By Simplicius, Substack, 7/10/26

The Economist published two important pieces centered on Russian “oligarch” Andrey Melnichenko, who is labeled one of Russia’s most ‘enigmatic’ wealth titans despite at times occupying first place amongst Russia’s richest men as, what Economist calls, the world’s “fertilizer king” and Russia’s “biggest industrialist”. He’s presented as particularly unique due to his more “centrist” position as someone who’s both inhabited Putin’s inner circle, yet also spent years living the Westernized liberal and Europhile lifestyle typical to Russian billionaires.

The first piece is a kind of introduction to him, while the second piece is an oped written by him and given tribune on the Economist as a kind of urgent message to the world about Russia.

The piece is long and filled with some interesting revelations. In its quest to skew the narrative toward the usual “Kremlinology” talking points of oligarchs serving a powerful undemocratic Russian autocrat, the Economist instead inadvertently gives light to contradictory realities. It exposes the fact, for instance, that contrary to the West’s beliefs, oligarchs in Russia had already been without real political power for some time, though the writers would never dare utter the reason why:

When Putin invaded Ukraine, the world waited for Russia’s rich and powerful to speak against the war. But they stayed quiet. The West imposed sanctions on them, partly to make them apply pressure on Putin. But this betrayed a lack of understanding of how power worked in Russia—the business elite had long given up trying to influence politics.

The journal admits that Western sanctions actually did the opposite of their intent, and pushed Russian elite back into the state’s bosom, with Melnichenko—who chose to live in Switzerland for a long portion of his life—himself admitting that for the first time he felt Russia was his only home:

Putin himself was worried the oligarchs would betray him. Instead sanctions pushed them back into his embrace. Yet when they returned, they repatriated their interests and ambitions along with their money. Melnichenko’s opening gambit when our conversations began three months ago was: “For the first time I feel I have no other country but Russia.” Given the reticence of his peers, it is astonishing that Russia’s most enigmatic oligarch, while living in Moscow, is willing to put his head above the parapet and lay his views on the record.

It goes on to even admit that, following the onset of the SMO, the Russian state did in fact begin confiscating oligarchs’ assets and returning them to “loyalists”:

At around that time he and other businessmen realised that the war would not end soon. With no reprieve from sanctions in sight, they started to repatriate themselves back to Russia, where they faced a different kind of threat to their assets.

Property rights in Russia had always been conditional. But the war unleashed a rapacity that hadn’t been seen for decades. Since 2023, assets worth $60bn have been nationalised or handed over to loyalists. It was the biggest redistribution of property since the mass privatisations of the 1990s.

In August 2023 prosecutors sought to confiscate Sibeco, a Siberian power plant, from Melnichenko, arguing that his purchase of it had involved fraudulent collusion with the previous owner. Two weeks later, the prosecutor-general’s office backed down in return for Melnichenko making a donation to a “charitable organisation”. According to people familiar with the settlement, the sum was 32bn roubles ($335m)—the same amount that Melnichenko had originally paid for Sibeco. The charitable organisation was Sirius, a school for gifted children favoured by Putin.

This is important to understand because it highlights this Economist series’ entire underlying thread, which is that the SMO has been slowly revolutionizing Russian society, turning the oligarchs back from liberalized sixth columnists to nation-serving adherents in the manner of China.

Melnichenko was amongst the first and most astute to recognize what must be done. He decided to get back in good favor with his motherland, which he had begun to use merely as a source of extraction and profits while he enjoyed life abroad. He returned and began to ingratiate himself with Russian elites, re-learning the system and re-absorbing the true national ‘pulse on the ground’:

Melnichenko now knew that he needed to establish property rights in Russia. The only way to do this was to work his way into the system, understand the competing interests and help shape its objectives. “If you want a seat at the table, you have to do something.”

As always he began by observation. “In 2023 I started to spend more time in Russia and was getting to know it in a much deeper way.” He talked to anyone who had a stake and a viewpoint: “politicians, journalists, thinkers, liberals, nationalists, communists”. He could be found having breakfast with Dmitry Muratov, the Nobel prizewinner and founding editor of Novaya Gazeta, a liberal newspaper, who was ostracised by the government and branded a “foreign agent”. In the evening he might have tea with Alexander Dugin, a nationalist philosopher who glorifies the war.

But here’s where the entire Economist series hinges. In his quest to re-integrate into Russian society, Melnichenko discovered that Russian elites are confounded and lack a unified vision of a workable future, for the time being. He then notes that Russia is seen as standing at a crossroads between four different potentialities, all of which sound grim, and which the Economist uses as the chief centerpiece to hook the series’ narrative on.

But it is a deliberately misleading hook, because they disingenuously present it as Melnichenko’s visions of a collapsing Russia with no options. In reality, Melnichenko presented the four “doom” scenarios in order to really pose his fifth redemptive one.

And what is that? To find out, we must peer into the second piece, written by the man himself:

In the piece, he keeps a deliberately neutral language in regard to the Ukrainian conflict, never quite openly blaming Ukraine or Russia, despite rumors he had been outspoken against the Russian SMO in the past. Now he’s clearly treading a fine line, and hoping for resolution which benefits himself, as well as society.

Critically, the theme of his entire piece can be condensed into one word: Sovereignty.

