Metallurgical plant on fire in Donetsk.
Ukraine - Russia Conflict
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Russia is killing its economy along with its people to pursue Putin's war of imperial delusion.
I do find it revelatory that there is no budget to pay the Russian troops. After all, why bother budgeting for wages they'll never live to receive?
theins.ru
Vladimir Milov
Politician, economist, social activist
When talking about the economic dimension of Putin's mobilization, most commentators focus on the catastrophic consequences for the skilled labor market and the loss of jobs by companies. This is all true: for example, back in July Putin admitted at a meeting with his ministers that a shortage of a million skilled workers is expected in the IT industry alone over the next two years, and now it is clear that this shortage will only worsen.
According to a Rosstat survey of entrepreneurs, the lack of qualified workers is one of the top 5 factors limiting production growth in the industry, and the importance of this problem in 2022 has increased. Mobilization poses the most unexpected threats, including to attempts to circumvent Western sanctions: for example, it hits small companies that specialize in complex schemes of parallel imports.
But the magnitude of the impact of mobilization on the skilled labor market remains to be seen, and so far we can only guess. But what has now become abundantly clear is that Putin will not have any sufficient budget to maintain, equip, and supply the newly mobilized troops.
This is clear from the document titled, "Basic Trends in Budgetary, Taxation, and Customs Tariff Policy for 2023-2025," which was obtained by Vedomosti. This document, for the first time, allows us to see the scale of the increase in military expenditures in connection with Putin's aggression against Ukraine. Its main conclusion is resounding: Putin will not have enough money for further financing of the war and mobilization. All of his efforts are doomed, primarily financially.
What follows from this document? That military expenditures in 2022-2024 (the government does not plan them for a later period, and we want to believe that another government will decide this question in the future) are planned to increase from the previously approved about 3 trillion rubles per year to about 5 trillion (a total of 3.4 trillion for the three years from 2022 to 2024 inclusive).
This is absolutely insufficient even to finance the current war, not to mention the expenditures for the additionally mobilized manpower of several hundred thousand people. We don't know how many Russians will be drafted in the end by mobilization - maybe the declared 300,000, maybe more or less. But relatively speaking, this is a force comparable to the current number of contract servicemen announced by Shoigu (the leadership of the Defense Ministry talked about 400,000 contract servicemen).
To put it simply, in the earlier approved peacetime military budget, of the 3.5 trillion rubles spent on maintenance of the army (salaries and supplies) approximately 1.2-1.5 trillion rubles (the rest was spent on military industrial complex and armament procurement, mainly through "closed" articles of the military budget). This is already very small for the second largest army in the world. For example, in December, at the board meeting of the Defense Ministry, Putin admitted that the average salary of a lieutenant was only 81,000 rubles.
It is clear that under conditions of such a large-scale war the expenses on salaries including combat pay must increase dramatically. According to my assessment, in these items alone the cost of maintenance of the troops currently stationed in Ukraine should have been increased by at least 3-4 trillion rubles a year, but not by the planned 1-2 trillion rubles in any case.
However, in addition to the active troops Putin wants to mobilize a second army, comparable in size, officially equating the newly mobilized with contract servicemen. It is obvious that even an increase in the military budget to 5 trillion rubles a year will not be enough for these purposes. Apparently, Putin and the Ministry of Finance are preparing for mass "cheating" of the military of their salaries (show these figures to your relatives and friends of the military and warn them about it) - there is no other explanation (in the case of deaths, the families will still have to pay large compensation).
Everything is very bad with the supply of the army in general. In the current military budget for these purposes only 436 billion rubles are allocated for the entire army (data is given in the materials for the approved federal budget of December 2021). We see this miserable "supply" on the battlefield in all its glory. For Putin to establish a normal supply of the army, he would have to allocate funds for this purpose of a completely different order: several trillion rubles per year. No one is going to do that. Apparently, there is a calculation that the military will make food and uniforms "by themselves".
