In my latest analysis, I said: "Russian President Putin acts in the only way he can: On economic issues, he used to promise more money, believing that the problem is solved once the money is wired; and in the military field, he still thinks that more soldiers can do what fewer cannot, completely ignoring the logic of contemporary wars." I believed that the Kremlin would limit its efforts to beefing up the army by 100,000, to 200,000 servicemen, which would be enlisted in remote regions, or recruited from prisons or from available mercenaries. Quite the contrary happened.
Witnessing an active Ukrainian advance, Putin ordered the occupied regions to be formally incorporated into Russia through "referendums" held early this week, to start a full-scale mobilization of the reservists aimed at increasing his army by 1,000,000 to 1,200,000 people, declared a state of emergency, and banned adult men from leaving the country. In one week, we saw "another Russia." A brutal police state is preparing for a "total war" on its neighbor and seriously threatening the world with its nuclear weapons.
The Local Authorities Started A Competition To Mobilize More People
The change has been dramatic. The Kremlin tried to insist that nothing serious is happening. Putin said that "only" 300,000 reservists are to be called into duty: Around 3,000 to 4,000 from each region, or 1.5 percent of all Russians, officially counted as reservists, with the age limit observed and professional capacities respected. However, almost immediately, things took another turn. Local authorities started a competition to mobilize more people, and we now know how a retired 59-year-old doctor from the Sverdlovsk region who is almost blind and suffering from skin cancer was enlisted as a lieutenant, and how in a Siberian village the authorities coming from Kemerovo, the regional center, took all the men between 18 and 55, to the military training center. The police started approaching people in the Moscow underground, to hunt them at supermarkets and nightclubs, and search passenger vehicles and traffic police checkpoints. The protests that erupted in large cities were crushed both the day the mobilization was announced and the following weekend, with more than 1,300 people arrested at each event; many of them were dispatched from the police stations directly to military training facilities after two or three days of arrest.
Government action produced widespread resistance. While in small towns all over Russia, hundreds of people of various ages submitted themselves to the authorities and disappeared from their relatives' eyes, presumably making their way to the frontline, in Moscow, Saint Petersburg, and other major cities, the citizens did their best to escape. In fact, tens of thousands of people left their homes and relocated to apartments or dachas (i.e., country houses), hoping to not be found. After the news that Russian men, who would be drafted into the armed forces, would receive a notification in their Gosuslugi personal account – the Public Services Portal of the Russian Federation – many disabled their profiles. Thousands abandoned their workplaces, since the military commissioners' representatives started to distribute mobilization requests even there, while others rushed to the airports and border crossings with other countries.
The airfare for a one-way ticket to Yerevan, Armenia, or Bishkek, Kyrgyzstan, skyrocketed to several thousand dollars, and over the weekend from 2,000 to 4,000 cars were blocked in queues at almost every border crossing with Georgia, Kazakhstan, and even Mongolia. The Finnish border guards registered up to 20,000 entries in the past week, and there is good reason to think that a higher number arrived in Georgia and Kazakhstan. It is worth noting that the Baltic states closed their borders to Russian citizens several days before the mobilization was announced, while Belarus started to search for Russian fugitives, presumably to send them back to be drafted into the Russian Army). On September 27, the borders were closed to almost any men ages from 17 to 60, and elements of martial law were introduced.
The Number Of Men On The Streets Of Moscow Has Decreased
In a single week, the economic and social life in the country has become largely disorganized. Not less than 100,000 people have left Russia, and there is good reason to believe that their wives may soon try to join them abroad. The number of men on the streets of Moscow has decreased twofold or even threefold. In provincial centers many enterprises have become immobilized as crucially needed workers appeared to be on the run (as happened in Saint Petersburg) or taken by the military (as in the timber industry in Siberia and Karelia). The government declared that mobilization will not affect students, infrastructure companies' employees, and journalists, but few believe such promises, since the civil aviation pilots got hundreds of mobilization orders, as fighter jets and helicopters are downed in Ukraine every day (on September 25, four Russian military aircraft were shot down).
The interesting thing is that the Russian economy may easily afford to mobilize 1,000,000 and even 2,000,000 people to the front: there are almost 3,100,000 jobless people in the country, 700,000 (!) private guards, 100,000 drivers of personal cars used by bureaucrats and wealthy citizens, 78,000 deputies in the parliaments and municipalities of the Russian republics with no real power, etc. Moreover, since productivity in the national economy is low, the large state-controlled companies employ many workers that they simply do not need (e.g., the Russian Railways, which is producing seven times less revenue than EU rail companies altogether, has more personnel than all those combined). So, I would say that if someone carefully analyzes where the new servicemen could come from, the economy might be left almost untouched – but since the mobilization has started to be conducted by brute force and become completely unpredictable, the economic effects seem to be disastrous.
The Economy May Lose From 3,000,000 to 5,000,000 Employees
First, I would expect the economy may lose from 3,000,000 to 5,000,000 employees, of 5-7 percent of the active workforce, with 1,000,000 called to the army, 400,000 leaving the country (the number had already exceeded 250,000 by Saturday evening) and at least 2,000,000 on the run domestically with their chances for regular work being close to zero. The effect will be different and similar at the same time both in provincial towns and capital cities. In the provinces, the share of the mobilized people will be two to five times larger than in either Moscow or Saint Petersburg, because the Kremlin fears the active citizens living in metropolises – so in rural areas and small towns, all the small and medium size businesses will be gravely affected, as they cannot survive the loss of 20 to 25 percent of their workforce. In the capitals, the direct loss will be much smaller, also because President Putin ordered that the bureaucrats and their families should not be affected at all, but many people will try to escape from mobilization and so they will simply abandon their places of work, hoping to hide for several months at least. The businesses in the metropolitan areas are much more effective and competitive, so even small losses of the workforce will result in serious disruptions there. I expect therefore the decline of the GDP will reach 6-7 percent in the Q4 compared to Q3 and grow to around seven percent year on year for the entire 2022, up from the current estimate of 4.5 percent. The downward trend will continue well into 2023.
