In the heart of the Russian “Rust Belt”, the city of Nijni Tagil is waking up from a long sleep. The factory chimneys of this industrial city nestled in the Ural Mountains – a thousand kilometers from Moscow – are once again smoking night and day. Mechanics at the Uralvagonzavod factory, the flagship of the Russian defense industry, are working hard to manufacture tanks on the front line of the offensive against Ukraine. “We were among the first to organize 24-hour work in our factory, and we increased production several times,” says a welder to Vladimir Putin, visiting the site on February 15. . “We are ready to work at this pace for as long as necessary,” continues this loyalist of the Kremlin leader, carefully selected by the organizers of the trip.
Not so long ago, however, Uralvagonzavod was on the verge of bankruptcy. The historic factory of wagons and tanks, up to its neck in debt, no longer made many people dream. The assembly lines were idling, workers’ discontent was mounting over falling wages. It was before the war, before Vladimir Putin made the conquest of Ukraine his business. “In the eyes of the Kremlin, the war is now the main engine of the Russian economy and the cement of national unity. There is therefore no reason to stop it,” observes Andreï Kolesnikov, expert at the Carnegie Foundation for international peace.
The figures speak for themselves: despite heavy Western sanctions, Russian GDP grew by 3.6% in 2023 and is expected to grow by more than 3% in 2024, far from the depression expected by the IMF at the start of the Russian invasion. The unemployment rate has never been lower, and formerly devastated regions are seeing a better future. The key to this little “miracle”? The forced militarization of the country. Defense and security spending is approaching Soviet levels, at 6% of GDP (and 30% of the Russian public bill), i.e. a budget of 107 billion euros in 2024. The use of these astronomical sums depends now on a man, appointed Minister of Defense on May 12, in place of Sergei Shoigu (long one of Putin’s favorites): Andreï Belousov, long-time economic advisor to the president, total novice in military matters, but convinced statist. The ideal pedigree for practicing a Moscow version of “military Keynesianism”. In summary: recovery through war.
“Putin injects a lot of money into the military-industrial complex to keep the economy running, according to the old principle of ‘helicopter money’, explains Russian economist Vladislav Inozemtsev, exiled in Washington. But instead of ‘dropping his bundles’ directly to the population, he distributes them to industrialists, who reinvest them.” To manufacture their weapons, vehicles and drones, factories need metals and electronic components; textiles are needed to design the uniforms and boots of officers, trains and drivers to transport this equipment. Faced with this growing demand, companies are competing for workers and therefore driving up wages.
Revenge of the Blue Collars
On Telegram and VKontakte (Russian Facebook), classified ads are pouring in. “In the city of Tula [NDLR : à 200 kilomètres au sud de Moscou], a railway equipment production company needs a turner. 565 rubles per hour during the day, 678 per hour at night. Minimum salary 161,000 rubles [NDLR : 1 663 euros] per month”, we read on this publication. Remuneration more than twice the national average salary. Even more attractive: “To work in rotation, a defense company in the Moscow region is looking for the following candidates: turner and miller […]. In a month you earn 205,000 rubles [2 150 euros] !!! We provide accommodation in a dormitory for two people per room, transportation to and from the factory, new work clothes, daily allowance, compensation for travel and medical examination.”
With such offers, the workers are rushing to the factory gates. A revenge of blue-collar workers clearly visible on the map of Russia, 30 times the size of France. “We are witnessing a redistribution of income between the middle class – who often work for international companies, many of whom have deserted Russia – and the working classes, who have not seen the end of the tunnel for decades, to whom Putin offers a solution on a plate: war!” squeaks economist Elina Ribakova, researcher at the Bruegel think tank (Brussels).
A sign of this shift, disused regions, long under state support, have started contributing to the federal budget for two years. In the center of the country, the Volga, the Urals or eastern Siberia, per capita income is increasing visibly. “These territories, with significant assets in the field of machine building, have seen an avalanche of funds coming from state defense orders,” notes in a recent study researcher Ekaterina Kurbangaleeva, who analyzed data from the national statistics agency Rosstat. Other sectors are benefiting from this boom, such as the shoe industry, whose income has doubled, or clothing manufacturing, three times more lucrative than before the war, according to the academic. Growth stimulated by the needs of the army, and by civilian demand after the departure of many foreign manufacturers.
