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RUSSIA EXPLAINING RUSSIA'S ECONOMIC STATE Pyotr Kurzin \| Geopolitics: Something Big Is Going On Inside Russia’s Economy PLAY YOUTUBE VIDEO Original article: https://www.youtube.com/watch?v=FRJmE1ROqkM Peter Burgess COMMENTARY Peter Burgess
Something Big Is Going On Inside Russia’s Economy Pyotr Kurzin \| Geopolitics Oct 10, 2024 30.5K subscribers ... 55,954 views ... 2.3K likes #ukraine #putin #russia Russia's economy has defied the expectations of almost all observers and analysts, demonstrating its resilience despite Western sanctions, plus Putin's tenacity. However, the longer the war in Ukraine lasts, continues to put subtle pressures and strains on the Kremlin's ability to portray everything is fine. In this conversation, I am joined by Professor Mark Galeotti, expert in modern Russia, especially its security politics, intelligence services and criminality. Mark explains Russia's geopolitical presence, public sentiment towards Putin, domination of United Russia, and evolving nature of Putin's leadership. We explore the internal power dynamics, the implications of recent reshuffles, and the resilience of the Russian economy amidst sanctions. The discussion highlights the paradox of Putin's high approval ratings contrasted with low trust, and sustainability of the current economic model. ↭ SUPPORT MY WORK ↭ ► Patreon: / theglobalgambit ► Buy Me A Coffee: https://www.buymeacoffee.com/thegloba... ► YT Membership: / @uc7-tpqkmvid. . ↭ ENGAGE WITH ME ↭ ► 𝕏/Twitter: (@pkurzin): / pkurzin ► Substack: (The Global Gambit) https://pyotrskurzin.substack.com/ ► Instagram (@theecoexpat): / the.eco.exp. ↭ PODCAST DOWNLOAD/REVIEW ↭ ► (The Global Gambit): https://podcasts.apple.com/us/podcast.. ↭ CHAPTERS ↭ 00:00 Intro 02:53 Understanding Putin's Domestic Support and Political Landscape 05:49 The Dynamics of United Russia and Political Opposition 08:58 Putin's Evolution: Phases and Influences on Policy 11:50 The Impact of the War on Russia's Economy 14:39 The Role of Demographics in Russia's Future 17:45 The Nature of the Conflict: Ukraine and Russia's Relationship 20:21 NATO and Russia: A Missed Opportunity for Cooperation 23:42 The Future of Ukraine: NATO Membership and Security Guarantees 26:23 The Stalemate: Current and Future Implications of the Conflict 29:30 The Future of Russia: Potential Changes Post-Putin #ukraine #russia #economy #internationalrelations #geopolitics #military #usa #war #putin #finance Transcript Intro 0:00 Russians are going to be dealing with you know a winter that is not always that common they're going to be stuck inside they're going to be focused on the news uh you've mentioned that you know largely there are a thousand or slash people signing up per day it seems you know but what about the economy why has the sanctions uh not worked or I I mean I always thought that the Russian economy would be more resilient can we still see those cracks happening or is it the Western narrative is still just trying to lead you to a false hope where do you see this going over the winter yeah well let's just start with sanctions it was a massive I think disservice to everybody the way that they were so ridiculously overhyped at the beginning we literally had people saying that this will bring the Russian economy to its knees in a matter of weeks and that was just phenomenally stupid sanctions have never managed to make a dramatic change in policy in and of themselves except when the mismatch this is the global Gambit is uh omnipresent I think in the world of geopolitical risk and Affairs at the um it's uh I think impossible to really 1:03 go a day without seeing in the news a new development about what's Not Just Happening obviously in Ukraine but in Russia itself and I think I Google or hashtag Putin uh when I'm preparing the YouTube video more than anything else uh these days grips aside uh as you can probably tell this topic is going to be about Russia particularly and its relationship within but also Ukraine and uh the near BR we're GNA have a two-part conversation with someone who I have been intending to get on for I think it's basically months at this point isn't it Mark but unfortunately our our you know schedules have clashed and and finally on October the 2nd here we are but uh my guest today is Professor Mark gootti uh who is honorary professor at UCL in the school of slavonic and Eastern European studies he's also a senior associate fellow at Russi or Royal United Services Institute in the UK and executive director mayak intelligence and uh his latest book down for pran Putin and the new fight for the future of Russia which some of you if who C Minds back to June 23 was Infamous 2:07 moment in well what seemed like a potential Mutiny sure something that we'll touch upon in this exciting conversation if you enjoy the conversation give it a comment give it a like maybe subscribe if you want to hear more or challenge what Mark or myself say but Mark um love to have you on I I don't know what what's on your mind first and foremost as we uh as we try to take stock of what's happening in the Middle East ention seems to have kind of forgotten about Russia at the moment or not in your mind yes well I mean and I should add actually I'm I'm delighted that the stars align so that we can finally have this conversation yeah I mean at the moment I mean you're absolutely right it's hard to sort of tear one's eyes away from from these unfolding Horrors in