Second, the government will seriously increase spending both on the military and on the police and secret services. With the army in Ukraine, even poorly trained, presumably tripling in size, the spending there may well reach $700,000,000 per day, up from $450,000,000 to $500,000,000 estimated for April and May. The salaries of the military, as was recently announced, are again on the rise, increasing faster than those of the bureaucracy. Moreover, the government announced that those mobilized will earn up to 300,000 rubles ($5,000) as a one-time payment as they join the army, so this may become another reason for increasing federal spending. The continuation of the war will create a huge demand for armaments and ammunition currently in short supply, so the Kremlin will be ready to spend any sum needed for securing the significant increase in military production. As a result of the recent decrees and ordinances, the Russian economy is turning into a war economy, which means that it will not be based on efficiency and that an incredible amount of money will be spent virtually for nothing instead of being invested or used for the benefit of the people.
Third, the transition to a war economy will dramatically increase the scale of corruption (there is already a joke in Russia that the military commissioners will become the newest group in the Forbes' list of billionaires) in the entire public service system, and this will seriously erase the vestiges of private business initiative. Moreover, the war economy is very expensive – and there is no coincidence that, in parallel with the annexation of the occupied territories and the announcement of closing the borders, the Kremlin became very concerned with tax increases, which will affect basic industries (the government intends to collect 1.4 trillion rubles next year from additional taxes and export duties on energy resources alone). and social security payments that are expected to increase in early 2023 (it may reach 15% compared to current levels and is now "explained" by the effect of merging of the State Pension Fund and the Social Insurance Fund into one body). There is no doubt that in the new situation, each ruble of collected taxes will turn into 2-4 rubles of losses for the country's GDP, and the economy will rapidly turn grey – both because of "disappearing" citizens and because of attempts to fool a state that becomes more and more aggressive in business taxation.
Women Are The Main Face Of The Demonstrations
All the three most prominent events of the last days destroyed the "Putin consensus" that for years has been the backbone of Russian political and economic stability. At least four important points should be mentioned here.
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First, the overall atmosphere of fear, which has surrounded protest activity in recent years, has started to evaporate. For the first time ever, the people feel that they are not calling for "abstract" values. I would expect that, as the fighting in Ukraine intensifies and the corpses start to flow back home in rising numbers, the people will realize the real consequences of this war. For many, the perspective of going to prison for two to ten years is still better than being sent to fight in Ukraine. At the same time, the people will realize that the government simply cannot send a million people to jail. Hence, the people will acquire a new boldness that can change Russia's protest movement.
Second, the mobilization will create a direct and recognizable link between the deepening economic crisis and the government's actions – the difficulties can no longer be explained by Western sanctions and other external circumstances. If a hundred people from a medium-sized city are mobilized, causing half of its businesses to stop, no one will be able to convince the locals that it was not the Kremlin that ordered this. For years, the business world has been accustomed to dealing with increased taxes, tightening regulation, and export and import restrictions – but they were not prepared for a manhunt on their employees. I think that the consequences of this development are underestimated, but they will emerge in the coming weeks, seriously changing the economic environment and the mood of everybody in the business sector.
Third, there is another factor that never existed in contemporary Russia: Women are the main face of the demonstrations. Statistically, Russian men have health issues, live 10 years less than women on average, and often resort to domestic violence, which affects a quarter of Russian families. Hence, the women instinctively revolt against the government taking away the most healthy and responsible part of the male population. It is clearly visible that the larger part of the protesters – from the streets of Moscow to the villages of Dagestan – are women, young and old, who never demonstrated before with such a determination. I would say this represents a dramatic shift in Russian protests, and it may have a crucial impact in the months to come.
Fourth, but by no means the least important factor, comes the regional composition of the protests. For years, the Kremlin relied on national republics, ruled by the local elites, as if they were medieval monarchies or countries (a special term, "electoral sultanate," was coined for these entities). As most of these republics (with Tatarstan and Bashkortostan being rare exceptions) are poor, they have been a source of many conscripts and professional soldiers for the Russian Army. Hence, the Kremlin believed it would be an easy task to mobilize the locals to the war – but it suddenly appeared that they believe that this is the Russians' war, not theirs. For example, in Dagestan, clashes with police and detentions erupted at a rally against mobilization. The most notable pressure on the authorities came from the Yakutia and Buryat Republics, where the local governments had promised to call back some of the already mobilized reservists, and from Dagestan, where the people violently clashed with the police. The rise of national identity is certainly something that the Kremlin did not wish to encounter during this war.
Hence, to conclude, I would reiterate that Russia has dramatically changed since the mobilization was announced around just ten days ago. One may already see "another Russia" emerging, without seeing any help from the Russian liberal opposition that has instead for so long been talking of a beautiful Russia of tomorrow...
*Dr. Vladislav Inozemtsev is MEMRI Russian Media Studies Project Special Advisor.
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