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I don't know if you've seen it, but there has been a really interesting article in the Wall Street Journal recently about the Russian elite being basically split in between these two camps where on one hand you have the people pushing for the war to be frozen right now because it's probably the best situation that Russia could end up in since it doesn't have the military power to push even further. And then on the other hand, you have another camp of people who are pushing for sort of the opposite, which is to escalate rather than to freeze. And it does seem like these are essentially the only two options that you have of how to get out of the situation apart from just doing the same thing that you're doing now. Do you see that when you're looking at it? Do you see that you have these two camps kind of competing over which direction Russia and Putin might take? And which camp do you think at this point is actually winning?
>> Uh well that that last part's the harder question. Um I I I don't think either of these things has I don't think I don't think this debate has that much to do with the war.
>> I think I think that that that it has much mostly to do with political economy, right? uh the war has created winners and losers in the in the Russian system, right? Um and um I think there is anxiety that the longer things go on, particularly if it requires really reshaping the way that money is raised and spent uh in in the Russian economy, the further reshaping the way that assets are owned and and distributed and redistributed uh has the potential of taking some of those changes that have happened, right? So, you know, moving kind of the real economy and the financial sector and and kind of everything that's sort of more modern and posts Soviet um uh further down the food chain, right? And putting them in structurally subordinate positions to um you know, the hydrocarbons that pays the bills and and the the um uh and and the security apparatus at the top. um that I mean that's been a long running transition uh really for a number of years that predates the war but it was always reasonably fluid and I think there was always this sense that that you know uh there was still a lot to play for and that you might eventually be able to to shift your way back up up the system and you would still see companies you like a wild berries or something that would come along and and really emerge and and become really quite um uh profitable and and um and political ally profitable uh uh within the system that has nothing to do with the old economy or hydrocarbons or or anything like that, right? Um it's it's um it's new economy kind of stuff. So um the people who whose interests are in those sectors of the economy, right, I think are nervous that things could shift so far that either they're not going to be there anymore, right? It's all going to be outsourced to China or whatever and and and and they won't have a role to play. Um or even if if they are there, they will be so structurally subordinate they'll simply be taxed into into irrelevance either through formal taxation or sort of just the informal rent taxation that that takes forces them to pay patronage up to a system that doesn't really serve their their interest. So I think that there is anxiety over that and people would like to to see that that doesn't um go any further than it has to and the longer the war goes on uh in the in in this current uh uhh format right the the the more likely it is that that that um unfavorable scenario for them comes to fruition.
Of course, you have people on the other side, right? Um who um are now in positions that uh are much more favorable than they've been in for a very long time. Um and would very much like to reinforce those positions and make sure that whatever happens next, right, it's not a return to what the political economy looked like before the war. Um again, not necessarily because they want to be at war, but because maybe they do, but war justifies their predominance. M >> um and so once that justification is gone, right, we're back to that sort of uncertainty that we were talking about a moment ago, right, it becomes very uncertain for them uh as well. And so I think we we do see them and we have seen from the beginning of of of the war. we see them um arguing um not just for an escalation and a continuation of the war but for taking the current relationship with the West and making it permanent. So that even if the fighting stops, right, that that Russia remains in a stance of geopolitical and geoeconomic confrontation and isolation from the West and this runs the gamut from the you know the the the security folks that we know right to some of the more deerist economist people like uh adeskin right in in and around the the the government right so it is um I I I've in some previous report referred to these these two groups as sort of the foxes and bears, right? And and and that that that first camp I see is the foxes. They're not they're not Democrats, right? They're not liberals. They just want, you know, uh the system to run a little bit more in their favor. And and that's more easily done if Russia has some kind of a peaceable uh relationship with the West and isn't spending all of this money on on the war. And then you got the bears on the other side that that really benefit from from this um arrangement.
The one person who doesn't benefit from this debate is Putin. >> For a while, I think that he did benefit from it. um because it allowed him to uh continue to play these sides against each other. And and if you remember, Putin really has never and he still hasn't ever given us a vision of the future of what Russia looks like after this war, >> right? Because as soon as he uh nails himself to to that vision, he makes one of these groups happy and he makes the other one unhappy and the whole thing becomes less stable, right? So right now there's everything to play for for both of these groups. And that tends to be the way that Putin likes it unless both groups come to the conclusion that the status quo in the war isn't tenable. Right? Because what Putin says when he goes on TV uh is not that we're going to negotiate our way out of this war, right? Um and not that we're going to escalate the war. He says everything's going great, >> right? and and we're going to keep going this way because it's great. >> Yeah. >> Yeah. >> And nobody believes that anymore, right? In the elite. And and so that's the that's the challenge uh uh uh for him is that a system and an arrangement that was really designed to keep both of these sides guessing, right? Has now given them one thing to be sure about, and that's that the current strategy doesn't have long to run.
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