the Middle East but I think in when it comes to to looking at Russia in in some ways what really Understanding Putin's Domestic Support and Political Landscape struck me was on on Monday 30th of September we had reunification day um 3:00 this entirely artificial holiday that was created by Putin to celebrate the annexation of four Ukrainian regions that the Russian troops didn't control then and still don't fully control now and try as I might looking through the Russian media Russian TV Russian social media output and so forth I really could not find any great enthusiasm for it there were the inevitable state funded and State controlled s of expressions of of carefully choreographed public support clearly with audiences of civil servants who are bus in and the like but even many Governors and Mayors did if they did anything at all they did the absolute minimum which I think brings up to me this this interesting Paradox that you know Russia is at the moment in not too bad a state domestically as well as in its war with Ukraine but on the other hand the Russian people themselves certainly do not seem 4:04 currently swept along with enthusiasm that's interesting because you know what we're led to believe uh in the west or uh maybe people who are pro Kremlin Kremlin ites will say well no the Russian people are absolutely doting of Putin that no matter what he does he is the best thing since sliced bread and uh you know I but I I think the kurk incursion or offensive Whatever by the Ukrainian sort of did knock this sort of perception of him as protectorate protector of the Russian State and identity and land and so on so what that he he I don't know what is your perception does Putin have a firm grip over Russian support or or it does EB and flow a bit yeah what always interests me is that his approval ratings as you say they they e and flow but they're often up in the S the 80% kind of figures that you any Western politician would would would gleefully kill for whereas his trust ratings tend 5:06 to re around the sort of 30% maybe the low 40s which raises this interesting uh Paradox that it seems to be that a lot of Russians approve of Putin without actually trusting him and I think what this actually speaks to is in some ways two ways that people look at Putin cuz remember you know Putin has been directly and indirectly in power for 24 years you know there's a whole generation of of young Russians who haven't known any anything else and there is no opposition there is no alternative there is but one pole star around which all the other constellations rotate so I think there's you know in some ways Putin has become an avatar of Russia and so when they The Dynamics of United Russia and Political Opposition asked about their approval of Putin in many ways they're being asked if you're a patriot if you believe in Russia and with with with Putin just simply as that representation of the motherland but then there's also Putin the human being 6:04 Putin the politician and I think in some ways the trust ratings especially because they tend to map off quite accurately also to the level of support for the protin United Russia political block actually sort of show what Russians think about Putin the politician and so I think this this is the sort of the the interesting Paradox I mean there there is there is nothing that is currently going to topple Putin he has if nothing else still a pretty strong grip on the security apparatus and on the whole people power very rarely triumphs against uh full array of of the security operators when when the elite is willing to sort of back it but that doesn't mean to say that everyone's happy that doesn't mean to say that everyone is is currently swept along because as you say I mean the KK was an interesting example you know if you think about Putin's legitimacy it was always based on two pillars one was prosperity next year for you ordinary 7:01 Russians will be better than last year it's harder and harder for them to really feel confident about that and the other one was security that Putin is the guarantor of not just the nation's borders but also the security of ordinary Russians and well the legitimation of prosperity is long gone and even security came under question and we saw on social media a big spike in critical statements about Putin so no one's turning up to to try and topple him because that's suicidal but that doesn't mean to say that everyone is still delighted with him I want to unpack a little bit more the United Russia aspect because I don't think a lot of people appreciate that you know Putin is part of a party or has been for much of his presidential uh existence and you know that's why he well in the early days he ran under the United Russia party Banner that I think ran as an independent a 8:01 couple of times more recently but what's the situation there in terms of the overall composition we've got the systemic opposition which is not well it's not an opposition let's be honest uh when you've got the Communists and the ultra nationalists ldp party sort of agreeing right um what how's that political environment look in the recent months or say the much of this year or is it not really worth even bothering considering given that it is Putin uh and Russian you know Putin's Russia yeah I I think I mean sort of inclining towards the latter though of course being being an academic I will never pass up the opportunity to talk about something I mean I think what we