In the Russia of those left behind, this sudden gentrification also owes a lot to a sordid windfall: the business of the mobilized. Dead or alive, soldiers who fight in Ukraine bring big returns to their families. A soldier sent to the front receives a monthly pay of around 200,000 rubles (2,100 euros), three times more than the average salary, and in the event of injury, compensation of 3 million rubles (31,500 euros). Considerable sums, which reach new heights in the event of death. The widow and orphans can then claim several payments: the presidential compensation established by a decree from Putin, that of the Ministry of Defense, payments from compulsory insurance for all soldiers and reparations paid by regional governments… family having lost one of their own can – in theory – receive up to 14 million rubles (147,000 euros), according to calculations by Vladislav Inozemtsev. “If a man goes to war and dies between the ages of 30 and 35 […], his death will be more economically advantageous than if he had remained alive, observes this expert in an article published on the Riddle information site. Not only does Putin’s regime exalt death, it makes it a rational option.”
Morbid social ascension
This is Vladimir Putin’s promise to his people: a morbid social climb, a guarantee of the sacrosanct “stability” which has always ensured his political survival. In fact, support for the regime no longer comes only, it seems, from the propaganda repeated over and over on talk shows. “People don’t particularly like war, but they simply say to themselves: I earn a better living than before, so much the better. It’s pure pragmatism, there is neither emotion nor morality in this story “, estimates Natalia Zubarevitch, renowned economist and geographer, based in Moscow. What about the families who see the coffins of their sons, brothers and fathers, sacrificed at the front, come home? “Never forget one thing,” continues the intellectual: the price of human life is very low in Russia.”
Above all, the majority of Russians do not feel directly concerned by this war. “The soldiers who died at the front still represent a small number of people involved in the war effort, insists Denis Volkov, director of the Levada Center in Moscow, the last major independent polling institute in the country. For the moment, we are aware of 50,000 independently confirmed losses [NDLR : selon des enquêtes de médias internationaux comme la BBC]. Or approximately 0.03% of the population. Let’s imagine that this figure is multiplied by 3 or 4, it remains a small percentage.” While those who fall at the front often come from rural regions, in the city, the war goes almost unnoticed. In Moscow and Saint Petersburg, the Summer is approaching, the cafes are full, the theaters and concert halls are running their programs as if nothing had happened, or almost nothing. But how long will this entire system continue? war effort ?
As long as Russia manages to export its hydrocarbons to its friendly countries, India and China in the lead, thanks to which money flows freely. Until Western sanctions become more effective. Because not only do the Russians manage to circumvent export controls on military materials, but they import without hindrance consumer goods that they are incapable of producing. “We are not exerting enough pressure to impose on Putin a choice between butter and guns, in other words financing the war or ensuring the well-being of his population,” laments Elina Ribakova. For now, Moscow has the luxury of doing both. Since 2022, the State has increased the pensions and salaries of civil servants several times and expanded social assistance programs, in particular family allowances.
“Nobody knows how to stop this war. And Putin doesn’t even think about it.”
In short, there is no incentive for Vladimir Putin to end his invasion of Ukraine. Worse, the Russian president has everything to lose. “It’s the principle of the bicycle: if you start riding, you can’t stop,” comments economist Vladislav Inozemtsev. “No one knows how to stop this war. And Putin doesn’t even think about it, especially that the state of emergency benefits him. The laws are adopted in twenty-four hours, the opposition is silent, the independent media are expelled. Everything is fine for him.
Theorist of an eternal war, the head of the Kremlin places his country on the edge of the precipice. The economy, overheated thanks to the demand of the army, threatens to eventually collapse. Other countries have had the painful experience – particularly at the end of the First and Second World Wars – of returning to normal after years of a war economy and underinvestment in infrastructure, education and health. Will military production be able to benefit civilian production if the conflict one day ends? “No chance!, says Natalia Zoubarevitch. These companies are sponsored by the State, they hardly care about costs, and are therefore not competitive.” The workforce, sucked for years by the defense sector, will be lacking everywhere. And the turners, welders and millers so in demand during wartime will struggle to retrain. A nightmarish picture.
But Vladimir Putin, aged 71, may no longer be alive when the bubble bursts. Even if Russian forces retreated, the army would still have to replenish its stock of equipment. Enough to keep the factories running for several more years. “The Kremlin’s credo? ‘After us, the flood’. In the meantime, let’s spend all the money necessary for our survival,” concludes Andreï Kolesnikov. Too bad if this means sacrificing the people. There is definitely something rotten in Putin’s kingdom.
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