He accuses the West of trying to undermine and sabotage Russian sovereignty, and carefully implies that the broader conflict between Russia and the West revolves around the West’s disintegrating security architectures viewing Russian sovereignty as a threat to them—which is precisely accurate and true.

From his piece:

Russia today possesses sovereignty: it has made and continues to make its decisions independently. This is not an evaluative judgment but a descriptive one. Russia has defined its vital interests, possesses the material base to defend them and bears the consequences of its own decisions.

The current Western discourse on post-war Russia, for all its variation in political packaging, aims at one thing: the destruction of that sovereignty or its radical limitation. The logic is understandable. If Russian sovereignty is perceived as a threat, its elimination seems to solve the problem.

He goes on to pose the four scenarios, though it must be said, he specifically notes these are scenarios being discussed in the West—a stark contradiction to the Economist’s attempted painting of these “harrowing” outcomes as those feared by Russian elites as represented by Melnichenko.

You see, he doesn’t warn of any “looming disaster” facing Russia, but rather paraphrases threats the West itself is scripting, which is an all-too-inconvenient fact for the Economist staff who rather spin it in a more sensational way. It serves their agenda to pretend it’s “Putin’s own oligarchs” who are sounding the alarm of Russia’s “coming collapse”.

The four scenarios Melnichenko gives are:

1. “A humiliated Russia lingering on the periphery of the West.”
2. Russia becomes a vassal of China, ending its relationship with the West.
3. Russia becomes fragmented and falls apart like the USSR.
4. Russia becomes a “fortress: closed, mobilized, in permanent siege”, and a state of “perpetual emergency.”

As stated, these are Western fantasies, and the ‘Overton window’ of Russia’s future that Western politicians and pundits alike would like us to believe is the only trajectory of Russia’s fate. Melnichenko tacitly disagrees, but cleverly makes sure not to make this too obvious as he’s writing for a Western audience for the purpose of reconciliation.

Melnichenko finally reaches the inescapable conclusion, which is that the very heart of the conflict revolves around the issue of Russian sovereignty, and by ignoring this, the Europeans doom the conflict toward existential escalation:

How Russia conducts its own political process and towards what ends it directs its sovereignty is a question that can be resolved only inside Russia itself, without deference to external preferences. Any attempt to manage this process from outside is not only doomed but counterproductive: it destroys the very condition—sovereignty—without which sustainable peace is impossible in principle. This must be accepted, not out of sympathy for Russia but from the understanding that no alternative to this recognition exists.

He goes on to lay out a rather brilliantly nested exegesis which is a message, and a hidden threat, to the Western order. Like a Matryoshka doll, he conceals this message beneath layers of “openness” that appear ostensibly as calls for understanding and cooperation with the West. In reality, what he’s laying out is his accurate portent for Russia’s future, one where businesses, oligarchs and citizens alike, all work toward a common sovereign revolution. This is sold as being beneficial to the West because, as he foresees things, it creates “predictable” stability—but the real threat is hidden in the message that the West is pushing Russia to become more unified and powerful than ever before.

I have grounds to believe this reckoning will come, and these grounds can only be understood by explaining why it has not come sooner.

Those who built the new Russia—entrepreneurs, scientists, artists, sportsmen, professionals who created its economy, its meaning, its reputation in the world—largely saw themselves as internationalists. This was neither weakness nor naivety. It was the obvious choice in a world where global integration seemed irreversible. Science operated by international standards, technology came from the best sources, rights and obligations were governed by Western law in Western courts, children studied at the world’s best universities, capital was placed where it was protected. This choice meant, consciously or not, the transfer of a significant part of sovereignty to external systems. Not because that was the desire. Because it seemed that the rules were neutral and access was open to all.

After spelling out how the new Russia was built by internationalists, he admits that globalization was a failure because it was nothing more than a ruse to take away Russia’s sovereignty:

For many years Russia’s authorities warned that this was a mistake. The advocates of global integration viewed this as a remnant of Soviet thinking. Time has proved them wrong, not because globalisation did not exist but because it was never neutral.

Sanctions showed this plainly. They were written by some, in the interests of some, and can be revised for others by political decision. My own experience of Western sanctions matters here not as a personal grievance, but as evidence that the infrastructure of globalisation is politically conditional. Assets can be frozen; rights once considered inviolable dissolve the moment a political decision is taken.

The systemic effect of sanctions proved broader than their original intent. Disconnection from global systems—financial, technological, legal, educational—confronted Russia’s creative class with a choice it had not anticipated: either full emigration with the severing of all ties, or a return to the question it had been avoiding for three decades: how to build its own world inside Russia, by its own rules, to its own standards.

He concludes that this process of rebuilding Russia as a self-contained ecosystem, “by its own rules, to its own standards” will not come fast or easy, but it is now fatefully ensured:

This process is neither fast nor easy. But it is inevitable, since the global world in its former sense no longer exists. Those who know how to create find themselves choosing not between Russia and a global space, but between Russia and a fragmented world in which each bloc builds its own rules. Under these conditions, the logic of creation points inward: to build something that will be attractive—to those who left long ago with the dissolved Soviet Union, to those who left recently, and to the Russian-speaking world at large.

