Moscow won’t run out of money and armaments for the war against Ukraine anytime soon, says military economist Marcus Keupp. An embargo on Russian raw materials cannot change that. However, the Russian military has massive logistical problems – a “disgrace” for Moscow.
ntv.de: Russian President Vladimir Putin did not expect such a protracted war or such significant losses. How long will his war chest last?
Marcus Keupp: Much longer than the West expects. This is due to two things: First, Russia has enormous reserves of conventional material. An example: West of the Volga alone there were around 2,800 operational battle tanks before the war. Even if around 550 of them are gone now, there are still 2250 left. So Russia can afford heavy losses. On the other hand, this war is costing Russia much less money than is commonly assumed. The war is still going on as it was in the deepest 20th century, with relatively simple mechanized systems. The most expensive things in a war are the air force and the navy – but they do not play a decisive role in this war.
Would an oil and gas embargo weaken Russia’s warfare?
Such an embargo would have no effect on the course of the war. It is naïve to assume that we put our money into the tank factory on the one hand and the finished tank comes out on the other. The Russian armaments used in Ukraine were built a long time ago. The fuels, i.e. oil, gas and diesel are self-produced. Even if we were to boycott Russian raw materials, that doesn’t mean that Russian gas and oil have to remain underground and that there will be massive losses in the state budget. Russia has other options.
Which?
If, for example, Germany stopped buying gas, Russia could at least partially divert the corresponding production volume. The transfer of Russian gas is not unilateral from east to west – a significant portion also goes into the Bluestream and Turkstream 1 and 2 pipelines. Turkey could use the portion of the gas that Germany no longer takes for intermediate trading. It could go to Greece or Bulgaria via the trans-Anatolian pipeline and from there to Eastern Europe or Italy. So if you want to boycott Russian gas, you have to sanction Turkey as well. Other options for Russia would be to stockpile the gas in underground storage or the pipelines themselves, or to use more gas for primary energy production and thus use less oil and coal. This could then be sold again on the world market. It doesn’t all happen overnight, but it would be a possibility.
Nevertheless, if the West were to boycott Russia immediately, it would quickly lose massive amounts of foreign exchange. Sooner or later the currency reserves will be used up.
Marcus Keupp is a lecturer in military economics at the Military Academy of ETH Zurich.
(Photo: Private)
Before no more money is put into the army, Moscow would reallocate the state budget and use reserves. Oil and gas exports account for 40 percent of Russia’s state budget. That’s a lot, but it also means that 60 percent of the budget is still available. The largest item is social welfare. Russia could cut these social spending and divert the money to the defense budget. Something similar could happen with other budgets such as that for economic policy. In addition, Russia still has its reserves from the national welfare fund, which was well stocked with 200 billion US dollars before the war.
So Russia could stay afloat on its own?
It is quite conceivable that we will get a Russia that no longer exports its energy as much and in return will wind down its economy. Then there’s just the military, a bit of energy business with the East, subsidized staple foods and nothing else. The question of whether the population will participate does not arise, because it is not asked. She was not even asked in the Soviet Union. The only thing that Putin still needs for his Soviet happiness is the closing of the external borders. The Russians can still leave the country.
Russia does not have competitive computer technology. How dependent is the Russian defense industry on imports?
The Russian defense industry does not need Western technology for its own production of simple, mechanized systems, because the companies use the old Soviet technology that has been modernized over the years. However, Russia is also the second largest arms exporter in the world. They have to be technologically fit, and if that breaks away as a result of the sanctions because they can no longer get Western components, they could lose international customers. But there is also another scenario. This could lead to a stronger alliance between Russia and the countries that do not support the Western sanctions but are happy to buy Russian defense technology. For example, India, the largest buyer of Russian arms, could then provide replacements for Western components. Of course, this is not the same level of technology and does not happen overnight, but the Russians have long dreamed of import substitution, i.e. of finally replacing Western technology with Russian in-house production. So far, however, they have had little success.
How do you explain the high loss of material by the Russian troops in the war against Ukraine?
One reason is the lack of logistics. One can clearly see that the Kremlin assumed three or four days of fighting and a quick regime change in Kyiv. There is no other explanation for the fact that the troops are running out of fuel and food in droves. As a result, many tanks just stay where they are. Also, it’s mud season in Ukraine right now. The Russians can therefore only use the paved roads for their supply routes – making it easy for the Ukrainians to predict the routes and bombard Russian logistics.
Despite this, Russia is far superior to Ukraine in terms of military material and soldiers.
You can’t just set off the Russian and Ukrainian systems against each other. At the beginning of the war, many experts argued that Russia is absolutely superior conventionally, because it has many more systems, and therefore will win. However, the longer the war lasts, the more important logistics become. If the troops run out of fuel, ammunition and food, even 800 tanks won’t do any good. Because then they just stay in the area. This is what we have observed on the Russian side since the beginning of the war. It is therefore not the number of systems that is decisive, but their value in use.
Russia has already changed tactics. How do you rate the success of the major offensive in eastern Ukraine?
This is not a major offensive, this is a logistical disgrace. I see on the map that the Russians are advancing maybe two kilometers a day. Even small towns fight for days before the Russians take them. This is the result of a mixture of amateurism and corruption.
In what way?
Many of the Russian systems have not been properly maintained. For example, we have seen heavy wheeled vehicles whose tires have been torn off. This indicates that these systems have not been moved for a long period of time. So one wonders where the maintenance money went. Possibly in the pockets of local politicians and local commanders.
What is the role of the fallen Russian generals in this system?
That, too, is a sign of the military amateurism of the Russian army. A general is not normally on the front line but commands the operation from a rear army headquarters or command center. It could be that the Kremlin sent its generals to the battlefield because of the low morale of the troops. However, I rather think that the generals communicated via non-encrypted communication, i.e. via normal smartphones or radios. The Ukrainians managed to intercept this very communication and use it to locate the generals’ locations.
In contrast, what about the system of the Ukrainians?
So far, Ukraine has not waged the war symmetrically. That means she doesn’t say that ten Russian tanks will come by and we’ll counter them with ten. The Ukrainians were not able to do this because of their material inferiority. Now the situation has changed. Ukraine has already acquired over 200 working Russian tanks. By way of comparison, the French Armée de Terre has around 400 tanks in its entirety, making it one of the major western European armies. In addition, the West will increasingly supply artillery in the coming weeks. The more this happens, the more symmetrical this war becomes. Ukraine is certainly far better off than it was in the first four weeks of the war.
So much better that she has a chance of winning this war?
Ukraine cannot win this war on its own. The outcome depends very much on continued arms shipments from the West. What is certain is that Russia will not give in and Ukraine will not give up. At the moment, Ukraine is managing to neutralize the Russian advance. If this continues for a few more months, Russia will have to contend with an enormous war of attrition. The Russian army may have enormous reserves, but Ukraine is currently being supplied by all of the West’s industrial potential. It would be a tremendous success for Ukraine if it could continue to freeze the war in this way. However, it would be too early to speak of a possible victory.
Sarah Platz spoke to Marcus Keupp