Protests in Russian elites. Russian economy is full speeding to the edge of the cliff. Ukraine is facing one more challenge. Navalny′s Patriot.

Protests arise in Russian elites

Despite Russia continuing its rhetoric that the economy has enough resources for an ever-increasing war budget, even the most prominent oligarchs close to Putin are starting to protest against the emerging economic crisis, where the only apparent solution seems to be reducing the war budget.

Last week, Sergei Chemezov, Russian grey cardinal of the military and industrial complex, spoke at the session of the Federation Council of Russia, criticising the Central Bank of Russia and its head, Elvira Nabiullina, for high interest rates. Currently, the interest rate stands at 21 percent and is predicted to continue rising. Chemezov's corporation, reportedly receiving up to 80% of Russia's defence industry orders through his conglomerate Rostec, did hold back while giving speech at the Federation Council with “who is who” listening.?

According to Chemezov, if the current situation with high interest rates continues as is, most Russian companies will simply go bankrupt. However, he is not the only influential Russian businessman who has begun to protest against the given economic situation. Aleksei Mordashov, the owner of Severstal, one of the largest metal producers and ranked fourth in Forbes’ list of the richest, assessed that "the situation has gone too far" and that the high interest rate, which is expected to rise further according to Nabiullina, "hinders any development." Companies find it more beneficial to halt growth and even reduce production, choosing instead to put their money in deposits.

Moreover, Mordashov is not just “an average entrepreneur” but has a significant influence. Until recently, he co-owned the bank Rossiya with Putin′s chums, including Gennady Timchenko, who still holds Finnish citizenship, and Yuri Kovalchuk, a close associate of Putin. Mordashov has also previously criticised tax increases on businesses.

However, Igor Yurgens, deputy head of the Russian Union of Industrialists and Entrepreneurs, whose grandfather was born in Tallinn, sided with Nabiullina, stating directly:

“If we think about all other sectors of the economy, give them loans as if nothing is happening, and lower interest rates for medium and large companies, inflation will accelerate. Then, the remaining 40 percent of our population who live on pensions or work in areas not tied to the mobilisation model will suffer great shortages. Ultimately, they will take to the streets because there will be no other solution.”

The The Russian economy has reached a point where lowering interest rates would significantly increase real inflation, which is currently close to 30 percent. Raising interest rates further will hinder any growth while continuing to boost inflation as long as the funds continue to be directed into the Russian economy, whose defence industry can no longer significantly increase production and catch up with money flooding in.

Thus, stagflation looms ahead, a situation where economic growth stalls amidst high inflation, and, according to Nabiullina, the only way out would be at the cost of a deep economic recession. In chess, this situation is called a zugzwang, where every move makes the situation worse.

Ukraine rocks innovation despite war

Time has named the Ukrainian government′s mobile application, Diia, as one of the best inventions of the year. Diia offers the ability to present nearly 20 documents through the mobile app and to use a large number of state-provided services electronically. Ukraine has even amended the legislation so that the digital passport, driving license, and other documents would be legally equal to paper based.

What Time particularly appreciated was a new, in some ways wartime, solution where one can both propose the hand in marriage and get married with just a few taps on a phone. Through the app, Ukrainians can send a marriage proposal, and if the partner responds positively within two weeks, consent can be confirmed via a separate video call conducted through Webex.

During the first month, 1.1 million Ukrainians made marriage proposals through Diia, and the first 435 of them have already gotten married. In a way, this is a sad example of how a war can also be a driver of innovation.

Ukrainian drones keep hitting Russian liquor factories

I was a bit puzzled, why are Ukrainians hitting Russian liquor factories? Probably there is something else being made than liquor. But X by Mikhail Khodorkovsky helped to figure it out—they are hitting the "centers of decision-making" like Russians threatened to.

21 million Ukrainians by 2100??

