The Ukraine War Has Exposed Russia for What It Is: In Decline

Thanks to his imperial impulses and the regime’s incompetency, what was predicted to be a 3-day operation in Ukraine has become an enduring nightmare.  After nearly two and one-half years of war, Russia’s pattern of ineptitude, disorganization, corruption, hubris, and primitiveness is facing dire consequences.

According to Christopher Steele, the former MI6 intelligence officer, the juggling of personnel in the Kremlin means there is “serious instability right in the heart” of the regime. In addition to replacing holders of key Kremlin posts with relatives and children of his inner circle, Putin made Andrei Removich Belousov his Defense Minister. Belousov is the first person without a military background to hold that position.  He is an economist.

Belousov is a known hardline defender of state control over the business sector. The selection is an admission of the scale of spent resources to date, and acceptance of the material and financial limitations for future prosecution of the war.  His appointment signals how determined Putin is to overhaul the economy in support of the conflict. But all he has done is to send a central planner to battle against the defense industrial bases of the United States and its NATO allies.

Forty percent of Russia’s economy will be devoted to the war effort in 2024. That is equivalent to the level the US committed during the last year of World War II (roughly $4 trillion, when adjusted for inflation). These investments do not produce sustainable economic growth. The reports coming from the Kremlin, echoed by The World Bank and amplified by many journalists are simply specious. This money comes from public sources. It does not represent final goods and does not generate more funds. Rather, they are the production costs of war. Opportunity costs of war are steep and result in fractal out-turns. Excessive military spending was one of the reasons the USSR eventually imploded.

Modern warfare organically links the entire system. Demobilization from a war economy requires a reorganization of the industrial base and takes years. As one analyst recently put it: “If the war were to end, the Russian economy would come to a sudden stop, leading to a crisis, if preparations for the next war were not made.”

As the economy militarizes, a monetary overhang looms. This will be particularly unforgiving as the concentration of central power increases, entrepreneurial competition languishes further, and the failure to develop a domestic microchip industry catches up with import-dependent Russia.

Russia’s inability to keep pace with the West by developing its own world-class tech industry has always been a constraint on the industrial defense base. During the Cold War, most western military analysts believe 50% of stolen secrets were unusable because western technology was too advanced for Soviet outdated weapons systems. The country simply missed out on the digital revolution because it was unable to create a competitive R&D ecosystem and supply chain.

Central planners placed false hope in its scientific community and believed it was as capable as its American counterpart. But the system never produced such figures as William Shockley, Jack Kilby, or Robert Noyce.  Neither did it attract brilliant scientific minds from other parts of the world, and nor will it now.

Russia has no adequate replacement market for western technology. Forty-five percent of vital military components are still inaccessible due to export controls and sanctions. It now imports 90% of its computer chips from China. But due to the fear of secondary sanctions Chinese replacement components are less advanced and their defective rates are as high as 40%. Additionally, swapping out with Chinese alternatives often requires a complete redesign of electronic equipment and the reorganization of supply chains.

Orlan-10 drones, Shaded Kamikaze drones, the supersonic Kinzhal air-launched ballistic missile, ship-launched Kalibr and mobile Iskandr missile systems, Azert portable radio stations used for jamming, the Strelets-M computer network for coordinating artillery, and a suite of satellite navigation elements are a short list of critical military hardware that rely heavily on western manufacturers.

It will take a long time for Russia to develop a domestic market. The production of microchips involves an entire infrastructure of researchers, laboratories, supply chains, equipment, foreign partners, and billions of dollars. If Russia ever does establish sovereignty in the semiconductor space, very likely the state-of-the-art will have moved on by then.

Putin may prattle about history and events as he did in his interview with Tucker Carlson. Then he claimed there was no notion of Ukraine or Ukrainian cultural identity before the Poles invented it sometime in the middle ages. Poland also began World War II by attacking Nazi Germany. The CIA is a rogue organization accountable to no one. It was responsible for the Euromaidan Uprising in 2013 and thus, his justification for invading.

But rather than posit his own twisted analysis, he should pay closer attention to real past events and the actions of predecessors. In 1981, Leonid Brezhnev was massing troops and tanks along the Polish border in response the Solidarity movement.  An invasion was imminent.  It was then Yuri Andropov told the Politburo:

“We can’t risk such a step. We do not intend to introduce troops into Poland. That is the proper position, and we must adhere to it …if the capitalist countries pounce on the Soviet Union, and you know they have already reached agreement on a variety of economic and political sanctions, that will be very burdensome for us. We must be concerned above all with our own country…”

The reality of human and material costs to Russia is genuine and will persist. Plans to revive the Russian empire, an autarchy in a global economy, and rants against the dollar-denominated world order may fit his messaging machine. The tyranny of facts is a stubborn thing, however. Putin seems to believe he can write his own history. A wiser Putin would be prudent to recall the words of Karl Marx: “Men make their own history, but they do not make it just as they please.”

About the Author: Dr. Jack Jarmon

Jack Jarmon is a visiting scholar at the Harriman Institute at Columbia University. He has taught international relations at the University of Pennsylvania and Rutgers University and was a USAID technical advisor for the Russian Federation. He has authored and co-authored five books on national and global security.