got is a situation in which a political system which was actually originally quite a clever dramaturgia quite a clever theatrical attempt to to mimic a real polit democratic system while keeping it all carefully managed has become increasingly threat Putin's Evolution: Phases and Influences on Policy red bear you know it's it's it's like it's like that that show that uh was quite good but by season 8 all the old 9:07 show Runners have gone all the best actors have gone they've used all their storylines half a dozen times and it's really not particularly compelling I think that's pretty much where we are now yes they still have the opposition parties they're still trying to play with other ones they sort of create new ones like the new people party which kind of stood for technology and wow and the youth and that's about it that you know but nonetheless they they still try to create these fake opposition parties to create the fact similary of politics but it's really working that much less and to be honest Putin is relying on it that much less I think that he himself is increasingly sort of embracing the essentially autocratic nature of of the political system and it's almost like actually the the the Democratic structures have become actually an inconvenience 10:00 but nonetheless it would be far more disruptive to actually do away with them than to just continue to play the tired old games yeah I think he is the quintessential strongman and has been a inspiration let's put it bluntly for people like uh erdogan but equally some people like you know some people who are anti the Netanyahu government at the moment you know they say that netanyahu's desire to sort of centralize the uh the judicial system to avoid his indictments he sort of he's taking that uh inspiration for sort of Orban and Putin by extension right I don't know if you'd agree with that sentiment but that's some what I've heard some other people sort of insinuate personally maybe from their own personal perspectives but um a little bit more then one of the things that I was always fascinated in when I did my studies of Russia was sort of the the phases of Putin um you know the the one academic I think has argued that Putin has gone through different personality phases you know obviously the first one being when he comes into off he deals with Chia he deals with uh NATO early on and then the orange Revolution happens and then we 11:04 start to see a different phase of Putin and then Georgia 2008 and then the snow Revolution which is the Western term for the protests in 2012 you know each sort of major there were a few inflection points that has sort of increasingly influenced the way that he approaches both domestic and foreign policy do you agree with such a sentiment or do you think that Putin is Putin and he's just adjusted his foreign policy to the events around him look everybody changes over time and although he's still recognizably the same Putin I think he's particularly subject to this the same kind of problems that all autocrats tend to succumb to which is that over time you become increasingly con convinced of your own indispensability that at one point you may well have been willing to listen to Alternative perspectives even critical perspectives but in instead you begin to surround yourself more and more with The Impact of the War on Russia's Economy cronies and yes men which is certainly what we saw with with Putin and 12:00 you get older you have less attention less capacity to do what you did once upon a time and I think this is what we see with with with Putin so it's a combination of just the the natural changes of any individual and the interesting thing is particularly ever since covid we have seen Putin much much less willing and able to actually travel around the country yeah and go and you know even with behind his massive security perimeter but none go and actually meet the people you know he used to do this thing of sort of Whenever there was a problem he would then sort of turn up metaphorically parachute in browbeat some local official ensure that he could re some money on on the problem and once again assert this time old Trope of the good SAR versus the bad boy ARS that the problem is all with the aristocrats and once the Zar realizes what's going on he comes in and sets things right well that was so much an element of Putin's original sort of yeah yeah it was PR but nonetheless it it was it was an integral element of his governance now that's not 13:04 the case and in part look it's it's probably a combination of concerned about security biocurity and just simply age and just simply can't be bothered so he changes but on the other hand of course he changes under the pressure of other various influences I mean he came into Power with a a genuine belief it seemed that Russia could reach some kind of modus vivendi with the West that actually allowed Russia to assert its status as he regarded being a great power and he very quickly became dis solutioned simply because he didn't really understand us this is a man who after all has no real experience in the west or dealing with the west and he decided in fact the West was essentially you know its interests were antithetical to Russia's and over time that change to its interests were actually hostile to russas and I think that although one can play all sorts of different sort of judgment points for me the key one was precisely you mentioned the snow 14:03 Revolution the balot