Layered even deeper in his admonishment is the prediction that expats and Russian businesses alike—particularly those which may have sold out in the beginning, it is implied—will again eventually find their home in Russia:

Large Russian businesses that invest in a sovereign Russia will, in time, become an integral part of it. The same will hold for other important institutions. As a consequence, Russia itself will become different. If we strive for a sovereignty that creates unity between citizens and institutions, I hope that in time we will correct all the internal imbalances for which we too bear responsibility—through the fact that we were once glad to absent ourselves.

In closing, he argues that such a sovereign, internally coherent, and unified Russia will not please the West, but it will be a far safer option than a Russia destabilized and fractured to the point of dangerous unpredictability:

The attraction of predictability

A sovereign Russia will not make every country comfortable. But it will be more advantageous in the long run than the alternatives. The choice for external players is not between a friendly Russia and a hostile one. It is between a Russia whose behaviour is predictable and one whose trajectory is unknown. In the world taking shape now, predictability is more important than sympathy.

The internal discussion about what Russia should be is inevitable. But that conversation belongs after the war and inside the country.

Once more, buried within the goodwill courtesies and ingratiating overtures toward the West, Melnichenko infact subtly retraces Putin’s own longstanding call for a renewal of the Westphalian system which the West itself had long abandoned:

The choice before the world is not between love for Russia and hatred of it, between punishment and forgiveness, between moral clarity and political cynicism. It is between two kinds of future: one in which major powers again learn to respect each other’s sovereignty, and one in which each attempts to reduce the others to objects of management. The second path has already brought us here.

The most important thing is that we step back from the abyss. Only then can we ask how we reached it and how to arrange the world differently. That work belongs to the next generation. Our role is to ensure they have something to work with.

In short, Melnichenko’s piece is in effect a Trojan horse of sorts: With a subtle appeal to the West’s sympathies—and its ego—meant to lull and disarm Western readers to his true message, he deftly delivers the thematic heart of Putin’s own longstanding arguments, famed from the days of the seminal 2007 Munich speech.

The Economist appeared to sense this hidden subversion in Melnichenko’s language and was forced to quickly publish a third additional ‘addendum’ piece simply to reframe his message to the tune of the correct narrative.

This unprecedented third piece of the day on the same topic is brief and to the point—only a few paragraphs in length. Its purpose is obvious: to control the narrative by highlighting only the most superficial platitudes and inferred “warnings” of Russia’s collapse, while burying the deeper hidden message which unequivocally declares that the West is pushing Russia into a historic reawakening of its national soul, wherein oligarch, corporate powers, and citizens alike unite under one common purpose of betterment for the nation.

The new piece above goes into full damage control mode, disingenuously miscasting Melnichenko’s return to Russia as a bid to save the country from internal “rot”:

…he has lived by Mr Putin’s rules—make money, but keep your nose out of politics. He is talking now because he and his fellow tycoons can no longer afford to ignore the rot of a country they watched descend into tyranny.

In reality, Melnichenko himself clearly states he came back not because of Russia’s corruption, but due to the West’s own unhinged and unprincipled immorality—sanctioning and seizing his assets, etc. Economist shills even openly wrote a disclaimer in order to distance themselves from Melnichenko’s thoughts, just in case their readers happened to intuit the true message beyond the Economist’s superficially phony “collapse” narrative:

Mr Melnichenko issued his warning in over 60 hours of interviews with The Economist (see 1843) and more guardedly in an essay that we are publishing online. This is the first time an oligarch inside Russia has spoken out at such length. We are giving him space not because we agree with all his views or he is a champion of democracy and human rights. Instead he is a pragmatist who wants his businesses to thrive. That is why his call could resonate in a country where wars gone wrong, including the defeat to Japan in 1905, have led to campaigns by industrialists for political change.

In short, the damage control piece desperately tries to change the message, but to those who know how to read carefully, Melnichenko’s words are clear: the war is the West’s fault, and Russia is being restructured as a self-sufficient society of supreme sovereignty where even the previously-alienated liberal class of exiles and pariahs has returned with newfound patriotism in its veins. A nation where oligarchs and big businesses are increasingly working for the benefit of the state and its people, rather than the crooked Western system which deceived and betrayed them.

The Economist tepidly tries to spin this message into an epigram about “reform”, and how the current moment is supposed to reflect the period following Russia’s loss to Japan in 1907, culminating in the Tsar’s overthrow during the later revolution. This is wishful thinking and naked sophistry on the part of the Economist staff, who are too terrified to voice Melnichenko’s true thesis.

It is a sure sign of the times that even Russia’s so-called “oligarchs” are now warning the West that it has freed the Russian genie from the bottle, and that there will be no turning back. But, as per usual, the message has fallen on deaf ears, because the Western system has decayed to such a degree that it can at this point function only on lies, propaganda, and deliberate misinterpretation.

In the West’s fragile court, the acquittal of a single truth is now too dangerous a risk.

---

Ukraine hits warehouse of top online marketplace

The Bell, 7/20/26

Ukraine’s long-range drones hit warehouses used by Wildberries, Russia’s answer to Amazon, in attacks over the weekend. The online marketplace handles 10% of the country’s entire retail trade. Kyiv said the facilities were trading in sanctioned goods and supplying the Russian army. The attacks could be an attempt to bring the consequences of the war to regular Russians, who cannot imagine life without Wildberries.

