Ukraine-Russia Conflict: Economic and Social Implications

This week we talk about foreign aid, brain drain, and long-term economic consequences.

We also discuss the Rasputitsa, counteroffensives, and strategic rethinks.

Recommended Book: The Kaiju Preservation Society by John Scalzi

Transcript

We've done this a few times before, but it's been a while since I've done a real update on Russia's full-scale invasion of Ukraine—September of last year, I think, was the last one, a bonus episode on the topic—and a fair bit has happened since then, even if a lot of these happenings have been overshadowed by other conflicts, most especially the invasion of Gaza by Israel following the attacks on Israel by Gaza-based Hamas.

But before diving into what's been happening, recently, in Ukraine, let's walk through a quick summary of events up till this point.

In early 2014, Ukraine's people rose up against their Russia-aligned government in what became known as the Maidan Revolution or Revolution of Dignity.

This was a long time coming, by many estimates, because of changes that had been made to the country's constitution and government since a decade previous, most of those changes orienting Ukraine more toward Russia's sphere of influence, authoritarian policies, and various sorts of corruption at the top, and the protests that led to this revolution began in November of 2013 before culminating in February the following year, which led to the toppling of the government, the creation of a new, interim government, the president fleeing to Russia, and new elections that kicked off a period of decoupling from Russian influence.

This was not well received in Russia, which has long seen Ukraine as being under its sway, if not belonging to Russia, outright, Ukraine serving as a large, friendly buffer between it and Europe, so Russian forces were send in, the flags and other identifiers on their fatigues removed, to support separatists in the eastern portion of Ukraine.

This sparked what became known as the Donbas War, which periodically flared up and sometimes merely simmered, but continued from when it began in February of 2014 all the way up to Russia's more formal invasion of Ukraine on February 24, 2022, following several months of buildup along the countries' shared border.

Against the odds and most analysts' assumptions, Ukraine managed to fend off Russia's initial assault, Russia managing to capture some territory, but not the capital city, Kyiv, and thus it wasn't able to decapitate the Ukrainian government and replace it with folks who would be loyal to Russia, as was apparently planned.

Russia's stated plans changed several times over the next few years, as their assaults continued to falter in the face of stiffer than expected resistance, and eventually the so-called "special military operation" in Ukraine became a more overt, full-on war, complete with forced conscriptions, massive loss of life, the demolition of infrastructure and entire towns, and a recalibration of the global order, new alliances popping up, others being challenged, and everyone, to some degree at least, being sorted into categories based on who they support, who they don't, and who they are willing to tolerate despite not supporting—that latter category consisting mostly of less-aligned nations like Brazil and India, which have done pretty well for themselves, economically, staying somewhat neutral and aloof from this conflict, and thus continuing to deal with both the Western alliance supporting Ukraine, and the comparably small team of opposing nations, including China, North Korea, and Iran, all of which back Russia to varying degrees.

In September of 2023, when I did the last update episode on this conflict, the state of play was largely defined by drone-based harassment of soldiers and infrastructure, like energy sources and bridges, by both sides against the other, Ukraine's flagging counteroffensive against Russia, which started out pretty good, but then ran intro trouble, seemingly due to sturdy Russian defenses that had been built around the portion of Ukraine they'd captured, the arrival of the "Rasputitsa" muddy season, which makes movement difficult in the region, and discussions about whether the US would provide longer-range artillery to Ukrainian forces, as Russia was comfortably settled-in, lobbing endless missiles and drones at Ukrainian forces and civilians, so longer-range munitions would help Ukraine counter that advantage, but there were concerns that this could lead to more attacks by Ukraine against Russian targets within Russia, which—because they would be using US weaponry—could help Russia justify expanding the war, which could, in turn, lead to WWIII, nuclear deployments, and the end of the world.

There was also discussion about whether the US should keep sending tens of billions of dollars to Ukraine, with Republicans mostly saying it wasn't okay, and some European leaders, especially those in Hungary, saying the same, while essentially everyone else said we need to keep Ukraine stocked with weapons and ammo, as the money is well-invested.