protests of 2011 2012 which he clearly did not or was not willing to see as the natural organic response of particularly a rising Metropolitan middle class who felt that they deserve to have a a say and who were angry when basically the presidency just seemed to be a trinket that could be passed back and forth between Putin and his chosen placeholder Dimitri mvv but instead Putin you know explicitly called it a sort of you know again foreign back in Insurgency and that Hillary Clinton had basically given The Role of Demographics in Russia's Future the signal and all that and I think we will in hindsight realize that was the point where he basically decided that the West was coming for him and really from that point increasingly Putin's state began to come onto War footing not because he thought that NATO tanks were going to roll across the border but he thought that NATO had all these or the West had all these sophisticated political technologies that they could 15:06 use to destabilize governments they didn't like that's how he interpreted the Arab Spring risings the colored revolutions and so forth and so he thought that was facing him now so you know there is the the natural shift of of a man who becomes increasingly intolerant of alternative perspectives I mean I still remember I mean I sort of I've trotted this out many a time but you know once having a cup of tea with a recently retired Russian spy in Moscow uh and this was back in 2015 who said look we've learned you do not bring bad news to the Zars table in other words if you actually want to be listened to you can't try and tell Putin what he doesn't want to hear so you this is something that that's been going on for some time I'm going to touch upon more of the foreign policy sort of extr territorial activities if you want to call them that with Russians in part two so guys if you're enjoying that do and do subscribe to be on the lookout for it but yeah uh 16:02 just staying on this pathway of Putin's approach to things internally so therefore well I'm I'm looking I'm still hoping for the day where we get a renewed photo of him on a on a horse uh you know Putin the the be back Rider right uh those those days I think are for behind us but um and also I don't know how much it's worth really talking about a sort of a postpin Russia because that's I don't think anywhere in the near future most people reckon he's going to be what he can run until 2036 he'll be what in his mid 80s at that point uh I just don't you know we can we can speculate for the fun of it but like I don't see the point I guess what I would ask you more pragmatically at the moment is his relationship to his existing power structure we had that unique or unique unusual uh should we say shuffling of people around and and um shyu to the to the security Council whatever it's called um and and bellof into the defense Ministry which are both 17:02 you know quite interesting shifts um gajim off I believe is still heads out the military so could you give us your perspective on on this reshuffle uh how you think it's gone in the past what six months since he did it um and whether or not it's out of desperation or pragmatism or something else yeah I think we should always avoid terms like desperation and so forth until we see genuine desperation remember as far as Putin's concerned things aren't going too badly they're not going the way he hoped and expected in 2022 but he does adapt to new realities and that as far as he's concerned he's involved in a conflict with all of the West can you can you unpack a little bit more yeah sure I mean look well I mean I The Nature of the Conflict: Ukraine and Russia's Relationship think for the simple reason that he has internalized this excuse for the catastrophic blunder that was rolling into Ukraine in February 2022 because remember this is a man who doesn't really believe Ukraine exists as a country the Ukraine don't really exist as a people and he had convinced himself 18:05 in part because it's what his Spooks have been telling him because in turn they wanted to tell him what he wanted to hear that the ukrainians wouldn't really resist there might be some some protests some riots which is one of the reasons why so many of the forces that went in were actually National Guard Security troops rather than actual troops but that he could just roll in impose some kind puppet regime and then roll out having established that Ukraine bid to leave Russia's sphere of influence had failed but again we can talk about that when we talk about near abroad and so forth um now though you know given that he he believes well what happened you know is it that he screwed up catastrophically I some I mean I don't know but I somehow suspect that he's not capable of that kind of level of Ruthless self-insight instead it's precisely it's NATO it's the West because as far as he's concerned he is now in a war with the West in which Ukraine is just the 19:04 most pyate Technic theater of of it um you know the very fact that if you if you call what's going on with the special military operation in Ukraine a war you can be sent to prison but Putin himself uses the word War when he's talking about what's going on between Russia and the West so as far as he's concerned this this this helps explain it that in fact he's fighting not just against all of Ukraine but all of NATO's military and economic capacity so in that circumstance actually I I think you know he can convince himself