Besides the fact that it is not possible to fit into the newly proposed 4.5-5 trillion rubles a year to finance the newly recruited troops and their supplies, there is a more serious problem. In the previous years, about two-thirds of the military budget was spent not on the army itself but on the production and purchase of weapons, the military-industrial complex. Military expenditures were mostly secret (the open one third of the budget was used to maintain the army itself, which appeared to be a sort of unloved Cinderella in comparison with the main recipient of military allocations, the military-industrial complex, favored by Putin).
Although we do not know exactly how the articles of the increased military budget will be distributed, we can say with certainty that amid the enormous losses of arms in Ukraine and the depletion of ammunition reserves, the share of spending on the MIC in the military budget for 2022-2024 will certainly not decrease, and may even increase. Therefore, no special additional money will most likely go to the army itself.
It turns out that nobody is going to finance or supply this enormous newly-recruited 300,000 (or whatever) force. Leaving aside other aspects, we shall dwell only on one conclusion - the army which is not paid for and not supplied with any supplies will not be able to fight. The fact is that the newly mobilized troops are literally thrown to their certain death, because not enough money has been allocated for their equipment and supplies. Given the current scale of the war, one would expect Putin to increase the military budget to, say, 9-10 trillion rubles a year - but nothing of the kind is observed.
You may ask: is it possible that there are some secret expenditures that we don't know about? No, there are not. The figures for total military expenditures given above include secret items and are reflected in the generalized figures of the Ministry of Finance. If there were anything else, it could be calculated. Conclusions about why Putin throws the newly mobilized into battle without allocating funds for such basic things as salaries and army supplies are left for you to draw-it seems we are dealing with one of the most glaring examples of a complete breakdown of the Russian system of government, which is generally unable to adequately assess reality. The closer is Putin's catastrophic defeat.
I do find it revelatory that there is no budget to pay the Russian troops. After all, why bother budgeting for wages they'll never live to receive?
Денег нет, но вы сражайтесь. Владимир Милов о том, как у Путина кончаются деньги на войну
Говоря об экономическом измерении путинской мобилизации, большинство комментаторов концентрируются на катастрофических последствиях для рынка квалифицированного труда и потерях предприятиями рабочих рук
theins.ru
No money, but you fight. Vladimir Milov on how Putin is running out of money for the war
October 3, 2022.Vladimir Milov
Politician, economist, social activist
When talking about the economic dimension of Putin's mobilization, most commentators focus on the catastrophic consequences for the skilled labor market and the loss of jobs by companies. This is all true: for example, back in July Putin admitted at a meeting with his ministers that a shortage of a million skilled workers is expected in the IT industry alone over the next two years, and now it is clear that this shortage will only worsen.
According to a Rosstat survey of entrepreneurs, the lack of qualified workers is one of the top 5 factors limiting production growth in the industry, and the importance of this problem in 2022 has increased. Mobilization poses the most unexpected threats, including to attempts to circumvent Western sanctions: for example, it hits small companies that specialize in complex schemes of parallel imports.
But the magnitude of the impact of mobilization on the skilled labor market remains to be seen, and so far we can only guess. But what has now become abundantly clear is that Putin will not have any sufficient budget to maintain, equip, and supply the newly mobilized troops.
This is clear from the document titled, "Basic Trends in Budgetary, Taxation, and Customs Tariff Policy for 2023-2025," which was obtained by Vedomosti. This document, for the first time, allows us to see the scale of the increase in military expenditures in connection with Putin's aggression against Ukraine. Its main conclusion is resounding: Putin will not have enough money for further financing of the war and mobilization. All of his efforts are doomed, primarily financially.
Putin won't have enough money to continue funding the war and mobilization
What follows from this document? That military expenditures in 2022-2024 (the government does not plan them for a later period, and we want to believe that another government will decide this question in the future) are planned to increase from the previously approved about 3 trillion rubles per year to about 5 trillion (a total of 3.4 trillion for the three years from 2022 to 2024 inclusive).
This is absolutely insufficient even to finance the current war, not to mention the expenditures for the additionally mobilized manpower of several hundred thousand people. We don't know how many Russians will be drafted in the end by mobilization - maybe the declared 300,000, maybe more or less. But relatively speaking, this is a force comparable to the current number of contract servicemen announced by Shoigu (the leadership of the Defense Ministry talked about 400,000 contract servicemen).
