The Battle of Bakhmut was baffling.
Bakhmut is, or was, a city of only 71,000 people at the start of Russia’s invasion.
But it is the pound-for-pound most talked about city in Ukraine,
with the last month alone delivering about one news story per Bakhmut household.
The attention is understandable: it’s meat grinder over there.
As we speculated on before, Ukraine seemed perfectly content to hold onto
the city in exchange for a favorable casualty ratio.
Ultimately, Kyiv claims that Russia has suffered 70,000 casualties in the battle.
The United States says it is 100,000.
Even Wagner says its mercenary group alone lost 20,000.
War being what it is, we do not have any clear verification of those numbers.
But even if the Russian totals were off by an order of magnitude,
it would still be difficult to justify the cost that Russia has paid.
For perspective, Bakhmut’s 71,000 pre-war population puts it on par
with Tamarac, Florida, and Drummondville, Quebec.
Even California’s 100th largest city has a population larger than Bakhmut’s.
Losing one’s home is tragic, of course, whether you live in Bakhmut,
Tamarac, Drummondville, or anywhere else.
But it is puzzling why Russia has invested so much to capture a town,
which by the end of the battle, will have a population approaching zero.
So what is going on here?
Recently, we explored how the upcoming Ukrainian spring counteroffensive could end the war.
That required first thinking about the political reasons why the war was still continuing.
One perspective points to Putin’s personal profits for prevailing,
or, more precisely, his punishment for failing.
Today, we are going to explore that possibility
further and see why it would make sense out of the Battle of Bakhmut.
This discussion of Putin’s hotseat will be a four-step process,
beginning with a quick refresher on the “gambling for resurrection” incentive,
why Putin owns the war and thus his political future depends on its outcome,
some evidence that Putin is concerned about these issues in practice,
and how pouring resources into Bakhmut makes sense if Putin has those concerns.
But we begin with gambling for resurrection.
Imagine you were minding your own business at a roulette table,
when all of a sudden a shady character walks over,
takes out $100,000 in chips, plops them on black,
and eagerly watches as the wheel spins around. “That’s my life savings,” he tells you.
Most of us would find that weird.
Think about your happiness
as a function of how much cash you have to your name.
Obviously your happiness goes up with more money, all else equal.
But normally there are diminishing marginal returns,
which makes the relationship look like this, with some curvature.
That is, each additional dollar makes you happier,
but the extra happiness of the next dollar is a little bit less than the previous dollar was.
People still go to casinos because gambling in moderation can be fun,
and losing a couple hundred dollars might be fine in exchange for a night out on the town.
But your life savings? And on a gamble that potentially doubles
your money but only wins 47.4% of the time? That is… weird.
Unfortunately for the man, the ball lands on red 23.
He is devastated. So you go over and ask him what he was thinking.
It turns out, he owes the mob $200,000. And if he doesn’t pay them the full
amount by tomorrow, well, they will kill them, and that will make him very sad.
Suddenly, the bet makes sense.
He is dead if he has $0 or if he has $100,000.
But betting on black gives him a reasonable chance of surviving.
In this analogy, the shadowy figure of course is Putin,
the mob are the Russian domestic political powers that be,
the debt owed represents the bad outcomes of the war so far,
the mob killing Putin is him falling from power, or an actual mob killing him for that matter—
after all, jail or death is a much more common post-tenure fate for
autocratic leaders than democratic leaders—
winning $200,000 is staying in office, and the roulette wheel is Bakhmut and beyond.
All of this assumes that Putin politically owns the war. But,
at least on the surface, this seems to be true.
In broad strokes, Putin’s ownership has been a three-step escalation.
Step one began in February 2022 with the start of the “special military operation”.
When Putin went on TV to make this announcement,
the invasion seemed like a good idea at the time, at least within the halls of the Kremlin.
Instead, it turned into a calamity on the western flank and perhaps eastward as well.
The planned three-day invasion of Kyiv turned into three weeks,
and then turned into a withdrawal.
Russia saw greater success and territorial gains in the east.
However, holding that territory—especially
with its vast front line—appeared predicated on Kyiv falling apart.
Because that did not happen, Ukraine’s counterattacks
in September 2022 recovered sizable portions of territory around Kharkiv.