that things aren't going too badly he's just taken vladar well his troops have just taken vladar after two and a half years mov may be next he's lost a bit of Kursk but I don't think he really cares that much about it um and and more to the point there's the prospect of America maybe having a Donald Trump presidency various European countries looking a bit wobbly the economy actually surviving s 20:05 surprisingly well under the strains of sanctions and and War Russians still being willing to volunteer admittedly being paid increasingly large sums ass signing on bonuses and salaries but nonetheless maybe a thousand Russians are volunteering every day for this meat grinder of a war so at the moment he's NATO and Russia: A Missed Opportunity for Cooperation he's also able to put off the prospect of another deeply unpopular mobilization wave put all that together and I think filter it through the rather sort of Rosy eight prisms not just through which Putin looks at what's going on but probably what what what people are telling Putin and I think he feels things aren't going too too badly right well um yes I think that well that makes me think of uh a fair few things as well something you did mention that made me think of a a joke but now now considering what Putin is as much of a joke as anything I think but anyway um 21:03 what about the economy then I'm sorry I realized I was yeah but the the um sorry I just realized I I I sort of wandered off in that direction and didn't really answer your question about the sort of the power structures I mean I wasn't G say anything but the reshuffle if you could yes that would be no if you could you know what what's I I'll rephrase the question so it's more all encompassing what do you think of the you know new relationships the new power dynamics between Putin and his most Inner Circle because I think there's a lot of speculation about who truly are Putin's supporters and whether or not they could always be a coup has there been a mini Purge yeah I'd love your thoughts on that yeah I mean look I I I I think that prospects of any kind of coup are still a long way away I mean however much we would love to think of these various deex mashina sort of solutions no I mean I think that the the reshuffle was really actually more than anything else I think a a recognition of the nature of 22:03 the war and the fact you know and a rather overdue um shift of emphasis within within the political system Putin doesn't like making back tough decisions he tends to put them off as long as he can and I think this is what you know a lot of people had felt that well first of all that shyu had to leave the defense Ministry he become massively unpopular in part because basically he's Putin's Flack Fest that all the criticisms which really should go to the Supreme commander-in-chief in other words the president were being directed towards Shu and the chief of the general staff gasimov but nonetheless shyu is a mate so he couldn't be totally dispensed with and I think there was also a sense that he was becoming a little bit too rich and a little bit too powerful you know with war there's loads more money slushing through the defense Ministry and although a lot of that just slushes right the way through to the defense Industrial complex there was enough left over that Putin sorry that shyu and and 23:03 his allies and cronies were were doing really rather well and so there's the point where you know when when when shyu becomes a little bit too obvious a little bit too high-profile and a little bit too wealthy maybe it's time to detach him from those particular rent streams but at the same time there was a sense that the previous Secretary of the security Council Nikolai patev a guy who has always freaked me out I mean described him in my podcast as the most dangerous man in Russia not least because I mean this is a man who has two two key sort of you know characteristics he is at once I mean sufficiently hawkish to make Putin The Future of Ukraine: NATO Membership and Security Guarantees look something of a of a liberal moderate at times but also actually smart and hardworking you know he's not someone who's just simply interested in in in seeing how much money he can skim off the system this is a man who believes all the most extreme conspiracy theories about the West in some a man who genuinely has recounted this story 24:02 about a a long-term Western conspiracy to partition Russia which originated with a psychic who claimed to have read former US Secretary of State madin Albright's dreams and from that divined this this this this plot and and patev had by virtue of the fact that these are not jobs that exist within the Russian system essentially become Putin's National Security advisor de facto and his Director of National Intelligence now that's always incredibly dangerous because in some ways the job of a national security advisor is to be the person who can call when what you're getting from your Spooks is is questionable but he' managed to sort marry those two roles together which meant that in many ways he had become the most important person in forming Putin about the outside world and the risks and opportunities there in so in some ways I think you know he he Bears a lot a lot of the blame for I mean not in any way to exonerate Putin 25:04 but you know the responsibility shall we say for Putin making the decision he made in February 2022 and so I think there was a sense that that