By Paul Goble
Moscow is currently spending 37 percent of the budget for the war in Ukraine and is projected to spend 45 percent by the end of 2023, a figure that will make it almost impossible to prevent a further decline of the ruble and a collapse of public confidence in the future of the civilian economy, experts with whom Novaya Gazeta spoke say.
While military expenditures have boosted the growth of Russia’s GDP over the last two years, the fact that these are being financed at the expense of spending on civilian goods and by increasing debt create a serious problem, these experts say. The government is unlikely to be able to pay off the debt except by printing more money and sparking inflation.
Thus, people who are owed money will get it back only in currency that is worth less than it was, and because that is already obvious, they are increasingly unwilling to support increases in government debt because such increases will lead to declines in their holdings and standard of living.
That is eroding public confidence in the regime, Russian economists Konstantin Sonin of the University of Chicago and Tatyana Mikhailova of the University of Pennsylvania say; and that collapse in confidence is spreading and is quite likely to eventually take on political forms (novayagazeta.eu/articles/2023/09/06/vpk-golovnogo-mozga).
What is perhaps especially worrisome is this: if the war were to end, something which many Russians see as a virtual panacea to all their problems, the consequences of spending cutbacks in the defense sector would overwhelm at least for a time the civilian sector and create problems resembling those at the end of Soviet times.
Thus, the Kremlin has yet another reason to continue a war-time footing lest the end of the war in Ukraine lead not to new stability at home but rather the kind of crisis that could threaten the survival of the Putin regime.