On Saturday night, Ukrainian drones attacked two of the company’s biggest warehouses in Central Russia — one in Elektrostal in the Moscow region, the other in Kotovsk in the Tambov region. According to official statements, eight people were killed and a further 80 injured. Footage of the fire in Elektrostal suggests that nothing at all remains of the warehouse after it burned for more than a day. The Kotovsk facility is likely a total loss as well.

***

Hitting the Wildberries warehouse is a lot more painful than it looks

By Ben Aris, Intellinews, 7/20/26

The tit-for-tat missile war escalated at the weekend after Ukraine hit the largest distribution centre belonging to Wildberries, the “Amazon of Russia.” The Kremlin hit back the next day with a massive drone and missile barrage.

The war has entered a new and brutally destructive phase with both sides adopting a “punishment strategy” – both are deliberately targeting civilian infrastructure and assets with the intention of just making people’s lives hell.

Zelenskiy was careful to say that Wildberries sells things like drone parts and both Wildberries, and its Ukrainian equivalent Nova Poshta, are used by regular people to send their men at the front care packages and supplies.

Zelenskiy claims the military supply component makes the Wildberries’ warehouse a legitimate military target, but we all know what is going on here: the AFU just wants to bring the war into the homes of regular Russians, who have been largely insulated from the effects until now. Pictures coming out of Moscow over the weekend show a huge black cloud over the city leading people to quip that it looks like Mordor.

But destroying the Wildberries’ warehouse is actually a lot more painful than it first appears. Wildberries became not only the largest e-commerce site in Russia, but the largest retail outlet of any kind in 2019 when it overtook Sportsmaster, the previous leader. The destruction of its stockpile is not just going to make shopping harder, it has also destroyed the livelihoods of thousands of SMEs that have already been struggling due to the sharp economic slowdown this year.

People (and the sanctions) focus on Russia’s oil wealth, but as I detailed in a piece way back in 2004, Russia is a “Soviet Sandwich” – there is a top piece of tasty and nutritious bread that is the oil and gas sector, but there is also a bottom piece equally appealing that is the retail sector. The middle was made up of greasy, grislily, and unhealthy pink processed and unreformed Soviet industrial sausage meat. There is a reason why half of all Russia’s imports over the last three decades has been machinery.

People forget how vast Russia’s consumer market is: 150mn gadget- and fashion-hungry punters. That is half as big again as Germany, the second most populous country in Europe. Pre-war retail turnover was approaching half a trillion dollars – about one third of GDP. This is why companies like Auchan and Raiffeisen Bank International (RBI) refuse to leave the Russian market – when I was at the EIU companies told me that not only was Russia their biggest market in terms of headcount, but also their most profitable, because the barriers to entry were so high, that pushed up the profit margins.

The upshot is amongst my Russian friends from the 1990s, anyone that had any good idea for any product or service, quickly became a millionaire, simply because the market is vast.

Light manufacturing Which brings us to Wildberries and why it is so successful. The second unusual factor that plays into this equation is not only is the consumer market vast, but so is the country. To get your goods to punters you have to send them over huge distances – literally halfway across the planet if a Moscow widget-maker sells something to a customer in Vladivostok.

Companies like Wildberries, and its rival Ozon (see my 2019 interview with the boss here), stepped into the breach here and have set up marketplaces which have become the basis of a flourishing micro-economy. But crucially they also set up the logistics distribution network. As Ozon CEO Alexander Shulgin told me: “Someone that makes nice chairs used to only be able to sell them to people in his town or city. What we do is open up the whole country to these craftsmen.” The way it works is you make your wooden stylish chair and drop it off at the local distribution centre (or they come and pick it up) but once it goes online and is sold, Wildberries or Ozon take over and will send it anywhere in the country, as well as taking care of billing and collection. Suddenly a small shop in Ryazan has access to 150mn people.

This is Germany’s Mittelstand with knobs on. The German version is thousands of small firms that make things like specialist high precision engineering goods or machines that they sell to bigger companies. The Russian version is much broader and is largely B2C rather than Germany’s B2B.

In other words, we are talking about jobs for regular people. The online marketplaces make it even easier to invent yourself as an entrepreneur in Russia than in Germany, and a very successful one at that if you have a good product.

This process has also been fuelled in a fundamental change in the cost of production. A great example and early success story was Obuv Rossii, a Siberian shoe shop, catering to the middle classes. The CEO, Anton Titov, told me that he used to have his shoes made in China, but after a decade of growth, Chinese wages grew at the same time as the ruble devalued to the point where it became cheaper to make things in Russia. China stopped being the world’s factory, as Chinese President Xi Jinping switched from an export-led economic model to a consumption-led one. This led to an explosion of light-weight manufacturing investment that was catalysed by online market places which appeared at exactly the right time to solve the very serious marketing and distribution problems overnight. In many ways Russia’s online sector has leapfrogged western retail which still relies on bricks and mortar chains on the high street.

Russia is physically so big, and the cities so spread out, that the physical distribution and shop networks make a lot less sense as they are so much more expensive. The heart of the online marketplace revolution is that a handful of leading companies have basically concentrated Russia’s entire logistics into a few centrally controlled systems that cover the whole range of products to make it as efficient as possible and have the economies of scale. The same is true to Ukraine’s Nova Poshta, probably the best company in the country.