that pev needed to be taken down a notch not again not dispens with because he'd been a loyal Soldier metaphorically um but that shyu would perhaps be a a less dangerous figure in that role and look shyu has he hasn't been able to bring in his own team team so he's still surrounded by patri people but nonetheless he's kind of Taken onto himself the role of kind of security Diplomat in that he's been to North he's talking to the North Koreans to the Chinese to the Indians you know he's secured and and the Iranians securing all kinds of various kind of weapons deals and the like so you know shyu is is is doing his job just now with a little bit less money at his disposal but at the same time given that this is a long War bringing belov into the 26:00 defense Ministry I think must have looked on paper like it was a good idea because in a time of war the defense minister he's not a military commander the chief of the general staff is actually the one who's handling the war the defense Minister's job is to try and ensure that the military have got what they need so it's really about finance and Logistics and that's belov he's an economist he he understands Central planning now I would suggest actually The Stalemate: Current and Future Implications of the Conflict he's proving to be a really quite bad defense minister because he doesn't really have any Authority in the ministry at all but never mind Putin didn't consult me so you know that there you go but the idea is exactly that in some ways this is a a reshuffle that's meant to recognize the realities which is that this is not going to go away this war that this is a war that is going to last probably years and that it will be determined as much as anything else by the continued flow of resources as well as information and so that that I think was was the essence you know so so in conceptual 27:03 terms I think it made a lot of sense in detail I think it's it's questionable but I think that's really what it represented it's Putin accepting that basically this war is going to is the new normal and will be for years to come something I'm going to be uh shall we say challenging on in part two um but yeah very hot take quickly on this um petrusev interesting you say because I I said we weren't going to speculate about the future of Russia but you know and the problem is he's a similar age to Putin but I I've always thought that of anyone who would be sort of potentially placed to take up the slack from Putin it was petev because of this similar sort of FSB relationship Dynamics he's pretty hard-minded sort of am I completely off the off the off the beat trap there or or or do you see sort of where I'm coming from with that or again it's pointless I mean I see where you're coming from I mean I I I I disagree for the simple reason that too many people hate or fear 28:05 patev um I mean it's interesting he's grooming his son Dimitri patev who is currently a deputy prime minister um to be his kind of vicer on Earth shall we say but the point is pev was no no one would ever describe him as clubbable um you know I remember once actually talking to a western Diplomat who had flown to some event this is you know when when when when we still had Western diplomats talking to Russians um had flown to some sort of particular event in in in the high North and patev and his AIDS were on the same plane and said look under normal circumstances everyone treats that as an opportunity got a long flight together you know as a tance to do a bit of informal diplomacy patev basically sconed himself at the end behind like a sort of a a serid rampart of AIDS to make sure that he kept all these nasty westerners at arms length and and to be honest that that seems to have also been the same kind of response he had to many of his his his peers in 29:02 the in the Russian government system so I mean I think that although patev certainly had the the ability um he certainly was kind of ideologically close to Putin and such like I think the realities are that there would be a lot of resistance because basically people would well are frankly scared of PF thing all right I want to come to the economy for the last part of this uh first part is uh obviously dut's season The Future of Russia: Potential Changes Post-Putin is is over or largely coming to an end uh the Russians are going to be dealing with you know a winter that is not always that common they're going to be stuck inside they're going to be focused on the news uh you've mentioned that you know largely there are a thousand or SL people signing up per day it seems um you know but what about the economy the obviously this is a uh a very big consumption is high expenditure government spending is high so you know there's a there's a boom Going on the economy is looking nice it's looking vibrant but how sustainable is this why has the sanctions uh not worked or I I 30:09 mean I always thought that the Russian economy would be more resilient but like you know can we still see those cracks happening or is it the Western narrative is still just trying to lead you to a false hope where do you see this going over the winter should we say yeah well let's just start with sanctions um it was a massive I think dis to ear everybody the way that they were so ridiculously overhyped at the beginning we literally had people saying that this will bring the Russian economy to its knees in a matter of weeks and that was just phenomenally stupid because of course