To put it simply, in the earlier approved peacetime military budget, of the 3.5 trillion rubles spent on maintenance of the army (salaries and supplies) approximately 1.2-1.5 trillion rubles (the rest was spent on military industrial complex and armament procurement, mainly through "closed" articles of the military budget). This is already very small for the second largest army in the world. For example, in December, at the board meeting of the Defense Ministry, Putin admitted that the average salary of a lieutenant was only 81,000 rubles.
It is clear that under conditions of such a large-scale war the expenses on salaries including combat pay must increase dramatically. According to my assessment, in these items alone the cost of maintenance of the troops currently stationed in Ukraine should have been increased by at least 3-4 trillion rubles a year, but not by the planned 1-2 trillion rubles in any case.
In the conditions of a large-scale war, the expenditures on salaries should rise sharply
However, in addition to the active troops Putin wants to mobilize a second army, comparable in size, officially equating the newly mobilized with contract servicemen. It is obvious that even an increase in the military budget to 5 trillion rubles a year will not be enough for these purposes. Apparently, Putin and the Ministry of Finance are preparing for mass "cheating" of the military of their salaries (show these figures to your relatives and friends of the military and warn them about it) - there is no other explanation (in the case of deaths, the families will still have to pay large compensation).
Everything is very bad with the supply of the army in general. In the current military budget for these purposes only 436 billion rubles are allocated for the entire army (data is given in the materials for the approved federal budget of December 2021). We see this miserable "supply" on the battlefield in all its glory. For Putin to establish a normal supply of the army, he would have to allocate funds for this purpose of a completely different order: several trillion rubles per year. No one is going to do that. Apparently, there is a calculation that the military will make food and uniforms "by themselves".
Miserable "supply" seen on the battlefield in all its glory
Besides the fact that it is not possible to fit into the newly proposed 4.5-5 trillion rubles a year to finance the newly recruited troops and their supplies, there is a more serious problem. In the previous years, about two-thirds of the military budget was spent not on the army itself but on the production and purchase of weapons, the military-industrial complex. Military expenditures were mostly secret (the open one third of the budget was used to maintain the army itself, which appeared to be a sort of unloved Cinderella in comparison with the main recipient of military allocations, the military-industrial complex, favored by Putin).
Although we do not know exactly how the articles of the increased military budget will be distributed, we can say with certainty that amid the enormous losses of arms in Ukraine and the depletion of ammunition reserves, the share of spending on the MIC in the military budget for 2022-2024 will certainly not decrease, and may even increase. Therefore, no special additional money will most likely go to the army itself.
The army will not get any special additional money.
It turns out that nobody is going to finance or supply this enormous newly-recruited 300,000 (or whatever) force. Leaving aside other aspects, we shall dwell only on one conclusion - the army which is not paid for and not supplied with any supplies will not be able to fight. The fact is that the newly mobilized troops are literally thrown to their certain death, because not enough money has been allocated for their equipment and supplies. Given the current scale of the war, one would expect Putin to increase the military budget to, say, 9-10 trillion rubles a year - but nothing of the kind is observed.
You may ask: is it possible that there are some secret expenditures that we don't know about? No, there are not. The figures for total military expenditures given above include secret items and are reflected in the generalized figures of the Ministry of Finance. If there were anything else, it could be calculated. Conclusions about why Putin throws the newly mobilized into battle without allocating funds for such basic things as salaries and army supplies are left for you to draw-it seems we are dealing with one of the most glaring examples of a complete breakdown of the Russian system of government, which is generally unable to adequately assess reality. The closer is Putin's catastrophic defeat.
Russia is killing its economy along with its people to pursue Putin's war of imperial delusion.
I do find it revelatory that there is no budget to pay the Russian troops. After all, why bother budgeting for wages they'll never live to receive?