Russia skipped over the light manufacturing stage in 1991. Usually, emerging markets get their first shot in the arm after the transition by attracting light manufacturing foreign direct investment (FDI) because wages are so low. But in Russia’s case the so-called Dutch disease of a heavily overvalued currency, thanks to oil and gas exports, meant that the cost of labour was too high, adding to the pain of the Yeltsin-era chaos. When I arrived in Moscow in 1993, despite the fact the economy had collapsed about a year earlier, the city was insanely expensive.

Belatedly, the light manufacturing boom finally took off nearly 20 years after the collapse of central planning. The tasty bottom layer of bread in the Soviet sandwich is also part of the reason the Russian economy has been so robust in the last few years as it can’t be sanctioned. VAT is the biggest contributor to budget revues (40%), far more than oil & gas (25%). How do you sanction retail sales that happen entirely inside the Russian economy and rely on no imports? That’s the whole point of local light manufacturing: it only uses Russian inputs to keep things cheap.

And there is the rub. Not only did Ukraine blow up a retail distribution hub so it will be harder to get your groceries this week in Moscow, but it also blew up the stock of thousands of small entrepreneur businesses. This has wrecked not just their jobs, but many of these small businesses have sunk life savings into funding their production in an effort to grow. I have seen reports of one woman that had invested $25,000 into her children’s clothes production and all her capital was tied up in inventory – all stored in the Wildberries’ Elektrostal logistics centre. She will have to go back to scratch and start all over again, carrying some heavy debt.

That is why Zelenskiy’s decision to hit the warehouse is so painful. He has chosen a target that is in many ways more painful for the economy than blowing up the oil terminals at Primorsk and Ust-Luga last month, not because it will hurt the budget, but because it will hurt a big source of employment for regular people. It was a lot more painful than it first appears as it hit a part of economy that was flourishing.

It was only one warehouse, but that is the main feature of the escalating missile war: both sides are now hitting warehouses, supermarket, delivery trucks and transport hubs. For example, Russia has started to systematically target Ukraine’s petrol stations. There are hundreds of these, but Russia is producing millions of drones. It will slowly wear Ukraine’s ability to put fuel in cars in the same way that Ukraine has already caused a fuel crisis by targeting Russian oil refineries. Soon just getting your shopping could become hard too. And currently the plan is to continue the war for two more years.

***

Russian Strikes Pound Ukrainian Cities After Ukrainian Drone Attacks Killed Eight in Russia

By Dave DeCamp, Antiwar.com, 7/19/26

Russian missiles and drones targeted multiple Ukrainian cities on Sunday, killing at least six people, in strikes that came a day after a Ukrainian drone barrage killed eight people in Russia.

Russia’s Defense Ministry said that its forces intercepted 379 Ukrainian drones over multiple Russian regions on Saturday. Local officials said that seven people were killed and 25 were wounded by an attack that hit a logistics center belonging to Wildberries, a Russian online retailer, in the Tambov Oblast. One other person was killed, and 61 were wounded by various attacks in the Moscow Oblast.

Russian officials vowed there would be a response, and according to the Ukrainian Air Force, Russia’s armed forces fired 41 missiles and 125 drones into Ukraine overnight into Sunday. Local officials reported three killed in a Russian attack that hit a postal facility near Kharkiv, and three other people were killed by separate attacks in Kyiv, Sumy, and Kherson.

Russia’s Defense Ministry claimed attacks on military targets, facilities that produce military equipment, and energy infrastructure, though photos show apartment buildings were also damaged in the Russian barrage. The Russian ministry also said its forces targeted Ukrainian ports and “vessels used in the interests of the Ukrainian army,” and Ukrainian officials reported five people were killed by a Russian strike on a cargo ship in the Black Sea.

Ukrainian forces also launched drones into Russia again on Sunday, with the Russian Defense Ministry claiming its forces downed over 160 Ukrainian drones over the Black Sea and multiple Russian regions. Ukraine’s drone attacks are known to be supported by US intelligence, meaning they always risk an escalation between Moscow and NATO.

By Ben Aris, Intellinews, 7/2/26

Russian public confidence in the economy has collapsed to its lowest level in at least two decades, according to a new Gallup survey, suggesting the economic resilience that underpinned the Kremlin’s wartime strategy may be beginning to fray as the conflict in Ukraine enters its fifth year.

The poll found that 60% of Russians now believe economic conditions in their local area are deteriorating, the highest proportion since Gallup began tracking the measure in 2006. Only 27% believe conditions are improving, marking a dramatic reversal from the early years of the war when buoyant government spending and record labour shortages fuelled optimism despite sweeping Western sanctions.

The findings adds to pressure on Russian President Vladimir Putin, who is facing a muted rebellion in the ranks of the elite between the doves and the hawks, both of which want to end the hostilities, but have very different proposals of how to do that. The collapse of confidence is also a function of the deteriorating state of the economy, which has been split in half: the military industrial complex is flourishing, while the civil sector is stagnating. The official growth outlook for this year has been cut from 1.3% to a mere 0.4% as strong inflation, sky high interest rates and falling oil prices weigh on budget revenues and spending.