The veneer of a special military operation was no longer sustainable. Hence Putin’s
September 21 mobilization announcement, and step two of the process.
Its main purpose
was to put enough troops on the front line
to prevent Ukraine from engaging in further easy counterattacks.
Step three occurred just eight days later.
On September 30, Putin signed into Russian law the formal
annexation of Luhansk, Donetsk, Zaporizhzhia, and Kherson Oblasts.
Regardless of the lack of international recognition,
claiming these territories as part of Russia proper likely served two purposes.
For one, Russian conscripts are not supposed to be deployed abroad under ordinary circumstances.
But here we have a loophole:
these parts of Ukraine officially became Russian according to Russian law. Problem solved.
The second part is that it fed the Kremlin’s broader narrative of the war: that Russia
and Ukraine are really one state, and so they are supposed to be under Moscow’s governance.
After all,
if you pull out the Kremlin’s preferred old maps, that’s what the lines say.
And although in theory that should apply to the entirety of Ukraine, practically speaking,
the Eastern sections were more feasible.
Combining these three steps together, Putin now politically owns this war.
And the problem with owning a war is that you are in jeopardy if the war fails.
That means someone might come for your seat in government.
Here, the irony of Putin wanting to become synonymous
with Peter the Great also risks leaving him subject to a legacy forever stained.
This is not some sort of abstract theoretical problem either.
Russians in particular are aware that a poorly fought war fell
the Romanov Dynasty in the February Revolution of 1917,
which led to the October Revolution and rise the of the Soviet Union in the same year.
To be clear, failure in Ukraine does not guarantee that Putin will lose power.
There is a needle he can thread to survive, and I swear that we will eventually talk about that.
Rather, the outcome of the war will shift his odds significantly. And if further failures in Ukraine
only have a marginal impact on his survival, but a major win will have a sizable effect,
then prolonging the war despite substantial costs might make sense from Putin’s perspective.
That’s the general theory. But what’s the evidence that Putin has these political survival concerns?
As a caveat, short of sitting in on the most sensitive of Kremlin meetings,
we cannot really know for sure as analysts.
I would even be hesitant to bet that American intelligence knows,
despite the CIA seemingly having the Kremlin’s pulse entering the war.
But there is a key observable feature of the war that is hard to rationalize
short of a gambling incentive.
Rewind to November 2022.
Ukraine had just completed the second phase of its fall counteroffensive,
pushing Russia behind the Dnipro River and liberating Kherson City.
With winter approaching, the Kremlin had two options.
Option one was to consolidate Russian gains.
Ukraine lost a good portion of its eastern regions as a
consequence of concentrating its defenses on Kyiv.
But following that phase of the war, Russia struggled to make any notable progress.
Thus, option one would recognize the Russian army’s apparent limitations,
use the troops mobilized in September exclusively as a means to patrol a very long front line,
and exploit the inherent advantages of fighting from cover.
Option two was to go on the offensive through winter,
while still respecting the possibility
of a Ukrainian spring counterattack by investing something in defense.
We all know which road Russia took.
So far, this explains why Putin would be interested in continuing an offensive.
It does not tell us why Bakhmut specifically received so much of Russia’s attention,
nor why it became the longest sustained battle in the war so far.
Thus, let’s turn why it is not just an offensive in general but Bakhmut in particular.
To answer that question, we need to look at a map of Eastern Ukraine.
Broadly, there are four segments of space that Russia could target.
Up north, option number one is the territory that Ukraine retook in September 2022.
Given Russia’s historical inability to defend
that territory, it would not make sense to repeat that same process.
Down south, option number four has a similar problem.
The territory at the end of the Dnipro River was where Russia retreated from in November 2022.
But anywhere else upstream has an obvious problem: the Dnipro River itself is in the way.
Furthermore, Russia blew the bridges around Kherson during
its retreat to prevent Ukraine from following.
That leaves options two and three.
Number three corresponds to Zaporizhzhia oblast and is sensible.
Zaporizhzhia City is the only regional capital
from the annexed territory that Russia never controlled.
Option number two corresponds to Donetsk oblast.
The likely reason that Russia has chosen to push
here over Zaporizhzhia is the fact that the Russian-funded
Donetsk People’s Republic had built up nine years of infrastructure in that location.
Indeed, Russian activity has gone all over Donetsk.
