David and Goliath

Posted: 22nd March 2023 Key

The War in Ukraine enters its second year. Russia’s position is weaker than you might think.

Russia’s Strength

With the passage of time, the news media’s interest in Ukraine has begun to fade a little, perhaps because there appears to be no progress in the war, perhaps because what is unfolding there is both deeply concerning and unbearably sad. Every night, TV news shows images of Russian rockets landing on Ukrainian cities, wantonly destroying ever more lives, homes and vital civilian infrastructure.

It’s clear that his ‘special military operation’ hasn’t turned out quite the way Mr Putin intended. It wasn’t over in a couple of weeks. Ukrainians didn’t throw down their arms and embrace their Russian brothers as had happened in Crimea in 2014. As the year went on, Ukrainian forces repulsed the initial attack on Kiev, sank the Russian flagship Moskva, recaptured swathes of territory in the northern Donbas region east of Kharkiv, and finally re-took the strategic city of Kherson towards the end of the year.

These reverses have not led Mr Putin to question the wisdom of invading his smaller neighbour.

Vladimir Putin Tells It Like It Is

Mr Putin gave his own version of events in his speech to the nation on February 21st, a furious rant against the West and its values in which, once again, he blamed the US and NATO for the war. This speech gives us an invaluable insight into Mr Putin’s current state of mind and is worth quoting at some length.

‘The United States and NATO quickly deployed their army bases and secret biological laboratories near Russian borders. They mastered the future theatre of war during war games, and they prepared the Kiev regime which they controlled and Ukraine which they had enslaved for a large-scale war’.

Now they admit this publicly and openly, and they feel no shame about it…they behaved just as shamelessly and duplicitously when destroying Yugoslavia, Iraq, Libya and Syria. They will never be able to wash off this shame. The concepts of honour, trust and decency are not for them.
The West is using Ukraine as a battering ram against Russia and as a testing range.
Look what they are doing to their own people. It is all about the destruction of the family, of cultural and national identity, perversion and abuse of children, including paedophilia, all of which are declared normal in their life…. millions in the West realise that they are being led to a spiritual disaster. Frankly, the elite appear to have gone crazy, and there is no cure for that, but we must protect our children (from degradation and degeneration) which we will do.
Those who have embarked on the road of outright betrayal, committing terrorist and other crimes against the security of our society and the country’s territorial integrity, will be held accountable for this under law’.

It’s clear from the above that Mr Putin remains totally committed to the war. In his mind, Russia isn’t fighting Ukraine but is engaged in a do or die crusade against the decadent forces of America and its allies whose aim is the destruction of Russia and its pure spiritual values. As he puts it ‘The Western elite…plan to finish us once and for all…and we will respond accordingly, because this represents an existential threat to our country’.

Does Mr Putin actually believe what he says? Doesn’t he remember that it was he who started the war, or that NATO’s help to Ukraine stops short of sending troops or longer-range missiles, or entering Russian soil? Doesn’t he think that these restraints would be a curious approach in the conduct of total war? Or that under him Russia has become a police state, where ‘terrorist and other crimes’ include placing flowers at the feet of statues or mentioning that the war is a war?
What matters is that Ukraine and its supporters are fighting a war against a delusional obsessive who will refuse to admit defeat. This makes the war harder to win.

Putin wasn’t always delusional. He has a clear, bright mind and is a lucid and persuasive speaker, but two decades of absolute power and of being told what his acolytes think he wants to hear, culminating in the setbacks of the last year, have brought him to where he is now.

Other depressing items of recent news include the various ways in which Russia has managed to evade sanctions, the mobilisation of 300,000 troops since September, the reported hardening of Russian public opinion behind the war, and Mr Putin’s repeated threats to use nuclear weapons.
Recently, Western companies who still have assets in Russia have been ordered to sell them, at prices fixed by the state, around half or below half their market values. As no overseas buyers can be found for these assets, they are likely to end up in the hands of Mr Putin’s oligarch friends, a nice little bonus for them.

Russia’s Weakness

Mr Putin’s weakness arises from the fact that the situation in Ukraine is not as he imagines it. He believes that Ukraine is governed by a gang of neo-fascists controlled by America. In fact, Ukraine stands united behind President Zelensky who enjoys an approval rating of over 90%. The head of the armed forces, Valery Zaluzhny, is also hugely popular.

