia is more isolated than it was before the war. That’s clear. And then the International Criminal Court arrest warrant also limits Putin’s ability to travel. And that’s another element of both embarrassment and limiting the manoeuvring for high-level leaders.

Gideon Rachman
Although he was in Mongolia just recently, where they didn’t arrest him, and I gather he might go to Mexico.

Alexander Gabuev
Indeed, he was in Mongolia. And that shows that in some cases Russia would have enough leverage. So Mongolia is so dependent on imported fuel from Russia and trade with Russia that it’s just unrealistic to imagine that Mongolia will arrest the Russian president and they will still host him. But in case of Brazil, he didn’t go and he didn’t go to South Africa precisely because of that. Ironically, he can go to the United States because the United States is not a signatory and has not ratified the Rome Statute.

But nevertheless, we’ve seen that Russia’s manoeuvring power has shrunk. We also have seen that the leverage that Russian counterparts have has grown significantly. You look at the relationship with Turkey or Azerbaijan and you see that Russia needs these countries for various reasons, mostly for trade and sanctions-busting much more than it used to. So it has to be accommodative to their interests. And war in Karabakh is a pretty good example. Last year, Russia had to fully throw its ally, Armenia, under the Azeri-Turkish bus because that’s what President Ilham Aliyev wanted. And then Russia didn’t have tools to push back and maintain status quo.

If you look at Russia’s foreign policy, Russia looks at every relationship through the prism of war. War is the organising principle of Russian foreign policy. And then it turns out that there are multiple countries that are interested to do business with Russia. Russia can provide them with attractive deals, and everybody is understanding that the west is not as omni-powerful as many people believed. The sanctions machine was unleashed against Russia. Russia is still standing. Russia is still able to wage this war. So various countries calibrate the risk of being punished by the west very carefully. But at the same time, they don’t want to deny themselves the very pragmatic benefit that this partnership with Russia entails.

And finally, they’re also looking for platforms that would be the alternative to the US-dominated global regimes and institutions. And Brics, as much as it’s still a letter soup cooked in Goldman Sachs’ kitchen by economist Jim O’Neill back in 2006, right now this organisation becomes attractive to many countries because they’re looking for platforms where they can leverage their national interests, be interlinked with other like-minded parties and have a hedge against the global infrastructure, including the global financial system that’s so much dominated by the west and where the risk of being overly dependent on the US for them is getting higher.

Gideon Rachman
So the Russians are in a sense saying, the west is targeted at us right now, but they might target you another day. So maybe work with us to try to de-dollarise the world system.

Alexander Gabuev
That’s very much what’s on Russia’s mind. They have a very powerful partner named China, and the trade between Russia and China is very interesting because it demonstrates that even if you fully de-dollarise, but you have a balanced trade relationship with China, China has a non-convertible currency, Rmb. But with that, you can actually manage your trade flows and replace your dependency on US dollar with dependency on Rmb.

Well, of course, other countries don’t want to have that dependency but other countries like Saudi Arabia are looking into Russia’s experience between these two episodes of Ukraine war and thinking like, OK, Russia came prepared. Probably it’s time for us to also experiment and to put these Rmb-denominated tools in our toolkit. And if that implies not only exports to China, but more ability to trade in national currencies, bypassing the dollar, that’s something we should experiment with because it’s difficult. The US still maintains dominance in the global financial system. It’s the deepest, the most sophisticated, the most reliable capital markets in the world.

But people are looking at the political pendulum of US domestic politics and think that . . . will that really stop with that election? Or there is . . . the genie is out of the bottle. They look at the deficits that the US runs. They look at the cost of servicing US debt, and that’s $3bn a day. And they think that is that really sustainable? And should we start hedging for both geopolitical reasons, because US can unleash sanction machine tomorrow and for economic reasons, because is it a Ponzi scheme in the longer run or not? We don’t know. I think that it’s not a direct challenge to US dollar dominance, but over the longer arch five, 10 years and so on, I think it’s becoming a problem that the western policymakers, particularly the American policymakers, will have to grapple with.

Gideon Rachman
OK, so to end, when we spoke in 2022 and we had that conversation about Iran, you had just left Russia. You’re now based in Berlin. Can I ask what’s life in exile like? I was very struck when some of those Russians who were freed from prison camps were still saying, well, you know, I’d like to go back at some point. Can you see a moment in the foreseeable future where you might be able to return to Russia?

Alexander Gabuev
The short answer is no. Not because I don’t want to. Don’t get me wrong. I’m a Russian by upbringing. Quarter Russian by blood. I’m half Ossetian. I’m quarter Jewish, but I have a Russian identity. I know my ancestors on some lines in Russia going back to 15th century in diplomatic service to the Russian tsars. And I’m really angry that this group of people around Vladimir Putin say that we are Russia and we represent the country where you are a traitor.

But I think that unfortunately, the regime is pretty durable and absent major triggers that are unexpected. For example, the hard landing of the Chinese economy. I think that the regime is very likely to be around for quite some time. And then the regime that will be produced out of that might also be repressive because all of the Russian law enforcement agencies — the military, the people in the intelligence — will one way or another be veterans of war against Ukraine.

It will be very hard for any new political leader to tell them that you fought a strategically stupid and unjust war. So I think that the regime is likely to reinvent itself and the outcome will be most likely transition from Stalin to Khrushchev, which was an improvement. But that’s an improvement that will not allow me and people like myself to return home as much as I wish.

So I told to myself that I will try to be as successful and happy as possible in the open world. I’m very happy to be in Germany and very happy to work with my brilliant colleagues. Your duty and responsibility as a Russian now is first to be analytical in our job and to talk to decision makers in western capitals and in various capitals about the world, how it is not how we want it to see. So to be responsible about risk-management and by that we are committed to international peace because I work for an endowment for international peace, but then also talk to the Russians, where Carnegie has a massive audience in Russia still disrupted by the government.

But we still have millions of people who read our analysis. I think that the unique role we can play and part of where our moral responsibility for allowing Putin to consolidate so much of authority kicks in is to talk to the Russians in calm voice about the strategic, pragmatic downsides of this war.

Yes, that war has made some Russians more prosperous. But long term, Ukraine as an angry enemy state that will be really willing to exact the price and avenge Russia for this horrible invasion. Expansion of Nato, militarisation of Nato and focusing on Russia, growing dependence on China, inability to replace the interconnectedness that Russia had. The demographic downsides like all of this. Why is that war a great idea?

So I hope that we can plant seeds of doubt that if there is an opportunity to change the system, there are some cracks, and things in Russian history happened unexpectedly. The Russian people give very short advance warning to their leaders. And I think that we are living in a world with technological revolution, with tectonic shifts in global geopolitics, that a lot of things are likely and possible.

If that happens, definitely not taking the chance to undo the harm and contribute to your motherland to become a normal, happy, prosperous country that can compensate the damage it’s done and just become where it should be. I think that I will not forgive myself for not at least trying. But I’m not spending much time thinking about those issues because I think that it’s very unlikely and it’s better to focus on the scenarios that you have.

[MUSIC PLAYING]

Gideon Rachman
That was Alexander Gabuev of the Carnegie Russia Eurasia Center, speaking to me in London. Thanks for listening. That’s it for now. Please join me again next week.