Russia continues to bombard Ukraine, inflicting heavy losses on its neighbor’s
cities and population. But is Russia actually on the losing side of the war? As Putin gets
more and more unstable, Russian losses are piling up - in more ways than one.
On September 7th, a little over six months after the war began, Vladimir Putin spoke at an economic
forum in Russia - and made a bizarre statement. He claimed that Russia hadn’t lost anything in
the war on Ukraine, something anyone could see was false. While Russia has a far larger country and
army than its neighbor, it has suffered far higher casualties. While Russia isn’t really in the
business of providing accurate casualty numbers, outside observers and Ukrainian officials estimate
they may have lost as many as 40,000 soldiers in total - many of them high-ranking officers.
But the losses go far deeper than that.
By the end of August, it was estimated that Russia lost more than 16 billion dollars in
military equipment - tanks, planes, and ships all being sent up in flames by the Ukrainian
military, backed up by the strength of NATO weapons. Most of these were older weapons,
some dating back to the Cold War, but Russia has suffered bigger losses as well - most famously
the missile cruiser Moskva. This massive ship was one of Russia’s crown jewels,
worth around 750 million dollars, and it was sent to the bottom of the Black Sea back in April.
And those losses just keep piling up.
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Now back to Russia and their growing losses.
Even as Russia takes territory, they keep being pushed back. Cities like Lyman were taken by
the Russians early in the war, only to see the Ukrainian forces push back in late summer and
early fall - driving the Russians out, resulting in many soldiers abandoning their posts. Putin
declared the conquered regions as part of Russia after referendums condemned globally as shams,
but it didn’t change the facts on the ground - Lyman’s Russian occupation fell to the
Ukrainian forces the day after the annexation was announced! That meant that all the equipment,
manpower, and blood put into conquering these regions was largely for nothing.
And not even Russia’s older gains are safe anymore.
The Crimean peninsula, a region of Ukraine that had been under Russian control for a long time
and has a significant base of Russian loyalists, was conquered by Russia back in 2014 and had
been seen as a foregone conclusion. After all, Russia defends its territory fiercely,
and no one wanted to give Putin a reason to escalate. But with Putin refusing to even
promise to leave Ukraine independent or its President alive, there was no reason to hold
back - and Crimea came under fire by the same liberation forces as the fall began.
Is there any hope of liberating this long-time Russian-occupied area?
It’s likely to be much trickier than any of the other areas, due to its population,
but the biggest blow in the region came on October 6th, 2022, when an explosion took out a large part
of the bridge connecting Russia to the city of Kerch in Crimea. This was a key shipping lane,
and one of the biggest ways Russia kept its forces supplied as they poured into
Ukraine. It caused a supply-chain crisis, led to a multi-day partial shutdown,
and ruined Putin’s birthday - happening the day after he turned 70. This incident
may have been the cause of Putin’s escalation in recent days - although no one is sure who
did it or how they did it. Even so, this was another costly blow to the Russian war effort.
But one thing may be keeping Russian costs on the battlefield to a minimum.
To put it politely, Russia runs a…vintage military. To put it less politely, their
army consists of poorly-paid draftees working with Cold War era equipment. This explains why
Ukraine and its allies are having such an easy time inflicting losses on the Russian military,
but it also keeps the costs of losses to a minimum. After all,
Russia built up its army heavily during the Cold War to prepare for a conflict against
an equal power that never happened - so it has a massive surplus of weapons to call on.
And the recent partial mobilization kicked off a massive draft, meaning Putin won’t be
short on soldiers - assuming he can keep them from deserting. And even with these mitigation factors,
it’s estimated Russia is spending 900 million dollars on the war effort each day!
But the battlefield losses, which have likely gone well over twenty
billion dollars by October, are only scratching the surface.
Because the war has left Russia’s economy in absolute shambles. This is one of the only wars
in recent memory where the entire world felt obligated to declare which side they were on.
Most powers not only condemned Russia, but imposed devastating and wide-reaching economic sanctions.
Other countries like Israel, India, and even China may have tried to stay neutral at first, but are
increasingly backing away from Putin as he appears more isolated. Putin’s only loyal allies who are
supporting his war are fellow pariah states like Syria, North Korea, and neighboring Belarus.
And that has taken a massive bite out of Russia’s economy.
Russia has seen itself largely cut off from the global financial system, as Western nations try
to starve out the leadership. The United States barred Russia from using foreign currency to
pay off debts as the ruble craters, while the UK banned major Russian banks from their financial
system and even froze the assets of Russian banks and individuals. The biggest blow was
probably when Russian banks were yanked off the international financial network Swift,
which made it incredibly difficult for Russia to continue selling their top export.
Because in Russia, oil is king.
Russian oil and gas exports are the country’s top moneymaker, and the world is turning off the
pipeline. The European Union took the dramatic step of cutting off Russian oil imports as of
December 2022, and two months later refined oil products will join them. Germany canceled the
opening of a major new pipeline, Nordstream 2, and the entire EU cut off Russian coal. However,
the EU has not cut off imports of Russian gas, since they rely on it for close to half
of their energy needs. This has given Putin an opening - leveraging Russia’s gas as the long,
cold winter looms. But Russia stands to lose untold billions if its energy
exports are cut off, which is why Putin has become more aggressive - even potentially
sabotaging a Norwegian pipeline in an incident currently under investigation.
