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Russia, mired in war, faces economic pain and attempts to isolate it

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By Andrew Osborn

LONDON (Reuters) – Russia’s invasion of Ukraine plunged Europe into its biggest land war since World War Two, igniting a conflict that has killed thousands, displaced millions, pulverised Ukrainian cities and damaged the global economy.

Despite warnings from U.S. intelligence in the run-up to Feb. 24, many European and Ukrainian officials did not believe it would happen. It was far too much for the Russian army to bite off, went the thinking.

Putin, who turned 70 in October, was, however, incensed by what he saw as Ukraine’s treacherous Westwards pivot, and ordered an invasion – which he called “a special military operation” – nonetheless.

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His goal was to root out what he saw as excessive and potentially dangerous Western influence in an area where Moscow once held sway and to speed up what he saw as an inevitable historical shift to a multi-polar world.

When in September he announced the annexation of four Ukrainian regions his troops partially controlled, a move the West declared illegal, his desire to enlarge Russia, already the world’s biggest country by territory, became explicit.

The war has so far not gone well for Putin. His forces were beaten back from the Ukrainian capital and then from the north-eastern Kharkiv region. In November, they were forced to quit the southern city of Kherson and the River Dnipro’s west bank.

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As winter sets in, his army, which still controls a large chunk of Ukraine, has had more success at destroying Ukrainian infrastructure, inflicting prolonged power and water outages, something Moscow says has a military purpose. Ukraine has accused Russia of terrorism.

After overseeing the Kherson withdrawal, the commander of Russia’s forces is under pressure to deliver on the battlefield.

On the home front, where space for dissent has shrunk to nearly zero and hundreds of thousands of young men are missing from the workforce after fleeing abroad to avoid being called up, people are trying to get on with their lives.

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But they cannot escape reminders of the war.

State TV schedules are dominated by rolling talk shows whose guests explain why the war is necessary and funerals for the war dead, whose number is a secret in Russia but estimated in the tens of thousands by the West, have become regular occurrences.

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Despite military setbacks and political infighting, eight sources told Reuters in October that Putin’s grip on power remained firm and unofficial polls give him a 70-80% approval rating. Some said that could change fast if defeat beckoned.

WHY IT MATTERS

Russia’s invasion up-ended geopolitics.

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NATO, an alliance that French President Emmanuel Macron said in 2019 was in the grips of “brain death”, is poised to add Finland and Sweden even though its further expansion was the very thing Putin opposed.

The United States, which the Democrats fretted had become too isolationist under former president Donald Trump, has provided Ukraine with the lion’s share of the financial and military aid required to keep it in the fight.

Ukraine, which before Feb. 24, had sometimes struggled to get the West interested in a slow-burning war against Russian proxies in its east, has received aid and Western support that once seemed unimaginable.

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And Russia, one of the world’s biggest energy and commodity producers, has been hit with the harshest Western sanctions in its modern history.

That and its own retaliatory measures have shrunk its role as one of Europe’s biggest oil and gas suppliers, disrupted global grain and fertiliser markets, fuelled global inflation and increased nuclear tensions to their highest level since the Cuban Missile crisis.

WHAT DOES IT MEAN FOR 2023?

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With Ukraine adamant that Russia withdraw from its territory before any peace talks happen, including from annexed Crimea, even a temporary ceasefire looks hard to achieve.

For Russia, 2023 is likely to be a year when it tries to stave off more Western attempts to isolate it.

Political leaders in Iran, North Korea and Belarus remain staunch supporters. China and India have stepped in to buy heavily discounted Russian oil, though Beijing has not been as full-throated in its public support of Moscow as expected.

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Cracks have meanwhile begun to open up in the former Soviet Union, where Moscow’s influence is under pressure as some countries try to change the status quo while Russia is busy in Ukraine.

At least two Central Asian countries have voiced public disagreement with Moscow, and Russia’s role as a mediator in a conflict between Azerbaijan and Armenia is being squeezed by the EU and Washington.

Moscow will have to manage its sanctions-hit economy too, a task made harder after the exodus of young men. Economic stability is linked to political stability, which the authorities have tried to ensure by intensifying a crackdown on anyone perceived a threat.

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Reuters reported in November that Russia plans to spend nearly a third of its 2023 budget on defence and domestic security while slashing funding for schools, hospitals and roads.

As Putin pays up to keep the war in Ukraine grinding on, managing its fallout at home and abroad is likely to get harder.

Explore the Reuters round-up of news stories that dominated the year, and the outlook for 2023.

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(Reporting by Andrew Osborn; Editing by Mike Collett-White and Angus MacSwan)

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