Денег нет, но вы сражайтесь. Владимир Милов о том, как у Путина кончаются деньги на войну
Говоря об экономическом измерении путинской мобилизации, большинство комментаторов концентрируются на катастрофических последствиях для рынка квалифицированного труда и потерях предприятиями рабочих рук
No money, but you fight. Vladimir Milov on how Putin is running out of money for the war
October 3, 2022.
Vladimir Milov
Politician, economist, social activist
When talking about the economic dimension of Putin's mobilization, most commentators focus on the catastrophic consequences for the skilled labor market and the loss of jobs by companies. This is all true: for example, back in July Putin admitted at a meeting with his ministers that a shortage of a million skilled workers is expected in the IT industry alone over the next two years, and now it is clear that this shortage will only worsen.
According to a Rosstat survey of entrepreneurs, the lack of qualified workers is one of the top 5 factors limiting production growth in the industry, and the importance of this problem in 2022 has increased. Mobilization poses the most unexpected threats, including to attempts to circumvent Western sanctions: for example, it hits small companies that specialize in complex schemes of parallel imports.
But the magnitude of the impact of mobilization on the skilled labor market remains to be seen, and so far we can only guess. But what has now become abundantly clear is that Putin will not have any sufficient budget to maintain, equip, and supply the newly mobilized troops.
This is clear from the document titled, "Basic Trends in Budgetary, Taxation, and Customs Tariff Policy for 2023-2025," which was obtained by Vedomosti. This document, for the first time, allows us to see the scale of the increase in military expenditures in connection with Putin's aggression against Ukraine. Its main conclusion is resounding: Putin will not have enough money for further financing of the war and mobilization. All of his efforts are doomed, primarily financially.
Putin won't have enough money to continue funding the war and mobilization
What follows from this document? That military expenditures in 2022-2024 (the government does not plan them for a later period, and we want to believe that another government will decide this question in the future) are planned to increase from the previously approved about 3 trillion rubles per year to about 5 trillion (a total of 3.4 trillion for the three years from 2022 to 2024 inclusive).
This is absolutely insufficient even to finance the current war, not to mention the expenditures for the additionally mobilized manpower of several hundred thousand people. We don't know how many Russians will be drafted in the end by mobilization - maybe the declared 300,000, maybe more or less. But relatively speaking, this is a force comparable to the current number of contract servicemen announced by Shoigu (the leadership of the Defense Ministry talked about 400,000 contract servicemen).
To put it simply, in the earlier approved peacetime military budget, of the 3.5 trillion rubles spent on maintenance of the army (salaries and supplies) approximately 1.2-1.5 trillion rubles (the rest was spent on military industrial complex and armament procurement, mainly through "closed" articles of the military budget). This is already very small for the second largest army in the world. For example, in December, at the board meeting of the Defense Ministry, Putin admitted that the average salary of a lieutenant was only 81,000 rubles.
It is clear that under conditions of such a large-scale war the expenses on salaries including combat pay must increase dramatically. According to my assessment, in these items alone the cost of maintenance of the troops currently stationed in Ukraine should have been increased by at least 3-4 trillion rubles a year, but not by the planned 1-2 trillion rubles in any case.
In the conditions of a large-scale war, the expenditures on salaries should rise sharply
However, in addition to the active troops Putin wants to mobilize a second army, comparable in size, officially equating the newly mobilized with contract servicemen. It is obvious that even an increase in the military budget to 5 trillion rubles a year will not be enough for these purposes. Apparently, Putin and the Ministry of Finance are preparing for mass "cheating" of the military of their salaries (show these figures to your relatives and friends of the military and warn them about it) - there is no other explanation (in the case of deaths, the families will still have to pay large compensation).
Everything is very bad with the supply of the army in general. In the current military budget for these purposes only 436 billion rubles are allocated for the entire army (data is given in the materials for the approved federal budget of December 2021). We see this miserable "supply" on the battlefield in all its glory. For Putin to establish a normal supply of the army, he would have to allocate funds for this purpose of a completely different order: several trillion rubles per year. No one is going to do that. Apparently, there is a calculation that the military will make food and uniforms "by themselves".