Like Hitler before him, whose career his own mirrors in many ways, Putin’s actions have produced the opposite result to what he intended. Instead of demonstrating the weakness of NATO, the invasion has reinvigorated NATO. Instead of drawing Ukraine back to Russia, the war has pushed the two countries further apart. Putin’s Russia objects to Ukraine’s increasingly westward orientation. The war has decided Ukraine’s future, which now lies to the west – this has ceased to be a matter of debate and become inevitable since the invasion. Ukraine has formally applied to join the EU and aims to join NATO as well. 86% of Ukrainian people are in favour of their country joining NATO, compared to around 50% a year ago. Since the war began geographical divisions within Ukraine have ceased to have any meaning. Civil society has grown stronger. The war against corruption – a major channel of Russian influence within Ukraine – began before the war but has accelerated in the last year.

Any lingering hopes that Russia might be a benign supportive neighbour have been cruelly dispelled by the indiscriminate destruction of civilian targets.

Mr Putin lost his war in Ukraine some time ago. His war aim was the bloodless reintegration of a neighbour which ‘was never a state in any real sense’. The war has been far from bloodless, and after a year of conflict Ukraine, which sees itself ever more clearly as a sovereign state, will do anything to avoid falling into Russian hands.

Public Opinion

Best estimates of casualties on the Russian side are 175-200,000, including 40-60,000 dead. Soldiers have come primarily from Russia’s east. On Monday February 21st, a BBC Panorama programme showed a graveyard outside a city in Russia’s far east which was shocking in its extent, with row upon row of newly dug graves extending into the distance. Citizens who agreed to be interviewed expressed concern about the war with its high toll of casualties. This concern can only spread in the heart of Russia as more and more people know someone whose life has been claimed by the war.

The free expression of opinion in Russia is distorted by extreme levels of police brutality and by the suppression of all independent media channels. There appear to be three main attitudes among Russian people – first the USSR revivalists, fervently patriotic supporters of Mr Putin, then those who believe the government’s propaganda, but are privately concerned about the situation, and finally those who oppose the war, but in most cases, with good reason, are too frightened to say so. It’s hard to know what the proportions are between these different groups, the first of which is highly vocal, the last necessarily silent, but data collected by the Economist magazine suggests that support for the war is not as overwhelming as Mr Putin would like to think.

Even before the war, younger Russians didn’t accept the narrative of a beleaguered Russia and over half had positive views about America. This age group watches far less television than its parents and so is less exposed to government propaganda.

Between 2017 and 2021, the number of Russians saying that free speech was important to them increased from 34% to 61%.

20% of Russians polled recently were opposed to the war, and the number who believe that the Special Military Operation is going to plan has fallen from 40% last summer to 15% recently.

The Spring Offensive

A Russian spring offensive has been anxiously awaited for months. It appears to have begun a few weeks ago along the Eastern front and particularly around the ‘meat grinder’ of Bakhmut, a north-eastern town of 70,000 inhabitants, lately reduced to a ghost town with just 5,000 inhabitants remaining. Total Russian gains so far amount to 60 square kilometres. The Russian army is desperately short of shells, vital in what has largely been an artillery war. The 300,000 men recruited since the autumn appear to have been used to bring depleted units back to strength rather than build new capacity.

The Wagner mercenary group has been recruiting prisoners from Russian gaols, promising them freedom once the conflict is over. However, the supply of prisoners is running short, and word of high casualty rates has got back to Russia, where men are opting for the safety of prison.

Yevgeny Prigozhin, founder and head of the Wagner group, close confidant of Mr Putin and undoubtedly one of the most evil men alive, has made no secret of his contempt for the regular army. Recently feuding has broken out between Mr Prigozhin on the one hand, and Chief of Staff Gerasimov and Defence Minister Shoigu on the other. Prigozhin accuses Gerasimov and Shoigu of treason, alleging that they have cut off Wagner’s access to ammunition and air transport.

Mr Putin reportedly believes that time is on his side. Perhaps the NATO coalition will split. Perhaps the US, under a different president (another Trump term would be ideal from Mr Putin’s point of view) would row back from a conflict which has begun to lose popular support in the US. Perhaps Ukraine will collapse under pressure. Maybe China will come into the war on the Russian side (of which more later). All of these are real possibilities. In the circumstances, you might think that Russia’s best tactic would be to lie low, conserving men and materiel until better opportunities arise. But you’d be wrong – the offensive began as early in the year as it could, with little to show for it so far, apart from the imminent – and by now meaningless – fall of Bakhmut. It’s possible that Putin wanted to get his blow in early, before deliveries of Western armaments begin in spring, or maybe it’s simpler than that – he can’t believe the extent of Russia’s weakness.