What I'd like to talk about today is what's happened in the months since, and what folks in the know are expecting to happen, next.

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Since last September, the debate over sending money to Ukraine has increased in volume, with countries like the UK scrambling to increase their funding to help fill the gap left by the US, where Congress is still deadlocked over a $60 billion aid package, the lack of which has left the Ukrainian government in the lurch, debating tax increases and spending cuts, while also rationing ammo, because they've hit their ceiling in terms of spending.

Most of those gap-filling aid packages from elsewhere, though, weigh in at tens or hundreds of millions, not billions, so one of the main challenges Ukraine faces right now is figuring out how to adapt their strategy for a wartime reality in which they're not well-funded from outside sources, as there's a chance more funding could eventually arrive from the US and other sources, but it's looking like the appetite for uncapped aid checks is drying up, even though Ukrainian President Zelensky continues to make the case that funding his country's defense is an investment, not a hand-out, because it ties up, and potentially even halts Russia's military ambitions in the area, which might otherwise be aimed at other nations Russia considers to be part of its orbit, and in some cases even thinks of as stolen territory, like Estonia—an attack on which would bring the whole of NATO into a conflict like the one Ukraine alone is facing, currently.

Ukraine has also been escalating its attacks, mostly surreptitious, but sometimes a bit more flagrant, into Russian territory near their shared border, using on the ground special forces teams on occasion, but mostly leveraging their remote-controlled and autonomous drone fleet to strike primarily military and energy targets, like fuel depots and fighter jets parked at airports.

Over this same period, Russia has hammered Ukrainian cities and towns with heavier-than-usual waves of rockets and explosive drones, targeting some military infrastructure, but more often hitting civilian centers, apartment buildings, and shopping malls.

A much-vaunted counterattack by Ukraine against Russian forces occupying their territory in November of 2023 achieved a few small, mostly symbolic goals, but failed to tally the large number of strategic successes accomplished during another counterattack earlier in the year.

This failure to replicate that previous success led to a wave of pessimism in Ukraine and allied nations, and new calls for some kind of peace talks—though then, as now, the Ukrainian government maintains that it won't hold serious talks until Russian forces have left the Ukrainian territory they've occupied, and they also say—with merit, according to most analysts—that any ceasefire before a Ukrainian victory would mostly benefit Russia, which would likely spend the time shoring-up its military and then invade again within the next few years, no matter what the terms of the ceasefire said.

So a ceasefire, at this point, would seemingly favor Russia, and most experts think the current situation on the ground in Ukraine favors Russia, as well, though Russia is suffering some serious consequences from their invasion, both of the short- and long-term variety.

In the short-term, Russia's economy—though not collapsing as many of the nations applying sanctions, like the US and EU countries, had hoped—is not doing anywhere near as well as it would have been doing, had this invasion not happened, or had it gone better for them, ending quickly, within a few days or a week, as they had initially expected.

It's become a lot more difficult for them to do business with much of the world, too, and their influence over global energy markets in particular have been severely hamstrung, which in turn has lessened the geopolitical heft of the OPEC + Russia oil cartel.

Russia has also nearly emptied its prisons, giving even incredibly violent and unstable prisoners the option of joining the military and being sent to the frontlines, those who survive granted their freedom; and this has reportedly led to a lot of horribleness back home, as these prisoners have been causing the sorts of trouble you might expect violent and unstable people to cause after being freed from prison, with the addition of also potentially suffering from the effects of PTSD and other sorts of trauma from having survived on the frontline of what has often been described as a meatgrinder sort of conflict, and in some headline-grabbing cases, they've brought military weapons back home with them, allowing them to cause enough more damage than would have otherwise been possible.

Russian citizens also have to worry about being conscripted, in some cases grabbed from the street and taken, with little preparation, to the front line somewhere in Ukraine, and about the sporadic drone attacks from Ukrainian special forces and Russian groups that support Ukraine in this conflict.