While unemployment remains close to record lows and defence factories continue operating at full capacity, civilian sectors are increasingly struggling under the weight of labour shortages and the poor health of the economy. Nevertheless, the economy soldiers: S&P Global reported on July 2 that Russia’s manufacturing PMI moved back above the no-change 50 points benchmark in June and expanded for the first time this year on the back of a mild recovery in demand.

Gallup also found that 56% of Russians believe their own standard of living is worsening, the first time in two decades that a majority has expressed such pessimism. At the same time, perceptions of the labour market have deteriorated sharply. Just 35% now say it is a good time to find a job where they live, down from an average of 51% during the previous two years, while 58% now describe the job market as poor.

The survey suggests that Russians increasingly recognise the difference between an economy sustained by unprecedented military expenditure and one generating genuine improvements in household prosperity.

“The longer the war grinds on, the more it may test people’s patience with the conflict and the sacrifices it demands,” Gallup concluded.

The deterioration comes as Russia’s macroeconomic outlook has become noticeably weaker.

Weak economy

Earlier this year the government cut its 2026 growth forecast from 1.3% to just 0.4%, acknowledging that the rapid expansion fuelled by defence spending is beginning to fade. Russia’s small- and medium-sized enterprises (SMEs) have been particularly exposed and are deteriorating rapidly.

Even the temporary boost from higher oil prices following the conflict between Israel and Iran has done little to change the broader trajectory, while the Central Bank of Russia has repeatedly warned that the economy is overheating after years of exceptionally tight labour markets. The windfall effects of oil prices over $100 caused by the war have already worn off as oil prices fall back to pre-war levels of around $75 per barrel so that the impact on the Russian budget will be small and short lived.

The country’s labour shortage has become one of the defining characteristics of the wartime economy, with military recruitment and defence production competing directly with civilian employers for workers. The result has been rapid wage growth in strategic sectors but mounting difficulties for manufacturers, retailers and service industries trying to recruit staff.

Gallup’s findings suggest that Russians increasingly view these shortages as a symptom of economic strain rather than strength.

The survey also recorded the sharpest annual decline in confidence in key state institutions since the series began.

Confidence in the military fell 13 percentage points to 66%, confidence in the national government dropped 14 points to 53%, while confidence in the honesty of elections declined 16 points to 40%. Perceptions of media freedom suffered an even steeper fall, dropping 25 percentage points from 59% to a record low of 34%.

The poll was conducted between March and May, before Ukraine intensified its campaign against Russia’s domestic fuel infrastructure. Ukrainian long-range drone attacks have increasingly targeted refineries, storage depots and logistics hubs across Russia, contributing to fuel shortages in several regions, particularly in occupied Crimea.

Timothy Ash, the senior sovereign strategist at BlueBay Asset Management in London, argues that the deterioration in public sentiment may therefore only be beginning.

“After 4.5 years of a war, or ‘special military operation’ which was meant to be over in weeks, the war seems to be finally coming home to Russians,” he wrote in a recent commentary.

Ash argues that several factors are likely to reinforce the negative trend.

The temporary rise in oil prices triggered by the conflict in the Gulf has already begun to unwind, while US sanctions relief briefly granted to allow Russian producers to continue exports has expired. As benchmark oil prices retreat towards the $70 per barrel range, he expects Russia’s Urals crude to resume trading at discounts of around 30%, potentially pushing realised prices back into the $50 per barrel range or lower.

Longer term, Ash sees even greater pressure building. He argues that higher production from countries such as the United Arab Emirates, combined with weaker global demand following the Iran conflict, could leave Brent crude closer to $60 per barrel over the next year, implying Urals prices could fall below $46, levels already associated with recessionary conditions in Russia earlier this year.

Perhaps more importantly, Ash believes the recent resilience of global oil markets has altered the sanctions calculus.

“The Iran war has shown that the West has much more leverage over Russia than it has perhaps dared to assume,” he wrote.

“If the West, and even China, wants to bring this war to an end they should cut off Russian energy exports.”

According to Ash, eliminating Russia’s remaining oil exports would deprive the Kremlin of around €500mn per day in revenue, potentially triggering a much deeper recession, accelerating capital flight, placing severe pressure on the banking system and forcing a sharp depreciation of the ruble.

“The wheels would literally come off Putin’s war machine,” he argued.

Ash also points to the growing asymmetry between Russia’s economy and that of Europe. With the European Union having approved a €90bn financial package for Ukraine and additional pre-accession funding under discussion, he argues Kyiv now has the financial resources to continue expanding drone production and deep-strike capabilities for years.

“Russia’s $2.5 trillion, and declining economy, just cannot compete with Europe’s $25 trillion economy,” Ash wrote. “Putin started an arms race with Europe that Russia simply cannot win now.”

While the asymmetries between the EU economy and Russia’s are large, Russia has repeatedly surprised with the resilience of its economy to the extreme sanctions regime, which has caused as much, or more, damage to the increasingly dysfunctional European economy than to the Russian economy. At the same time the Kremlin continues to fund its war with cash, while Europe is increasingly funding its support for Ukraine with debt.

Nevertheless, Russians are becoming increasingly sceptical about the economic trajectory of the country. The patriotic rallying effect – patriotism was at an all-time high in 2022 – has evaporated, replaced by growing concerns over living standards, employment prospects and the longer-term costs of sustaining a war that the Kremlin initially expected to conclude within weeks.