This is most notable in Vuhledar and Avdiivka.
But Bakhmut received the most attention,
in part because it was the third largest city in Donetsk uncaptured
and because the two largest cities— Kramatorsk and Slovyansk—lie behind it.
Russian motivations in Bakhmut is that the offensive is pathological or irrational.
That is, Russia is fighting over Bakhmut because it received so much
media attention that Moscow simply could not let it be without losing face at home.
Or that Russia lost so many soldiers battling over it that the Kremlin became the victim of the
sunk cost fallacy:
calculating whether to continue an action
based on previous losses rather than present and future expected gains.
There are no inherent, academic problems with the sunk cost fallacy as an idea.
Russia cannot change what has already happened,
so the onus on the Kremlin is to do the best it can given what could happen now and later.
But allow me to introduce to you what I like to call
the sunk cost fallacy fallacy:
the tendency for analysts to attribute puzzling choices to the sunk cost fallacy
and overlook logical alternative explanations.
As bloody as the broader Battle of Bakhmut has been,
it is the place that Russia has been seeing gains.
Russia’s capture of Soledar on Bakhmut’s northern edges on January 26, 2023,
was its first notable victory in a long time.
And in the months afterward, Russia made slow but steady gains in Bakhmut itself.
At the time of writing, it appears that Russia has captured just about all of it—
though Ukraine disputes that,
the Wagner group, which was pivotal to the city’s capture, appears to be leaving,
and Ukraine has begun taking flanking positions to the north and the south of the city.
Thus, even if Russia has captured or will capture Bakhmut,
the question remains for how long.
Moreover, the uphill topography heading into Slovyansk and Kramatorsk will prevent
Russia from immediately advancing elsewhere.
Zooming out, if we want to pass judgment on the
wisdom of the Kremlin’s choice to go after Bakhmut and not elsewhere,
we would need to know what the counterfactual was.
Unfortunately, having confidence in such a counterfactual is basically impossible.
The fog of war makes it difficult enough to understand what is currently happening,
never mind what would have happened if Russia had indeed gone elsewhere.
Nevertheless, it is possible that if the Kremlin had reallocated
all of those resources to Avdiivka or Vuhledar,
then Russia would have made more progress at a lower cost than what has occurred in Bakhmut.
As such, this might just be a garden variety
sunk cost fallacy and not a sunk cost fallacy fallacy.
But we have seen Russia recognize problematic attack vectors,
put an end to them, and then focus the attack elsewhere.
Indeed, that is exactly how we got here. The Kremlin calculated that continuing
toward Kyiv was not feasible and moved its attention to the east.
If Russia did not have a problem with the sunk cost fallacy in Kyiv,
it is puzzling if it started months afterward in Bakhmut.
Regardless, the key takeaway here is that if a new leader
magically dropped into the Kremlin tomorrow,
they might look at the death toll and conclude that the battle is
not in the best interests of the Russian state.
Unlike Putin, they do not face political culpability
for pulling out of the region or switching to a defensive strategy.
But if you are Putin, and your political fate is tied
to the war having some selling point—any selling point at all—
you might prefer to spin the wheel. But do you know what isn’t a gamble?
Reading a high-quality book that investigates the many possible
causes of the Russian invasion of Ukraine. Check below for more information on that.
And if you enjoyed this video, please like,
share, and subscribe, and I will see you next time. Take care.
Earlier in today’s discussion, I mentioned the February and October Revolutions.
Pop quiz: in what months did they take place?
If you said February and October, you would be technically correct
—the best kind of correct—but not for the reason you might think.
If you were to celebrate their anniversaries based on the Earth’s position relative to the Sun,
you should be partying in March and November.
And if you are a habitual viewer of this channel, you already know the reason why.
Remember the sign off from the video on Putin’s arrest warrant,
regarding Russia’s failure to show for the 1908 Summer Olympics shooting event?
The short version is that, prior to the Soviet state,
Russia was on the old Julian Calendar, not the Gregorian Calendar.
By 1911, Russia had fallen almost two weeks behind the Gregorian world.
Consequently, the February Revolution on the 23rd corresponded to March 8th.
and the October 25th Revolution occurred on November 7th from our perspective.
Thank goodness we have now agreed to use the same calendar.