Miserable "supply" seen on the battlefield in all its glory
Besides the fact that it is not possible to fit into the newly proposed 4.5-5 trillion rubles a year to finance the newly recruited troops and their supplies, there is a more serious problem. In the previous years, about two-thirds of the military budget was spent not on the army itself but on the production and purchase of weapons, the military-industrial complex. Military expenditures were mostly secret (the open one third of the budget was used to maintain the army itself, which appeared to be a sort of unloved Cinderella in comparison with the main recipient of military allocations, the military-industrial complex, favored by Putin).
Although we do not know exactly how the articles of the increased military budget will be distributed, we can say with certainty that amid the enormous losses of arms in Ukraine and the depletion of ammunition reserves, the share of spending on the MIC in the military budget for 2022-2024 will certainly not decrease, and may even increase. Therefore, no special additional money will most likely go to the army itself.
The army will not get any special additional money.
It turns out that nobody is going to finance or supply this enormous newly-recruited 300,000 (or whatever) force. Leaving aside other aspects, we shall dwell only on one conclusion - the army which is not paid for and not supplied with any supplies will not be able to fight. The fact is that the newly mobilized troops are literally thrown to their certain death, because not enough money has been allocated for their equipment and supplies. Given the current scale of the war, one would expect Putin to increase the military budget to, say, 9-10 trillion rubles a year - but nothing of the kind is observed.
You may ask: is it possible that there are some secret expenditures that we don't know about? No, there are not. The figures for total military expenditures given above include secret items and are reflected in the generalized figures of the Ministry of Finance. If there were anything else, it could be calculated. Conclusions about why Putin throws the newly mobilized into battle without allocating funds for such basic things as salaries and army supplies are left for you to draw-it seems we are dealing with one of the most glaring examples of a complete breakdown of the Russian system of government, which is generally unable to adequately assess reality. The closer is Putin's catastrophic defeat.
More silly propaganda. At lieutenant wages, 300000 soldiers will need 288B rubles per year in terms of salary alone. That's not a lot. If they don't pay their soldiers, that's a different story, but that's unrealistic, even the SU paid their soldiers. Russia has the money to sustain such salaries indefinitely. Plus most of these guys will go home once the war is over anyway, either in a body bag, stretcher or their own two feet.
Dunno why they are so worried about IT workers. The market will balance itself after the war, as people return and immigrants are brought in from other countries, alongside pay hikes.
Under normal circumstances it can, but these are not normal circumstances. Wars cost money, even small ones, and this is not a small one. Russia is spending shed-loads on cruise and ballistic missiles. Even the cost of Shahed drones rack up when used in large enough quantities. Add that to a $7bn bridge, a $1bn cruiser, dozens of fighters, several other boats, an oil rig, many air defence systems, two Tu-22M3s and over 10,000 ended ground vehicles of various description and the money has to come from somewhere. Oil is now at $84, so that isn't helping Putin any. The costs mentioned are large items, beyond that you have the cost of day-to-day operations, fuel, ammunitions, food. And if we base who is winning on the direction the front line is moving in, Ukraine has been winning since the end of August. Russia is not regarded as a stable market by international investors, the interest rates they need to offer are far higher and currently their GDP is going down while their deficit is going up and the workforce is leaving. As that happens interest rates will need to rise even further to prevent inflation. They will reach bankruptcy well before they reach 100% debt.
The market will balance itself indeed, and it will balance itself against Russia. Why the f*ck would IT workers and programmers live in a retro-Stalinist sh*thole getting paid peanuts, when they can live free and earn way more elsewhere, without any fear of being beaten into fighting a war they don't believe in? Russia will need to build another wall to keep people in after this catastrof*ck.
Wack-a-mole 2022.
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As long as they are selling oil and gas to someone, they will make money.
People from outside advanced economies can't easily get into advanced countries, they have to go through a quota system, so the next in line is Eastern Europe. People flock to where the money is.
Some IT workers left Russia because some of their employers left. It's obvious that others will fill that hole, especially with the Russian govt providing more sops to bring back business. Draft-dodging as well.