The Home Front

Russia faces challenges on the economic front, too. Its economy contracted by 2.0% last year, a most resilient outcome in the circumstances, due largely to a windfall from the oil price spike in mid-year, which is unlikely to recur unless, as some predict, China’s unlocking causes another, smaller spike. Around 500,000 people have left Russia in the last year, mainly the best educated and most employable, and including around 100,000 IT specialists. Their loss will be felt in the economy and society.

Russia has repudiated its western markets and now relies on selling oil to Turkey, India and China at below-market prices. Now that western economies have found alternative sources of energy, Russia can no longer weaponize the supply of these essential commodities, as it has done or threatened to do for so long.

Russia has proved adept at evading sanctions, but there is a cost of importing industrial goods in retail-sized parcels, and EU countries have responded to sanctions evasion by updating legislation to close loopholes.

Corruption weakens economies. Under Putin corruption, his favourite modus operandi since the early days in St Petersburg, is the central pivot of the economy. Corruption is inefficient, siphoning money from productive to unproductive channels. It increases inequality, reducing almost to zero the number of people who are genuinely engaged in the economy and lowering public morale.

Russia’s government now takes a far higher share of the economy than a few years ago, and around a third of its spending goes on ‘defence’ at the expense of healthcare and benefits.

The Echoes of History

The career of Vladimir Putin echoes that of Adolf Hitler in a number of important respects. Both characters exhibit high levels of paranoia. Both exploited strategic blunders on the part of western governments. The treaty of Versailles gave Hitler his opportunity. The treaty imposed an insanely harsh schedule of reparations payments on Germany, causing its economy to collapse. The ensuing chaos allowed Hitler to inspire the masses with visions of national revival and revenge against Germany’s oppressors.

In Russia’s case, the blunder was the handling of NATO’s expansion in the decade after German unification. Virtually all European heads of government had solemnly promised that, once East Germany had joined NATO through West Germany’s existing membership, NATO would respect Russia’s security and not expand further east, but then numerous former Soviet satellites were allowed to join the alliance. Today, should first Finland and then Ukraine be admitted, NATO will share an extensive land border with Russia – exactly what Messrs Gorbachev and Yeltsin were told would never happen. Russia’s concerns are entirely understandable and should have been addressed at the time. We are harvesting the bitter fruits of that failure today.

Hitler and Putin both dreamed of establishing empires, in Putin’s case of rebuilding one. Both started with small acquisitive moves which irritated the western powers without provoking more than a token response. Both were emboldened to attempt larger incursions, the invasion of Poland and Ukraine respectively. Both were surprised when the hitherto supine western powers responded with force.

Hitler’s war was lost long before the Russians arrived in Berlin in May 1945, perhaps as early as January 1943 when the German Sixth army surrendered at Stalingrad, but though the inevitable outcome became obvious to everyone, no one could prevent the carnage from continuing for more than two years, because no one in Germany was able to overthrow Hitler, and ill luck thwarted the assassination attempt of July 1944, which if successful would probably have brought an earlier end to the war.

Hitler was in power for almost seven years before launching his war. Putin has had twenty-three years in which to tighten his grip on the Russian state, and his grip is now very tight indeed. All opposition has been ruthlessly crushed. As it becomes plainer that the Ukraine war is lost, as ever more bodies are returned for burial at home, can there be any hope that his by now wholly malign regime can be overthrown from within? The possibility appears remote, and yet an ageing, ailing Putin can’t continue forever. The most likely alternatives could be either – God forbid – an even more extreme warmonger (though probably not Mr Prigozhin, who appears to have over-reached himself) or a popular uprising against the war. Protestors would have to overcome the obstacle of a brutal, reinforced police force – government spending on repression increased 50% last year.

In the last months of the war, Hitler’s inner circle kept their spirits up by clutching at straws. Hitler was convinced that there would be a sudden reversal of fortune, such as happened to Frederick the Great. The V2 rocket would turn the tide in Germany’s favour, President Roosevelt would die and America would pull out of the war, the Allies would turn against each other, or realise that Russia was their real enemy and invite Germany into an alliance against the common foe. These fantasies kept the Nazi leaders’ hopes alive until the very end.

Mr Putin has probably started entertaining similar fantasies about what might turn the war in his favour. Perhaps the threat of nuclear war will deter the allies, perhaps the US will decide to pull out as it recently did from Afghanistan, perhaps the millions of conscripts he believes he can mobilise will overwhelm the opposition. Perhaps China will come into the war on the Russian side.


As China and America drift towards a cold war, the Ukraine conflict comes gift-wrapped for the Chinese.

