30 August, 22:37
Let me open with a claim that will sound absurd: the war ended a year ago. It did not stop, it did not freeze, it did not settle into a positional phase. It ended in the sense that a business ends when it no longer has either an achievable goal or a price anyone can calculate. Everything we have watched for at least the past twelve months is no longer the continuation of a war. It is an attempt to revive a corpse, and a strikingly unsuccessful one.
Let me open with a claim that will sound absurd: the war ended a year ago. It did not stop, it did not freeze, it did not settle into a positional phase. It ended in the sense that a business ends when it no longer has either an achievable goal or a price anyone can calculate. Everything we have watched for at least the past twelve months is no longer the continuation of a war. It is an attempt to revive a corpse, and a strikingly unsuccessful one.
The proof does not lie on the map, where arrows still suggest movement. It lies in the accounting. As long as the war was a project, it was financed out of revenue: oil, gas, export rent, accumulated reserves. The project allowed profit to be consumed, and in that there was a certain cannibal logic. But the moment the source stopped covering the outlays, the system shifted into a different mode. It began to feed on itself. Not to borrow against the future, but to finish that future off with the cost of the present. From that moment the war stopped being a war and became a method for liquidating Russia itself. The distinction is fundamental, and it is worth unpacking slowly, because the whole architecture of official statistics is built precisely so that this distinction stays invisible.
And the statistics, credit where it is due, perform brilliantly. Five years into the war, the picture of reality offered to Russians is almost a holiday brochure. GDP grows modestly but confidently. Unemployment sits at a historic low. The banking system is resilient to every cataclysm at once. Public debt is negligible by any global standard. Strikes on refineries do minimal damage to the economy, and the fuel shortage is purely local and creates no critical problems. In the official version there is no crisis in Russia at all, only temporary little seasonal difficulties that are about to resolve themselves.
It is worth pricing that picture separately. For years now the security services have been waging a brilliant and highly successful campaign against dissent: every hostile platform blocked, the institution of foreign agents built and running, methodical work with anyone who deviates from the party line. And no one is spared, neither strangers nor their own. The blow lands not only on the liberal who relocated to Berlin, but on the war correspondent who allowed himself to write about actual casualties or to ask where the promised drones went. This is an important detail, and we will come back to it: the system is not sanitizing potential opposition, the system is sanitizing the books.
Because every official figure requires a footnote, and the footnotes are more interesting than the figures. Enterprises are operating, but they are moving staff to a shortened week. Loans are being serviced, but with several rollovers and deferred interest, which means the borrower is formally no longer a debtor, he will simply repay everything at some point later, in some new and different life. State contracts are being fulfilled, but the contractors sit without money and are in effect lending to the state out of their own working capital. Exports continue, but the revenue does not always arrive from abroad, and rarely arrives quickly, while part of it settles in a labyrinth of intermediaries who heroically circumvent sanctions for half the sum. The train runs on schedule, but the overhaul of that train, due a year ago, has been pushed to next year. And next year it will most likely be pushed again.
Each of these footnotes looks like a technicality on its own. Put them together and you see the mechanism. Money is being pulled out of the sectors Putin has not yet finished off, through dozens of ingenious channels: through debt, through unpaid invoices, through cancelled repairs, through the refusal to invest in anything beyond the current quarter. This is not robbery at gunpoint, it is competent financial engineering, and the people executing it are genuinely good at their work. Which is exactly why nobody should wait for a loud Russian collapse. The cash machines will not shut down, no default will be declared, there will be no panic in the queues.
None of which makes the problem smaller. Russia's problem is considerably worse than a one-off crash. A crash is an event, and recovery begins after an event. Here there will be no event at all. There will be the slow conversion of a working economy into the stage set of a working economy. The machine tool that was not repaired has not broken down, it will simply never again deliver its former output. The engineer who left the industry has not died, he will simply not come back. The plant living for its third year on deferred investment is formally alive, but it has already eaten its own tomorrow and is now working through the day after. Russia is rapidly losing live business, qualified people, infrastructure and its future tax base, and what it gets in return is a formally functioning camp system from which nobody living in Russia will derive any benefit at all.
Now to why this is happening the way it is and not otherwise. Here we need an optic, without which the picture disintegrates into a series of separate unpleasant news items.
The economy of losses is not a rhetorical flourish and not an insult. It is the description of a system in which the very act of spending a resource has become the main way of extracting gain. In a normal economy profit arises on the difference between cost and result, which is why a loss there is highly undesirable. But in a system where the budget has turned into an object of bargaining, and the state order has become the perfect commodity because it requires neither a buyer, nor quality, nor competition, the loss stops being an undesirable outcome. The loss becomes the product. It is generated deliberately, it is planned, and on it people build meteoric careers and insane fortunes.
