The fact that Vladimir Putin invaded Ukraine at a huge financial cost to Russia does not mean that the economy does not matter to him. On the contrary, financial performance — or, rather, underperformance — played a decisive role in his decision. Unable to offer an increase in income or at least convince the Russians that the economy was doing better than it could otherwise, he tried to repeat the Crimean scenario of 2014. This may have worked, but he did not calculate correctly. Putin’s aggression has brought material destruction and human tragedy to the Ukrainians. But the war has also devastated Russia’s economy. In 2022, Russia’s gross domestic product will shrink by at least 11 percent – the worst recession since the early 1990s. Why did it start this war? Political scientist Adam Przeworski once wrote that authoritarian balance is based on economic prosperity, lies or fear. Like most 21st century dictators, Putin initially avoided fear. In the first decade of his tenure, he presided over a period of rapid economic growth, which was driven by rising oil prices and economic reforms in the 1990s and early 2000s. This prosperity brought him genuine popularity. However, as Putin’s centralization of power promoted corruption and stifled competition, his economic model lost its validity. Following the recovery from the global economic crisis, Russia’s GDP growth has slowed to almost zero. As incomes stopped rising, Putin’s popularity also plummeted. According to the independent Levada Center, Putin’s approval rating fell from a peak of 88 percent in September 2008 to the low level of the 1960s in late 2013. Putin decided to tackle an economic problem with a non-economic solution. The annexation of Crimea in 2014 boosted its popularity, probably beyond its expectations. Polls by the Levada Center show that Putin’s approval returned to 88 percent within a few months. However, the Crimean phenomenon has disappeared. As Putin’s model of governance is incompatible with economic growth, Russia’s economy has remained stagnant. Despite repeated promises of reform, investment did not take off, capital continued to flow out of the country, and Russia fell further behind developed countries. Putin’s corrupt model protected his proxies against ordinary Russians. In 2019, Russian GDP was 6 percent above pre-Crimean levels, but real household incomes were 7 percent below the 2013 ceiling. Putin then turned to Przeworski’s second pillar of authoritarianism: lies. The Russian government has stepped up censorship and propaganda. Putin tried to convince the Russians that their stagnant standard of living was better than any possible alternative. However, this narrative was becoming increasingly difficult to describe as younger Russians avoided propaganda and bypassed social media censorship. By April 2020, Putin’s approval had fallen to a record low of 59%. He responded by poisoning and imprisoning opposition leader Alexei Navalny, cracking down on independent media and shutting down the human rights group Memorial. Even this did not help the declining enthusiasm for his rule. Exhausted, Putin returned to the recipe of 2014 – hoping that a short-lived victorious war would once again boost his popularity despite his lack of financial success. This time, however, he made serious miscalculations. He overestimated his military might, underestimated the courage and will of the Ukrainians to defend their country, and did not expect the unity and determination of the Western response. Dictators are prone to such mistakes, especially those who, like Putin, eliminate critics, suppress independent media, and stifle debate within and outside the system. Surrounded by yes-man, Putin was about to gain too much confidence – and start a war that was neither short nor, at least so far, victorious. The consequences of Putin’s aggression are devastating for the Russian economy and deadly for Russian politics. Before the war, he was a dictator, pretending to be a Democrat and relying on money and information manipulation. As soon as he saw that 2022 is not 2014, he moved on to Przeworski’s third pillar: fear. One week after the start of the war, it shut down the few remaining independent media outlets and introduced wartime censorship. Borrowed from Adolf Hitler, he now refers to anti-war protesters as “national traitors” and threatens to “spit them out like a fly”. The Putin regime has completed its transition from a 21st century dictatorship to a 20th century dictatorship based on fear. Unfortunately, this is what Russia will look like until it leaves.