More abstractly, the Russian economy is not doing great, they've been largely unable to produce much in the way of high-end or high-tech goods for several years, now, and they're also running short of workers, more than 43% of industrial enterprises in the country reporting worker shortages as of July, 2023.

In parallel, more than 1000 companies have withdrawn from Russia, including their own google-equivalent, Yandex, which took a 50% hit on its already substantially depleted value just to be able to leave the country and operate elsewhere; this has given the Russian government more direct control over their regional slice of the internet, but it's also a tradeoff many companies, international and local, have decided to make, as being cut off from the rest of the world and having significant sanctions applied to their behaviors if they stick around generally isn't considered to be worth the upsides.

Also leaving Russia are its people. And while there will almost certainly be long-term consequences of those contemporary economic issues for Russia and Russians, this so-called "brain drain" could prove to be even more significant, especially when paired with the large number of deaths amongst Russia's troops, estimated to tally somewhere between 70 and 120 thousand since the full-scale, 2022-era invasion began.

Also since late-February 2022, at least 2,500 scientists have left Russia, and that's on top of the around 50,000 Russia's own Academy of Sciences estimates it has lost over the past five years—all those researchers moving to greener pastures in other countries.

An estimated 11-28% of the country's software developers have fled, and as of early 2023, it was estimated that hundreds of thousands of young people have left Russia since the invasion.

Research from within Russia that same year indicated that about 1.5 million people under the age of 35 left the Russian workforce in the year between December of 2021 and December of 2022, alone, for brain drain and other reasons, and this—combined with all the young people who have been conscripted, adding up to around 521,000 soldiers by the end of 2023, the goal being around 745,000 by the end of 2024—that's a lot of people, all from a relatively narrow age demographic, roughly 18 to 30, who are not working, are not getting a formal education, who are not dating, not home with kids or their older family members, to take care of them.

From a demographer's perspective, this is the seed-corn of a country, the next generation that will step into roles that are currently held by the adults in the room. And Russia is a country of around 144 million people, so it's not small, and these figures won't wipe them out or anything, but their population has been on the decline since the mid-1990s, and the median age in the country is already just over 39 years old.

So losing, to other countries, to the black market, maybe, or to death, disability, or the other consequences of a military conflict, a significant chunk of the younger portion of your population is not ideal, as that leaves a country with fewer people who are capable of stepping into the roles that their elders will be leaving over the next few decades, and that means fewer younger people to keep the economy ticking along, to make discoveries, to earn money and pay taxes, which over time perpetuates all kinds of negative cascades and spirals, economically, demographically, and in terms of a country's capacity to compete, globally.

One of the most long-lasting consequences of this invasion, then, could be a demographic collapse in Russia that leads to untold consequences, up to and including the eventual overthrow of a government that, no matter how cleverly it navigates this war and whatever happens next, won't be able to bring renewed equilibrium, safety, success, and flourishing back to the country, because of issues like demography that are not really salvageable once the dice are cast.

Of course, Ukraine is in an even worse state, and would be even if all the money than had been promised and implied by its wealthy western allies had arrived on time: the country is devastated, its people are almost uniformly traumatized, it's governance and infrastructure is operating only at subsistence level, and some of its towns and cities have been almost entirely leveled, no buildings left standing, completely unlivable, and not just because there's no running water or electricity or shelter—the very soil in many of these areas, some of which are vital breadbasket regions for the world, have been polluted with toxins and chemicals from the conflict, and that's when they haven't been freckled with mines.

Over the past few months, the story on the ground has remained largely the same, with Russia managing to take a few symbolic and moderately strategic cities and towns, and the front line barely moving at all in either direction.

Ukraine has been hobbled by a lack of resources and those aforementioned defense lines Russia set up, after it committed to hold still, shooting long distance stuff, and periodically flooding the zone with meat-shield, waves of soldiers, which seems to be working decently well, though with a significant loss of life as a tradeoff.

