This year, May 9, known in Russia as "Victory Day" in remembrance of the Soviet Union's role in the defeat of Nazi Germany, marked two and a half months of Russian President Vladimir Putin's war against Ukraine. This war, which Moscow describes somehow as the continuation of the Great Patriotic War, hoping to reach a new Yalta Conference, is seen by the Kremlin as a very long enterprise. Since early March, when Russian forces captured a significant part of Ukrainian territory, approached Kyiv, cut a "land corridor" to occupied Crimea and besieged Mariupol, nothing has changed in their favor. Moreover, Russia retreated from northern Ukraine, eased the siege of Kharkov, lost around 20,000 troops, hundreds of tanks, and the Black Sea Fleet's flagship. These days, Russian forces are waging war predominantly with Ukrainian civilians and engage in almost unimportant encounters on different parts of the extended frontline.
Many sources (Russian, Ukrainian, and Western alike) predicted that on Victory Day, President Putin would either announce a kind of a victory, which seemed possible even though there were few reasons to celebrate, or declare a formal "war" on Ukraine instead of the "special operation" he announced on February 24. That would have allowed him to call for a general mobilization and impose martial law in Russia. Yet, nothing of the kind happened. President Putin's speech was a rather meaningless and confused collection of propagandistic slogans stuffed with old Soviet names for Russian cities (he talked about "Leningrad" and "Stalingrad" and used the word "comrades" not less than ten times). However, taking all the latest developments into account, it is possible to outline the most important trends that will dominate Russian politics and the Russian economy at least till the end of this year.
Speech at the military parade to mark the 77th anniversary of Victory in the Great Patriotic War, on May 9, 2022. (Source: Kremlin.ru)
1. Russia's Military Difficulties
First and foremost, Russia's serious military difficulties now loom large. The Kremlin already deployed to Ukraine from 75 to 100 percent of its combat-ready forces, and it seemingly has no reserves, as Russia is forced to cut the number of its troops in Syria and relocate them to Ukraine. In 2008, the minimum length of mandatory military service for Russians in the Russian Army was reduced from two years to one; today Moscow is considering bringing it back up to two. Furthermore, military demobilization may be delayed – such a move will not only be criticized but would be considered unlawful unless the Kremlin introduces martial law. It is also worth noting that this spring, 134,500 Russian citizens were sent to military service, which is fewer than were sent in 2021.
Hence, Russia may have no means of increasing dramatically its military pressure on Ukraine. Meanwhile, the losses are mounting, and inside Russia the attitude toward the war is slowly changing – more and more servicemen have declined to be sent to Ukraine, and several military recruiting centers have been set on fire across the country. Putin's empty May 9 speech reflected this trend. The Russian leadership presumably believes that any mass mobilization may destroy Putin's approval by the people. Consequently, this means that under the current framework the war cannot be waged with the same intensity with which it began.
1.1 United States' Help To Ukraine
An important component of Russia's slow demise is the strengthening of the Ukrainian army, which the United States strongly financially backs. In recent weeks, Washington took several bold steps that culminated in U.S. President Joe Biden signing into law a lend-lease act that can speed up the process of sending military aid to Ukraine.
It is worth noting that the United States alone provided, or committed to providing, Ukraine aid and loans surpassing $50 billion. The EU nations followed suit helping Ukraine with their rather limited armament supplies, but impressive humanitarian assistance. With around 20 U.S. military transport aircrafts landing daily on Poland's Rzeszow airfield loaded with state-of-the-art weapons, Moscow has fewer chances for an effective military advance, especially as all experts mention the shortage of Russia's ammunition.
Time is running out for a new Russian offensive, and the Ukrainian army will try to get the advantage and move forward. Ukraine must act swiftly in the coming days, as the people's morale is high, and every week of standstill deteriorates Ukraine's economic position and may causes thousands of civilian deaths. If attacked with advanced weapons systems, Russia has little to respond with, except for some political demarches.
1.2 Referendums In Donetsk, Luhansk, And Kherson
A political demarche that Russia may launch is to organize referendums in Donetsk, in Luhansk, and in the newly occupied Kherson regions in order to annex these areas to the Russian Federation. This move could be extremely probable since it would make any military Ukrainian advance into these territories an "aggression against the Russian Federation." According to the "Fundamentals of the State Policy of the Russian Federation in the Field of Nuclear Deterrence," adopted by Putin's decree on June 2, 2020, if the very existence of the state is put under threat, even with conventional weapons, Russia can resort to the use of its nuclear weapons.
Though annexing new territories to Russia may be considered a military success, it will not contribute to Putin's popularity among his supporters, who expect Russia to destroy the Ukrainian state. Yet, in these two and a half months of war, Russia showed that it can hardly win against Ukraine.
2. Russia's International Positioning
The second very important point is the international positioning of the Russian Federation. In early May, the G-7 leaders voiced that their main goal is "not allowing Putin to win this war." Consequently, Russia now faces resistance from the entire Western world.
In fact, the European Union is expanding its sanctions measures and most probably will introduce quite soon its new sanctions package targeting Russian oil and gas while two U.S. Senators announced that they want to introduce a resolution to designate Russia as a state sponsor of terrorism – I believe that this step should have been taken at least several years ago. Furthermore, Finland and Sweden want to end their decades of neutrality and join NATO (I suppose that their membership may happen by the end of the year). Russia is now treated as an unpredictable, dangerous power that deserves not so much negotiations, but just avoidance.