it wouldn't and frankly if you can't bring the Iranian economy to its knees or indeed the North Korean kind of North Koreans are quite quite a good job of doing that themselves um you know of course you're not going to get as large and as globally interconnected an economy as as as Russia's but that's not really what sanctions are 31:00 all about sanctions has never sanctions have never managed to make a dramatic change in policy in and of themselves except when the mismatch between what you're trying to achieve and the amount of pain that you can deliver is sufficiently great but in this case given that as far as Putin is concerned this is a war which is existential politically for him of course they're going to resist it the purpose of sanctions is just simply to add costs it's to add grit into the workings of the defense industrial machine and in that respect it is working yes it's a constant struggle because the Russians are very good at then coming up with alternative ways of you know shipping fridges via Kazakhstan to rip the chips out of them to put in their missiles or buying things via the UAE or or whatever else but take those chips as an example the defense industrial complex can still get the microchips it needs for the missiles and drones but it's basically paying two to three times as much for them precisely because they can't just simply buy a batch and bulk they're 32:04 having to use all sorts of third party gray Market roots and such like so it inflicts costs and we have to acknowledge that's basically what sanctions are going to do we had this I say we I mean the West generally had this exaggerated notion of the degree to which it controlled the markets um well in fact you know most most countries in the world actually will look at their own self-interest first rather than sacrificing it in the name of damaging Russia and in terms of the overall economy I mean it's an interesting case study in actually how no matter how stupid your government can be if you have smart people actually at the executive level running it then they can they can manage to mitigate a lot of if not all of the effects of your stupid leadership and this is very much what I see and feel at the moment and indeed you know although I've lost a lot of my 33:02 contacts in Russia for for for evident reasons um nonetheless ones I talk to who are within the government structures they w't they wouldn't necessarily frame it in this terms but it's very much that they do what they can do despite rather than thanks to the Kremlin but the point is if we look at you know managing the economy we have you know very smart people like Ela nbuli now the chair of the Central Bank um you know but also there's a lot of other people just generally through through the structures you know who who are who are doing a good job but there's a limit to what they can do I mean what the the the base rate has been raised to I forget if it's 19 or 20% now I think it's 19% now um now that means that if you have deposits in Russia you're laughing most Russians don't really have much in the way of savings instead what they're actually facing is growing costs for for credit increasing credit card bills um it's getting harder and harder to actually get loans frankly let let alone whether you can actually afford it and if we 34:02 look at the the overall Improvement in the economy that's an aggregate figure and it's distorted by the fact that the defense industrial complex is now pretty much on full capacity I mean most plants are working 24/7 three or four shifts a day and they are paying what they need to pay to get their Workforce which is driving up wages but it's driving up wages where there are defense industrial plants and for people who can get those jobs if you actually look at the civilian sector that is left the bit that can't be converted to military use can't piggy back on the defense sector I mean that's actually really suffering it's suffering in terms of the fact that it's having to pay the salaries to retain workers who otherwise could cross the road and go and work in the defense Factory um it's suffering from the fact that just simply there aren't workers I mean basically there is an unemployment rate but essentially it's just fractional unemployment in practice there's there's no more spare labor capacity it's one of 35:00 the reasons why why they're not launching another mobilization wave beyond the politics it's because that would take workers away from the economy where they needed the police the police are between a third and a quarter under understaffed at the moment again for this reason that they just can't attract people so you know actually one one has to acknowledge that there are very real pressures and Putin himself I mean he he's been quite explicit by saying we will not repeat the errors of the Soviet Union in other words focusing entirely on guns rather than butter and so far at least to a degree he's managing to retain that balance he can't do it forever I mean economists who know vastly more about this sort of thing than me reckon that there's up to two years that the Russian system can kind of operate on this kind of basis before some very very tough decisions have to be made about that guns versus butter balance right and for you know for a lot of Russians as I say even now things aren't looking that great we'll be back guys it's part one see you in part two [Music]

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