And this is precisely where the war turns out to be not a disaster but a market condition. There is a large group of people in Russia for whom the war is very profitable. Extremely profitable. Behind the charitable advertising of first aid kits, flashlights and socks hides budget theft on a scale that could have clothed, shod and fully equipped the personnel of two or three mid-sized states. Russians would do well to look more closely at how exactly this war is being fought. Not in the sense of arrows on maps, but in the sense of elementary bookkeeping: how much was allocated and for what, how much never arrived, and where the missing part settled. But that inquiry is the very dissent the security services are fighting so successfully. The circle is closed, and it was closed not by ideologues but by accountants.
Back to the central thesis. Why do I say the war is over and what we are watching is the resuscitation of a mummy? Because the war has lost its function. The original premise was that this was not merely the subduing of a runaway colony, Ukraine, but an acquisition: territory, resources, control over transit, status in a new global arrangement. The acquisition did not happen on a single count, and in Moscow they know this more precisely than anyone else. What remains is pure inertia of expenditure, justifying itself by itself: we fight because we fight, because that is how it must be. The system keeps moving not because there is a goal ahead, but because there is nothing behind.
And here comes the symptom everyone has been discussing for days, the managed leak to Bloomberg. Formally, three unnamed sources shared secret insights into Putin's mood. In fact what we have is a set of theses coinciding word for word with what runs on Russian television, which means this is no leak at all but a message dispatched to the right address.
The message is remarkable for what is not in it. There is not a single assertion about future Russian gains or achievements. There are only threats and contrived explanations of Putin's position. Sanctions and strikes on refineries will not stop him. The current phase of escalation is not the ceiling. The negotiating frameworks have collapsed. Russia has repeatedly made concessions and every concession worsened its position. America is to blame for the failure at Anchorage. Ukrainian strikes are increasingly treated as NATO aggression because the weapons come from there. There are almost no alternatives to further escalation, talk of tactical nuclear weapons is growing louder, and only Putin, the man who started the war, is holding his subordinates back from using it. Note that last point: the man the world unanimously regards as the source of the threat is proposing, through the pages of the Western press, that he be considered the only restraining factor. That is not the posture of the strong. It is a loser trying to sell himself at a better price.
Some connect the publication with the visit of the CIA director a couple of days earlier, as if this were the Russian reply. The chronology does not survive contact with the facts. Messages of this kind are not prepared and transmitted in a single evening; the attempt at bargaining reached the newsroom at minimum several days before publication. Which puts the sequence in exactly the reverse order: first the article was read in the White House, then the CIA director flew to Moscow with an answer, and only then did the material appear. The publication was a formality, the ritual closing of an exchange that had already taken place. And if you want the real conclusion from that chronology, here it is: the Americans took Putin's attempt at communication seriously.
Now the interesting part. What is Putin actually bargaining for in this message? Moscow is refusing the partial ceasefires Zelensky has proposed: on grain, on energy, on a mutual halt to long-range strikes. The refusal is presented as a demonstration of strength. Let us take it apart through actual damage, honestly and without pathos.
Ukrainian long-range strikes, for all their spectacle, do Russia less harm than the imagery suggests. The campaign against refineries is painful but not critical for the country. The campaign against marketplace warehouses is painful for the population but not particularly significant on the scale of the state. Incomparably greater damage to the Russian budget is done by the war itself: daily spending on it has grown for the fifth consecutive year. If the fighting lasts another year, it makes almost no difference whether it is accompanied by the fireworks of deep strikes, because even a positional war with its wildly inflated budgets will cost the Kremlin more than every hit on every oil depot combined.
From which a simple conclusion follows. If Moscow is bargaining specifically over long-range strikes, then it is not bargaining over the economy. It is bargaining over the picture. A burning refinery is visible from a window, filmed on a phone and posted online. Working capital extracted from industry is visible from nowhere; it does not burn and never makes the frame. Putin is defending the image of stability instead of its substance, and that is probably the most honest description of his current strategy.
How long does an illusion like that hold? The question answers itself. Missile escalation against Ukraine will produce nothing. Strikes on food infrastructure are already underway, they are pure terrorism against civilians, and the effect is close to zero: logistics will change, the range of goods will shrink, but with a European rear Ukraine will not starve. The effect of a new campaign against the power grid is also questionable, because the infrastructure has been rebuilt over these years and the facilities hardened. And the prize itself is dubious: a country blacked out in winter with a freezing population is an achievement for which Russia has already earned the reputation of a fascist state. Terror against civilians against the backdrop of impotence against soldiers in the field damages Russia's standing more than any defeat. War on a civilian population is a demonstration of weakness to everyone at once, including those still formally counted as allies.
Threats to strike central Kyiv, to hit Bankova, change nothing at the front and read exactly the same way. Tactical nuclear weapons even more so, and in fact worse. A strike on a city with mass civilian casualties would raise the question of whether China wants to keep doing business with such a partner, and Beijing, as is well known, deeply dislikes a partner who manufactures problems for it out of nothing. Using nuclear weapons along the line of contact is meaningless in purely technical terms: the line would have to be blanketed with hundreds and thousands of charges, after which one would have to advance across contaminated ground, an idea curious in itself. Threats to strike Europe in order to force it to end support for Ukraine would produce the opposite reaction. And NATO entering the war is the outcome Russians would like least of all: if today oil is somehow still moved by the shadow fleet, then in a direct conflict with Europe exports through western routes can be forgotten for good.