The Ukrainian leadership replaced the country's commander-in-chief in early February 2024, amidst rumors of disagreements between him in the president about how to proceed, and there's been word that the US is encouraging Ukrainian's government to settle in for the long-haul, rather than aiming for shorter-term victories and press release-worthy counterattacks, building up their in-country manufacturing capacity so they can produce their own weapons and ammo, and making it more likely that Russia will likewise be tied up indefinitely, having to invest more and more resources for every square foot it takes and occupies.

The degree to which this will work has been questioned, and Russia has shown itself to be more than capable of striking targets well beyond the front lines, so anything Ukraine builds, especially in terms of military manufacturing capacity, would likely be targeted before it could come online.

In Russia, anti-government sentiment was recently inflamed by the seeming killing of anti-Putin crusader Aleksei Navalny, who was previously reportedly poisoned by the Russian government, before returning to the country, being put in a prison camp, and then apparently killed—though the nature of his death and treatment of his body, family, and supporters after the event has left this sequence of events as much of a puzzle as the deaths of the other people who have run afoul of the Kremlin and then mysteriously died of poisons, by falling out of windows, and so on—the specifics are in question, but most experts assume these deaths were ordered by Putin or one of his people.

The degree to which this will matter, how much this renewed support of anti-Putin people and causes will impact anything in a country that's pretty well locked down in Putin's favor at this point, is a big question mark right now.

But it is a wildcard that could go on to influence this larger conflict, and the eventual state of this part of the world when it finally ends, whenever that happens to be.

Though at this point, knowing what we know now, publicly, it seems likely to persist for at least another year, and maybe a lot longer than that.

Show Notes

https://www.semafor.com/article/02/06/2024/sale-of-russias-google-yandex-tightens-moscows-grip-on-the-internet

https://www.washingtonpost.com/world/2023/02/13/russia-diaspora-war-ukraine/

https://www.themoscowtimes.com/2023/04/11/russia-lost-13m-young-workers-in-2022-research-a80784

https://archive.ph/oEs0l

https://thebarentsobserver.com/en/2024/01/brain-drain-hammering-russia-more-2500-scientists-have-already-left-disaster-experts-say

https://archive.ph/n1D8R

https://archive.ph/XXKPw

https://archive.ph/YKfDR

https://www.npr.org/2023/05/31/1176769042/russia-economy-brain-drain-oil-prices-flee-ukraine-invasion

https://www.themoscowtimes.com/2023/04/11/russia-lost-13m-young-workers-in-2022-research-a80784

https://www.worldometers.info/world-population/russia-population/

https://en.wikipedia.org/wiki/Economic_impact_of_the_Russian_invasion_of_Ukraine

https://www.reuters.com/world/india-says-it-busts-trafficking-racket-duping-people-into-fighting-russia-2024-03-08/?utm_source=substack&utm_medium=email

https://www.reuters.com/world/us-embassy-warns-imminent-extremist-attack-moscow-2024-03-08/?utm_source=substack&utm_medium=email

https://www.france24.com/en/europe/20240308-turkey-ready-host-ukraine-russia-peace-summit-erdogan-zelensky?utm_source=substack&utm_medium=email

https://www.nytimes.com/2024/03/09/world/europe/russia-ukraine-avdiivka-villages.html

https://www.nytimes.com/2024/03/10/world/europe/ukraine-women-soldiers-army.html

https://www.independent.co.uk/news/world/europe/russia-ukraine-war-putin-nato-troops-latest-b2510252.html

https://reuters.com/world/europe/pope-says-ukraine-should-have-courage-white-flag-negotiations-2024-03-09/

https://www.reuters.com/pictures/ukraines-winter-war-scenes-frozen-frontlines-2024-03-08/

https://www.wsj.com/world/russia-is-pumping-out-weaponsbut-can-it-keep-it-up-ba30bb04

https://archive.ph/T6lK8

https://en.wikipedia.org/wiki/Revolution_of_Dignity

https://en.wikipedia.org/wiki/Russo-Ukrainian_War

https://en.wikipedia.org/wiki/Timeline_of_the_Russian_invasion_of_Ukraine

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