On the one hand, China poses as a high-minded neutral, urging the two sides to negotiate and offering itself as an arbitrator.

On the other hand, its sympathies are entirely on the Russian side. Chinese premier Xi Jinping refers to Russia’s invasion of Ukraine as ‘America’s War’ and represents it as an inevitable reaction to NATO expansion. China’s attitude is well summed up by Wang Wenbin, Foreign Ministry spokesman, when he says that the US is ‘endlessly shipping weapons to the battlefield. We urge the US to earnestly reflect on its own actions and do more to alleviate the situation, promote peace and dialogue, and stop shifting the blame and spreading false information’ – hardly the words of a neutral.

In Taiwan, China has a Ukraine of its own – a country which considers itself an independent sovereign state, but which China’s leaders consider to be an integral part of China – like Tibet. The US has undertaken to come to the aid of Taiwan in the event of an invasion. Allied failure in Ukraine, which could include a ceasefire that hands Russia de facto rule in the four breakaway Donbas republics and Crimea, would encourage China in its bid to absorb Taiwan.

US Secretary of State Anthony Blinken says that China has already begun to consider supplying arms to its Russian ally. This would be the worst possible outcome. Ukraine President Zelensky says ‘If China allies with Russia, there will be a world war’. We must hope that China decides in favour of the high moral ground, perhaps as a counterargument to US criticism of China’s appalling treatment of the Uighurs.


Peace is as far away as ever. Mr Putin now says he is not fighting against Ukraine but a war of survival against the corrupt western elites who are seeking to destroy Russia (the ‘corrupt western elites’ being his equivalent of ‘world Jewry’ in Hitler’s narrative). Putin will not be satisfied until Ukraine returns to Russia, and perhaps not then. Ukraine is fighting to restore its 1991 borders, including the Crimea and the whole Donbas region. Ukraine’s allies believe that Ukraine must win and that Mr Zelensky must decide what victory looks like. Just as Mr Putin isn’t fighting Ukraine, the allies aren’t fighting Russia, but against Putin himself.

Between the opposing points of view there is no common ground at all.


The conflict appears to have reached a bloody stalemate which commentators believe could last indefinitely. In fact, the situation is remarkably unstable. The war is using up ammunition faster than it can be replenished. The Russian war machine looks tired and at odds with itself. The NATO coalition looks solid – unless America steps back from its leading role.

There are many in Russia who understand that Putin’s war is a war against Russia’s future. Russia risks becoming the world’s largest failed state. Russia needs peace as much as Ukraine does. My hope is that Putin can somehow be replaced by people who understand this. A failed Russian campaign this spring might just be the trigger for change to happen.

Another item on my wish list is for President Erdogan to lose the Turkish presidential election in May, though of course there’s a risk that if he does so he’ll seek to overturn the result. A less belligerent Turkey would remove its spurious veto on the accession of Sweden and Finland to NATO.

Peace negotiations with a more amenable Russia would include acknowledging the rights of the Russian majority in Crimea, as well as properly addressing Russia’s concerns over being surrounded NATO countries. Under Putin, Russia has done all it can over two decades to undermine western democracies. Without him, a new relationship could develop which would include the re-opening of trading relationships between Russia and the west. The peace dividend could be incalculable. Without Putin’s support, the odious dictatorship of Lukashenko in Belarus would quickly collapse. Ukraine and Belarus could become peaceful, prosperous democracies as Poland has done.

These things are not impossible. The actions of warlords are often counterproductive. Hitler, for example, didn’t establish a thousand-year Reich, didn’t conquer Russia, and his policy of genocide led to the creation of the state of Israel. Germany after Hitler has become one of the most peace-loving nations on earth, chided by one and all for not spending enough on its armed forces. The west should welcome a reformed Russia, should one emerge, with open arms, acknowledging the mistakes that have contributed to the disaster of Ukraine.
The alternative, a long proxy war between the US and China, which might spread from Ukraine to other areas, is almost too horrible to contemplate. The possibility that Putin’s Russia might actually deploy nuclear weapons, though remote, is utterly sickening.

One way or another, I believe the situation will have changed beyond recognition by this time next year.

Tony Yarrow

February 28th, 2023


Please note, these views represent the opinions of Tony Yarrow and do not constitute investment advice. This document is not intended as a recommendation to invest in any particular asset class, security or strategy. The information provided is for educational purposes only and should not be relied upon as a recommendation to buy or sell securities. Wise Investment is authorised and regulated by the Financial Conduct Authority, number 230553.


Tony Yarrow