And the world is targeting Russia in many other ways.
Dual-use goods, those that can be used for both civilian and military purposes like car parts,
have been cut off from Russia via an export ban from the UK, EU, and US. Those three powers,
along with Canada have also banned the export of luxury goods to Russia - so
no French champagne for Vladimir. Russian gold can no longer be imported, and heavy taxes have
been imposed on other imports like Vodka. But perhaps the biggest blow to Russia’s business
sector has been a ban on Russian flights to the US, UK, Eu, or Canada - cutting off the
ability of many powerhouse oligarchs to do business around the world.
And that poses multiple problems.
Because it’s not just the Russian government that’s being targeted - it’s the most powerful
businessmen from the country. Putin surrounds himself with an elite group of power brokers,
usually billionaires from the energy or financial sector. They’ve been called Oligarchs by the
media, and they are among the only people in Russia besides Putin who enjoy a high
standard of living - and they’d better enjoy it while it lasts. Because in Putin’s Russia,
you’re only in the inner circle until you’re not, and many former oligarchs
have found themselves suddenly under arrest and their assets seized by the states. So
it’s not a surprise many of them keep a secondary home in a freer country abroad.
Or at least they did.
More than a thousand powerful individuals from Russia have been personally sanctioned
by the west. While proposals to target all Russian citizens with sanctions have been
shot down as discriminatory - especially as many are refugees who left the Putin regime
while they still could - the ones being targeted are generally allies of Putin.
The sanctions range from government officials being banned from entering other countries,
to billionaires like Roman Abramovich having their assets seized. Abramovich, the former owner of
the UK football team Chelsea FC, found himself unable to either use his assets or sell them.
And one item has become the symbol of these sanctions.
One of the ultimate luxury items for billionaires is a superyacht - the
closest thing anyone will come to personally owning a cruise ship. These massive symbols
of wealth are perfect for when you want to head into international water to do god-knows-what,
but they have to dock somewhere - and multiple Russian billionaires found their yachts being
seized by western governments in recent months. While many businessmen protested
that they personally hadn’t committed any crimes and their property is being
seized without trial, the general response from the governments has been “So sue us”.
And there’s one final factor that is going to cost Russia a lot of money.
Ever since the Soviet Union fell, Russia tried to recast itself as a haven for
industry. Under past President Boris Yeltsin, they largely succeeded - and this gave rise
to the oligarch era. But under Putin’s more militaristic regime, things changed.
Businessmen had to worry about being arrested or their assets being seized. Foreign citizens
have been arrested on trumped-up charges - most famously the WNBA star Brittney Griner,
who was playing in a basketball league in Russia shortly before the war when she was
arrested on marijuana charges and sent to a labor camp after being convicted.
So it’s no surprise that many companies are thinking twice about doing business there.
In the aftermath of the war, countless companies pulled out. Some, like McDonald’s, did it out
of outrage at Russia’s aggression. Others, like Netflix, found the new policies in Russia to be
impossible to work with. Netflix was reportedly ordered to place multiple channels of Russian
government news propaganda on the service and chose to withdraw from Russia in light of these
requests- which means Russian soldiers deployed to Ukraine may be more interested in finding a place
where they can watch the next season of Stranger Things. They might as well make themselves
comfortable and try to keep their head down as losses will only keep mounting until the war ends.
So how much has Russia actually lost from the war?
We cannot give you an exact dolar amount, as most of the economic losses are internal and likely
underreported. The figure is near-incalculable because of how many elements go into it. We know
they’ve lost billions in military equipment, and their current mobilization effort is likely to
cost billions as well - even with them cutting every corner possible on equipment and training.
They’ve also lost billions in Russian oil exports, and those losses are likely to escalate massively
in the winter. Putin is hoping that Europe breaks and stops supporting Ukraine due to a cold winter,
but if you’re betting on mother nature bailing you out, that’s not a good
sign. And the US alone has seized as much as thirty billion dollars from Russian oligarchs.
So the odds are that before the situation in Ukraine is resolved,
the war losses from Russia will mount into the trillions - and it may be only getting worse.
Because the sanctions are likely to continue for the duration of the war,
and Western powers may tighten the screws on Putin further. If the war ends via a defeat for Russia
or a negotiated withdrawal, the odds are heavy reparations will be imposed on Russia for the
rebuilding of Ukraine - which has suffered billions in losses of its own. So Russia’s
choice may be to either suffer under sanctions, or take a bigger up-front financial hit to get
out of the war. Which might be why Putin is looking at a third option - keep escalating,
threaten the west, and hope everyone gets scared enough to let him have his way.
Want to learn more about the direction of the war? Check out “Why Is Ukraine’s Counterattack
So Successful”, or watch “What If The US Invades Russia (Day By Day)” for a scary hypothetical.