By Kautilya The Contemplator, Substack, 7/8/26

The recently concluded NATO summit in Ankara was presented as another demonstration of alliance unity. Leaders reaffirmed their unwavering support for Ukraine, pledged €70 billion in military assistance through 2027, expanded defense-industrial cooperation, endorsed new drone production agreements and announced plans to help Ukraine develop the capacity to manufacture Patriot missile systems. The imagery of US President Donald Trump and Ukrainian President Volodymyr Zelensky standing together reinforced the message that the West remains committed to Kiev for as long as necessary.

Yet beneath the carefully choreographed declarations lay a more revealing reality. The summit produced no new diplomatic initiative, no political framework for ending the conflict and no serious discussion of what an eventual settlement might look like. Instead, Ankara institutionalized a strategy of endurance rather than one of resolution. If history has taught anything, it is that betting on exhausting Russia has rarely ended well for its adversaries.

The summit therefore raises a fundamental question. Has NATO abandoned the search for a political solution altogether? For several years, the alliance’s policies have increasingly suggested that its objective is not to negotiate an end to the war, but to prolong it, thereby buying time for Europe’s rearmament while seeking to impose maximum military, economic and political costs on Russia through sanctions, long-range drone and missile strikes and continued battlefield attrition. The underlying assumption appears to be that time will gradually weaken Moscow while strengthening NATO. Whether that assumption withstands strategic scrutiny is the central question this essay seeks to answer.

Ankara Institutionalizes a Long War

The clearest message to emerge from Ankara was not one of victory but of long-term commitment. The pledge to sustain at least equivalent levels of military assistance through 2027 signals that NATO increasingly views the conflict as a prolonged contest requiring years rather than months.

The emphasis on expanding Ukraine’s domestic defense industry points in the same direction. Trump’s announcement that Ukraine would eventually receive the capability to produce Patriot missile systems was politically symbolic, but its practical significance is far less obvious. Patriot production requires sophisticated industrial facilities that would almost certainly become priority targets for Russian ballistic missiles and long-range drone strikes.

A far more plausible outcome is that production will remain in Europe, with missiles or major components transferred into Ukraine much as European partners already support drone manufacturing today. The announcement therefore signals a long-term commitment to continue waging the proxy war more than an immediate transformation of Ukraine’s industrial capacity.

The Missing Political Strategy

Every NATO summit since the conflict began has announced additional weapons, funding and security commitments. What none has articulated is a realistic political end state.

Unlike NATO, Russia has consistently framed the war in terms of concrete political objectives, specifically preventing further NATO expansion into Ukraine, demilitarization and securing what it regards as its core security interests. Whether one accepts these objectives is beside the point. They provide Moscow with a clearly defined political framework against which military operations can be assessed.

The omission from NATO summits is striking because military strategy derives its coherence from the political objective it is intended to achieve. If the objective remains the restoration of Ukraine’s internationally recognized borders, the battlefield offers little evidence that this is becoming more attainable.

If the objective is Russian capitulation – a goal that several European leaders have at times implied or articulated in various forms – it rests on an assumption that is detached from both history and ground realities. The result is an increasingly open-ended strategy whose costs continue to mount even as the political objectives it seeks become progressively less attainable.

Buying Time for Rearmament

Viewed through this lens, NATO appears less concerned with ending the war than with using time as a strategic resource. Across the continent, governments are increasing defense budgets, expanding industrial capacity and rebuilding armed forces after decades of post-Cold War reductions. These efforts require years to bear fruit.

Ukraine increasingly serves as NATO’s strategic bulwark on Russia’s border while Europe rebuilds the military capabilities that decades of post-Cold War underinvestment allowed to atrophy. Buying time is only strategically valuable if it materially improves one’s political position. What evidence suggests that another three years of war will produce a fundamentally different political outcome than the previous four? The Ankara summit offered no explanation for that.

Can Attrition Actually Work?

The central assumption underpinning NATO’s strategy appears to be that time favors the West. Yet this raises a more fundamental question: what if prolonging the war is not weakening Russia, but instead transforming the conflict into precisely the kind of war in which Russia has historically been at its strongest?

For more than three decades, Western military doctrine has emphasized technological superiority, precision-guided weapons, rapid maneuver and decisive campaigns. Russian military thought evolved along a different path. Shaped by the experience of the Second World War, it has long viewed time, space, industrial mobilization, operational depth and attrition not as signs of strategic failure, but as instruments of victory. Major wars between industrial powers are ultimately decided by which side can better replace losses, sustain production, withstand attacks and steadily erode the enemy’s capacity to fight.

One of the great ironies of the Ukraine conflict is that NATO increasingly finds itself fighting the war Russia wants rather than the one the West spent three decades preparing for. Expectations that precision weapons and technological superiority would deliver decisive breakthroughs have instead given way to a grinding contest of artillery, drones, industrial production, logistics and manpower. Ukraine has become a hybrid form of warfare that combines twenty-first-century network-centric technologies with a twentieth-century industrial war of attrition. While drones, satellite intelligence and digital networks have transformed the tactical battlefield, the strategic logic of the conflict has resembled the Soviet conception of large-scale conventional warfare.