Unfortunately, Ukraine faces yet another challenge after the end of the war: a demographic crisis. The only and last census of independent Ukraine's population was conducted in 2001, according to which 48.5 million people lived in Ukraine. By the end of 2021, the State Statistics Service of Ukraine stated that around 41 million people were permanently residing in the country, although a planned new census had been continuously postponed, leaving exact data unavailable. Knowing the exact number is even more challenging as Ukraine does not have a complete digital population register. (This makes it also hard to have a full understanding of people that have been killed in towns like Mariupol as the paper-based registers are still in the occupied city or destroyed.).

However, just before the start of the large-scale war, the first digital census was conducted, comparing various state databases and mobile operator data. It was estimated that 37 million people were living in Ukraine before the full-scale war, excluding Crimea. Not because Crimea is not considered part of Ukraine, but because Ukrainian mobile operators did not operate there, making data collection by the same method impossible. Including Crimea’s estimated 2.4 million residents, the population number again approached around 40 million.

According to a recent UN estimate, Ukraine’s population is expected to continue declining due to emigration and the war, reaching 37.4 million by January this year. This means that from the beginning of the war in 2014, 10 million people have emigrated, killed, or died.

UN forecasts from July suggest that the downward trend will continue, and by 2100, Ukraine may have a population of only 15.3 million. This decline is attributed not only to emigration but also to Ukraine's birth rate, which the UN considers one of the lowest in the world. Thus, even after the war ends, new challenges lie ahead for Ukraine. But Ukraine is strong and persistent, and it will once again surprise everyone.

Navalny - Patriot

My journey as analyst of Russia, Ukraine and developing markets started in 2000 in Finnish leading investment media "Arvopaperi". Almost five years of "learning from the best" leaves it′s marks and I learned very fast how to track back to original source, question and double-check everything, confirm and not assume. From then on, I always prefer to learn from the original sources, not refer to interpretations of someone.

So I read Alexey Navalny′s "Patriot". He started writing his diary in Germany, while recovering from Novichok poison and did not manage to finish it before his death from probably Novichok as well. (I was very disappointed when chief of Ukrainian intelligence Kyrylo Budanov claimed in very self-confident way that the cause of death was a "blood clot". Blood clot? Really? This is the most common cause in Russian prison when you don′t want to disclose the reason). But to be honest, I read it to form my own opinion, even though I have always had my reservations to Navalny.

Anyways, he wrote it to be published, so I will take the right to criticise.

Well, I am probably not the target audience. All those memories of Soviet childhood, and of modern Russia, in a bit lecturing way, are not really engaging. A bit...no, really, obvious. They remain hollow and fail to bring new information or surprise or even make you "dig deeper". As unfortunately does the diary from prison, where he describes his life through irony. It just doesn′t get deep, as if the hero doesn′t really want to open up, even when standing and watching to abyss. Unlike the books of Garri Kasparov and Mikhail Khodorkovsky.

To summarize - yes, in this book he was against war, and even though I was very picky, I did not manage to find anything that shocking or even anything much to quote. And, no he did not show his inner struggle, even if he had it.

So I shifted to John Sweeney, who never lets you down. So his book about Navalny "Murder in the Gulag" was far more interesting and colourful description of Navalny than Navalny′s "Patriot.", I must honestly say. Sweeney started by stating that Navalny was probably pawn in someone else′s game, even though he did not realise it. And that he started off as nationalist, then shifted colours while he actually was a liberal. Colours, shades, transformation. This is what is interesting and now we are getting there. Actually a very interesting read, as was one of my favourites, "Killer in the Kremlin.".

But, having said all of it, it takes a lot of courage and grit to consciously choose the path of dying in prison, opposing greater evil.

Picture and heartbreak of the week:

Just a heartbreaking funeral in Kharkiv of the boy murdered in a Russian terrorist attack on the residential house. Something Putin calls "military target.". The boy's mother is severely injured in the hospital, and she couldn't attend the funeral. So her husband, the boy's dad, holds the phone by the coffin so she can say the last goodbye to their boy.

Our NGO Herojam Slava has supported the refugees in Kharkiv since 2015 and the citizens of Kharkiv since the very first weeks of March 2022 with medicine, food, needed supplies. Evil can rule only if good people do nothing.