2.1. Sanctions Targeting Russians
The most relevant point about sanctions against Russia is that they are starting to target all Russians. The European authorities have actually decided to ban Russian citizens from acquiring new real estate in EU countries. According to the most common estimates, Russians possess at least 1.5 million houses and apartments in Europe. I would predict that the next step taken against Russians will be even more radical. For example, Russian citizens may not be able to request visas and their residence permits issued for a prolonged stay in Europe might be revoked. Russians will be unwelcome almost everywhere, and if this happens, it might become an important way to pressure the Russian authorities.
2.2. UN To Set Up An Investigation Into Russia's War Crimes
Moreover, in recent days, the idea of charging the Russian leadership with war crimes allegations gained new ground. The parliaments of several EU nations, most notably of Lithuania and Czech Republic, have already proclaimed that the Russian "special military operation" in Ukraine "bear the hallmarks of genocide" and designated Russia as a terrorist state.
The UN Human Rights Council also decided to start a formal investigation into war crimes committed by the Russian occupation forces in Ukraine. Hence, I would argue that by the end of the year a special international tribunal for Russia's crimes in Ukraine will be established. Most probably, international arrest warrants will be issued for Putin and several dozen of his military commanders. Russia is turning into a global outcast without any chance of stopping these moves against the country.
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3. The Russian Economy's Weakness
The third crucial point is the weakness of the Russian economy. During the first two months of war, the Russian economy remained quite well, taking into consideration a successful repel of the attack on the ruble, caused by the arrest of the Central Bank's reserves and the overall economic uncertainty. The ruble, which fell to an exchange rate of 130-140 to the dollar, recovered swiftly and in recent weeks has been trading higher than before the start of the war, becoming the most appreciated currency in the world in 2022.
The country successfully avoided its sovereign default, which has been called "inevitable" by all international rating agencies and financial consultancies and which, supposedly, Russia will not allow in the coming months. Furthermore, the initial price hikes have not disturbed people too much, as those most in need received a pensions increase of 8.6 percent beginning on April 1, and were promised additional benefits later in 2022. The Western companies' exodus (as of May 12, up to 800 international corporations terminated or somewhat reduced their business in Russia) also was not fully felt by the economy – so its overall performance could be called tolerable, if not satisfactory. It also seemed that the oil and gas revenues for the first quarter beat expectations due to the energy price increases.
3.1. Russia's GDP Decline
However, already in April many disturbing signals started to emerge, pointing to a full collapse of the import substitution strategy, which Russia has been championing since 2014. Almost every day, even the loyal Russian press reported that Russia has failed to replace the supply of imported products with domestic production, in many cases due to massive corruption.
Bloomberg also reported that Russia's GDP is likely "to shrink as much as 12% this year," contrary to the 8-9 percent the governmental services predicted in March. This may indicate that there is no more hope for a swift recovery of the Russian economy in 2023 (the May 11, 2022 report by Russia's Central Bank states that the economy "will adjust to the sanctions" by mid-2023), so the decline in GDP figures may continue in 2023, and quite probable in 2024 as well.
3.2. Russia's Shrinking Availability Of Necessary Goods
The major issue for the West, if one looks at both the U.S. and European strategies for countering Russia through sanctions, is to cut Moscow off from its financial flows. This might be achieved by terminating business with Russian banks in the dollar zone, cutting them from the SWIFT clearing system, and undermining the main sources of Russia's export revenues (as mentioned earlier, the EU is coming closer to introducing a ban on Russian oil and natural gas).
Yet, from the Russian point of view, the most important challenge for its economy is not the deficit of funds (Russia has huge internal reserves, its public debt is one of the smallest in the world if compared to its GDP, and the Central Bank does almost nothing to inject additional liquidity into the financial sector), but rather the shrinking availability of necessary goods, first of all components for industrial production and hi-tech equipment for various industries. It is worth noting that the tech companies of China, which is Moscow's long-time backer, are gradually shutting down operations in Russia without official announcements due to sanctions from the United States. In March, the Chinese exports of notebook computers to Russia declined by 40 percent, of smartphones by 66 percent, and of telecommunication equipment by 98 percent.
Maybe not now, but by early autumn, Russia will fully experience the effect of Western sanctions, and the 2020s might become a decade of decline, notwithstanding the direction the war in Ukraine takes. The fact that more and more official statistics are being classified proves that the overall perspectives are becoming dire.
May 9 has not become Russia's new Victory Day. It seems instead that the Kremlin is planning to "routinize" the war and make it a long, if not an endless, process. This may help Putin keep control over Russian society, to bite even deeper into Ukraine's territory, and to annex new territories to Russia. Yet, 2022 is not 2014, and the Russian army is capable of neither advancing nor standing against Ukraine, given the number of Western supplies that Kyiv continues to receive. The high command in Moscow seemingly wants to continue bombing Ukrainian cities and infrastructure in the hope that the price of war will become too high for their opponents to bear.
Putin seems unable to solve "the Ukrainian problem" as he wished, but it still has a lot of "low intensity" options that can be confronted only if Ukraine and its Western allies are bold enough to bet on a full-scale military defeat of the Russian forces. Both economic and diplomatic means are good, but in current circumstances they seem by no means sufficient.
* Dr. Vladislav L. Inozemtsev is a special advisor to the MEMRI Russian Media Studies Project.
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 See MEMRI Special Dispatch No. 367, After Ten Years Of Anemic Economic Growth, Russia Faces A Deep Crisis Without Credible Means For Countering It, March 9, 2022.
 Toneto.net/news/tehnologii/The-Wall-Street-Journal--kitayskie-IT-kompanii---tiho---begut-iz-rossii, May 8, 2022.