The sum of it: the options for escalation are minimal, the gain from them is negligible, and the costs of the war, inflated by the security services themselves, are already vast. Starting the war in February 2022 at enormous cost was a decision explicable within a cynical capitalist rationality. Escalating at the moment when there is nothing left to saw off is a decision with worse consequences and without a single chance of a prize.
And here we come to the underwater part of the iceberg, without which the whole construction hangs in mid-air.
Try to recall when and how often the intelligence chiefs of other countries have travelled to Russia. Britain's MI6? Israel's Mossad? The German, French or Chinese services? Nothing comes to mind? Correct, because such visits did not happen. It is always the Americans who come. They came under different presidents, in different circumstances, at every volume level of mutual public accusation. This is not a protocol detail. It is an indication of the character of the relationship, and the honest name for that relationship is this: Russia is a crypto-colony of the United States, however wild that sounds in the fifth year of Russia's war against Ukraine. Or, to put it even more precisely, Russia has always and in every era been the servant of the hegemon.
And here one has to be objective, otherwise the result is not analysis but cheap conspiracy theory in dress uniform. The mechanics of this alliance are extremely simple and maximally humiliating for Russia. Russia has historically never been an independent center of capital accumulation. Russia has always been run by compradors and has always been a structure that lives off intermediation between the world economic center and its own periphery: it sells raw materials upward, buys technology from above, and converts the difference into power at home. A comprador structure has a vital need for a master, meaning a hegemon with a market it can attach itself to. Enmity with the hegemon is fatal for Russia, while submission is a source of rent.
Hence the entire historical sequence of Russia's greatest allied victories. Russia in coalition with Britain against Sweden helped Britain become mistress of the seas. Russia in coalition with Britain against Napoleon helped Britain become the world hegemon. And of course Russia in alliance with the United States, with Stalinist industrialization, which directly or indirectly led to the Second World War, thanks to which hegemony moved across the ocean. Lend-lease was not an act of goodwill but the mortar of that alliance. Every time Moscow found itself on the same side as the hegemon, it received technology, credit, markets and status. Every time it found itself on the other side, it received the Crimean War, Port Arthur, the Cold War and what we are watching today.
Objectivity demands one further detail immediately. The alliance between Russia and the United States was never a friendship, and never a partnership of equals. The hegemon always used Russia as a colony, as a counterweight and as a supplier, and when the need passed, the connection was severed without a trace of sentiment: from the Congress of Vienna to the Crimean War took forty years, from Yalta to Fulton less than one. And the working channel between Washington and Moscow today implies no collusion over Ukraine's fate. It means precisely that the hegemon and its crypto-colony maintain a line along which a message can be passed without intermediaries. That is a function, not affection. But this function exists exclusively with Washington and does not exist with London, Berlin or Beijing. That asymmetry is the fact worth holding in mind every time Moscow explains that the entire West, and America above all, has turned against it.
Now look at events through that lens. Russia's economy is being taken apart for spare parts to finance a war that ended as a profitable project a year ago. Escalation is unavailable, because every version of it costs the escalating side more than it yields. And the only functioning foreign policy channel leads where it always led, to the hegemon, to whom Moscow desperately wants to reattach itself and can no longer do so on the old terms or without losing face. That, and not any readiness to go all the way, is what reads out of the message Putin sent through Bloomberg. The subject stopped being a halt along the line of contact long ago. The subject is rolling the economic contracts back to their state before February 2022 and never fighting again.
Notice, incidentally, how Putin's rhetoric has shifted lately. The openly delirious patriotic-historical excursions have grown noticeably rarer, while uncertainty and irritation increasingly show through in his interviews. Why? Because the nonsense for the masses about historical missions and great conquests inspires Putin exactly up to the point where his own safety and the safety of his family come into question. The talk about turning the whole world to dust for the sake of greatness was part of the show from the very beginning, and the Bloomberg message confirmed it better than any analyst could.
The same applies to Putin's entire present entourage, which in the finest traditions of courtyard hooligans threatens nuclear strikes and assorted reprisals from every iron and hairdryer in the country. That entourage, psychologically organized as a prison hierarchy, is cowardly by definition and was never prepared to die in the first place, least of all after arriving at success. A man who has made millions on the war is not going to die for the Russian world. He is ready to sink to the very bottom and will whimper obediently in order to survive.
And the last point, the one this whole exercise in bookkeeping was for. The dismantling of Putin's vertical has already begun, it is being carried out by his own hands, and it will continue exactly as long as there is something left to take apart. That is why the ruins of Ukraine are being paid for today with the demolition of Russia itself. And that is why this demolition suits the people conducting it, right up to their own last day.