Putin thinks the West will be the first to blink in the war of attrition with Russia

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Russian President Vladimir Putin is engaged in a long war of attrition against Ukraine and will relentlessly try to use economic weapons, such as a blockade of Ukrainian grain exports, to reduce Western support for Kyiv, according to members of the Russian economic elite. .

The Kremlin has seized on recent signs of hesitation by some European governments as an indication that the West may lose sight of its efforts to counter Russia’s invasion of Ukraine, especially as the global costs of the increase after the imposition of sanctions on Moscow.

Putin “believes the West will burn out,” said a well-connected Russian billionaire, speaking on condition of anonymity for fear of reprisals. Putin did not expect the initially strong and united response from the West, “but now he is trying to reshape the situation and he thinks that in the longer term he will win,” the billionaire said. Western leaders are vulnerable to election cycles and “he thinks public opinion can shift in a day”.

The embargo on Russian oil exports by sea announced this week by the European Union – hailed by Charles Michel, President of the European Council, as exerting “maximum pressure on Russia to end the war” – would have “little short-term influence”. said a Russian official close to Moscow’s diplomatic circles, also speaking on condition of anonymity for fear of reprisals. “The mood in the Kremlin is that we can’t lose, no matter what the cost.”

The Kremlin has stressed that the EU move has only caused a further spike in global energy prices and said it will seek to divert supplies to other markets in Asia, despite the ban to insure Russian shipments which was also imposed by the EU and Great Britain.

People in EU countries “feel the impact of these sanctions more than we do,” Kremlin spokesman Dmitry Peskov said in an interview with The Washington Post. “The West has made mistake after mistake, which has led to growing crises, and to say that it’s all because of what’s happening in Ukraine and what Putin is doing is incorrect.”

This posture suggests that the Kremlin thinks it can survive the West by withstanding the impact of economic sanctions. Putin has no choice but to continue the war in the hope that the Ukrainian grain blockade “will lead to instability in the Middle East and cause a new flow of refugees”, says Sergei Guriev, former chief economist at the European Bank for Reconstruction and Development.

The Kremlin’s aggressive stance appears to reflect the thinking of Nikolai Patrushev, the warmongering head of Russia’s Security Council, who served with Putin in the KGB in Leningrad and is increasingly seen as a hardline ideologue who leads the war of Russia in Ukraine. He is one of a handful of close security advisers who Moscow insiders say have access to Putin. In three fiercely anti-Western interviews given to Russian newspapers since the invasion, the previously publicity-shy Patrushev said Europe was on the brink of a “deep economic and political crisis” in which rising inflation and falling living standards were already having an impact on mood. Europeans, while a new migration crisis would create new security threats.

“The world is gradually falling into an unprecedented food crisis. Tens of millions of people in Africa or the Middle East will find themselves on the brink of starvation, because of the West. To survive, they will flee to Europe. I’m not sure Europe will survive the crisis,” Patrushev told Russian state newspaper Rossiiskaya Gazeta in one of the interviews.

In another interview last week with the popular tabloid Argumenty and Fakty, Patrushev said Russia is “not rushing to meet deadlines” in its military campaign in Ukraine.

The Russian military is steadily advancing in the Donbass region in eastern Ukraine, and rather than seeking an immediate and decisive battle, Putin believes time is on his side, the Russian billionaire has said. Putin “is a very patient guy. He can afford to wait six to nine months,” the billionaire said. “He can control Russian society much more tightly than the West can control his society.”

The weeks-long diplomatic haggling over the terms of the EU oil embargo was seen by the Kremlin as a sign of faltering Western will, economists and the Russian official said. Phone calls from French President Emmanuel Macron and German Chancellor Olaf Scholz to Putin over the weekend about ways to lift the blockade of Ukrainian ports will have further reinforced this view. When Western leaders call Putin and seek a deal, “it means he thinks he has influence,” a former US government official said.

The Kremlin insisted the blockade of Ukrainian grain exports was due to Ukrainian Black Sea mining – a claim denied by Kyiv – while Peskov said Western sanctions were also preventing the shipment of grain .

EU agrees to phase out Russian oil but exempts pipeline deliveries

Russia’s potential losses from an EU ban on its oil exports by sea could be minimal, said Sergei Aleksashenko, a former vice president of Russia’s central bank, who now lives in exile in the United States. United. If Russia is able to divert the entire shipping volume to India and China, Russian losses from the ban could total as little as $10 billion, he said.

Putin’s economic advisers “will tell him what the estimated loss from the embargo is, and he will laugh softly,” Aleksashenko said. “He’s not changing course.

The EU embargo should be seen as ‘just a first step’ in efforts to cut off hard currency revenue from the Kremlin, said Edward Fishman, assistant professor of international and public affairs at the University. of Columbia and former US State Department official.

Several current and former senior Western officials have discussed proposals for the US and EU to form a cartel and impose a price cap on Russian oil, possibly at $30 or $40 a barrel. The measure could be more effective than the EU ban and help lower world prices, Guriev and Fishman said. Under the proposal, the United States could impose secondary sanctions on anyone buying Russian oil at a price above the cap, they said.

Italian Prime Minister Mario Draghi first floated the idea of ​​creating an oil consumer cartel during a meeting with President Biden, while the European Commission is currently considering Draghi’s proposal for a potential oil price cap. gas.

Russians face prospect of Soviet-style shortages as sanctions hit

Putin has declared that the “economic blitzkrieg” against Russia has failed, and on the surface the economy has been cushioned against the initial shock of Western sanctions by the influx of nearly $1 billion a day in revenue from of oil and gas exports to Europe before the EU embargo on oil transported by sea. Thanks to capital controls and orders for Russian exporters to sell half of their hard currency earnings to the State, the ruble strengthened to reach pre-war highs.

But the head of the Central Bank of Russia, Elvira Nabiullina, warned that the full impact of Western sanctions was yet to be felt. A ban on high-tech imports is only just beginning to be felt, while shortages of certain products are only beginning to be felt. Inflation is expected to exceed 20% and Russia faces its deepest recession in 30 years. Putin’s attempt to protect the population against inflation, estimated at 18%, by ordering a 10% increase in pensions and the minimum wage is far from good.

With growing risks for all parties, “it will be a war of attrition economically, politically and morally,” the Russian official said. “Everyone is waiting for the fall,” when the impact of the sanctions will hit hardest, he said.

So far, however, with Ukrainian President Volodymyr Zelensky estimating that Kyiv needs $7 billion in aid a month just to keep the country running, Putin seems to be betting the West will blink first, the report said. former US government official. “Putin’s goal of subjugating Ukraine and possibly placing a Russian flag in Kyiv has not changed.”

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