This also explains why each side measures success differently. Western analysis often focuses on territorial gains. Russian operational thinking has traditionally prioritized the systematic destruction of the enemy’s combat power. Territory can be regained. Experienced soldiers, trained officers and scarce equipment are far harder to replace. From this perspective, degrading Ukraine’s military faster than NATO can regenerate it matters more than the pace of territorial advances.

If NATO’s strategy is to prolong the conflict in the expectation that Russia will eventually exhaust itself, Ankara raises an uncomfortable possibility. Rather than forcing Moscow onto unfamiliar terrain, the alliance is encouraging precisely the form of warfare in which Russia has historically demonstrated its greatest resilience. The longer the war continues, the less it resembles the conflicts that shaped modern Western military thinking and the more it resembles those that shaped Russian military doctrine.

The Strategic Paradox

The Ankara summit exposes a profound strategic paradox. NATO remains the most powerful military alliance in the world today. Its combined economic output, technological base and defense spending far exceed those of Russia. Yet that overwhelming military potential has not translated into decisive political leverage because the alliance remains constrained by the one step it is unwilling to take: direct war with another nuclear power, not to mention that even conventionally, NATO is significantly under-prepared to fight the scale and intensity of the campaign that Russia is waging in Ukraine.

This, in turn, raises a more fundamental question. Carl von Clausewitz argued that war is an instrument of policy, not an end in itself. Military operations derive their meaning from the political objectives they are intended to achieve. Yet the Ankara summit devoted enormous attention to sustaining the war while offering remarkably little explanation of how doing so advances the political outcome NATO ultimately seeks.

That omission matters because strategy cannot be judged solely by the resources committed to it, but by whether those resources move the political objective closer to realization. After years of war, Russia has adapted to sanctions, expanded defense production and re-oriented much of its economy toward Asia. Furthermore, the Russian Armed Forces have accumulated an unprecedented volume of large-scale conventional combat experience, knowledge that is now being incorporated into training, doctrine and the development of the next generation of officers.

If the alliance’s underlying assumption remains that a longer war will eventually compel Moscow to accept strategic defeat, the evidence points in the opposite direction. Time alone does not guarantee a more favorable political outcome. It merely extends the conflict unless it materially changes the strategic balance.

The real significance of Ankara lies not in the €70 billion it pledged, but in what it implicitly acknowledged. NATO has institutionalized a long war without explaining how that war ends. Until it can answer that question, additional funding, more sophisticated weapons and deeper industrial cooperation may prolong the conflict, but they cannot substitute for strategy.

Kautilya The Contemplator is a reader-supported publication. To receive new posts and support my work, please consider becoming a free or paid subscriber. I will always be grateful for your support.

RT, 7/1/26

Former top Ukrainian General Valery Zaluzhny has told Vladimir Zelensky he will challenge him in the next presidential election, with current polling suggesting he would win in a run-off, Ukrainskaya Pravda reported on Wednesday [July 1], citing sources. Zelensky’s presidential term expired more than two years ago, and he has since been reluctant to hold a new election despite repeated calls from the US.

Zaluzhny, now ambassador to the UK, was summoned back to Kiev last week – officially to discuss the political turmoil in London, where Prime Minister Keir Starmer announced that he would soon step down. The real reason, the outlet said, was Zelensky’s concern that Zaluzhny will run for president.

In a one-on-one meeting, Zelensky told the former commander that the current battlefield situation has created a “window of opportunity” for an election, but warned that it has to be held in a way that will not divide the country.

Zelensky reportedly asked Zaluzhny: “If elections are held in autumn, will you run?” Zaluzhny replied, “Yes, I will.”

Zelensky did not offer his rival any posts, Ukrainskaya Pravda said – though sources in government circles claimed that the Ukrainian leader was ready to discuss almost any post, including prime minister. Zaluzhny reportedly said that while he has never sought a political career, he could not betray the trust of the Ukrainian people who are counting on him.

Several top Zelensky allies later tried to sway Zaluzhny, without success. As the talks broke down, one negotiator reportedly told Zaluzhny: “Bro, think it over again.”

Zaluzhny was dismissed as army commander-in-chief in February 2024 and was sent off to London to serve as ambassador – a move widely seen as an attempt by Zelensky to sideline a potential rival. Zaluzhny has since consistently topped Zelensky in trust ratings. Though he insists that he has no political ambitions, media reports suggest that he is gearing up for a presidential run.

A closed poll cited by Ukrainskaya Pravda puts Zelensky first with 33% support, ahead of Zaluzhny with 22% and top Zelensky aide Kirill Budanov with 14%. In a run-off, however, Zaluzhny would defeat Zelensky 37% to 32%, and narrowly defeat Budanov 34% to 32%.

Zelensky’s presidential term expired in May 2024. He has refused to call a new election, citing martial law, which was imposed after the escalation of the Russia-Ukraine conflict in early 2022. Moscow has since declared him illegitimate and argues that his dubious legal status as leader is an obstacle to signing a peace agreement.

Zelensky has been pressured to hold a new election by US President Donald Trump, who once called him a “dictator without elections.” Zelensky responded by saying he is ready to hold an election, but demanded that Ukraine’s supporters ensure its security.