German experts talk about the return of the Soviet “planned economy” to the Russian Federation, but point to an important loophole in the actions of the Kremlin.
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After nearly five months of war against Ukraine, Russian autocrat Vladimir Putin appears to be entering a new phase in his military strategy. On Thursday, the Kremlin signed a law that allows the government to introduce “special measures” to support military operations abroad.
This means that Moscow can now oblige individual companies to adapt their production to the needs of the Russian army in the war against Ukraine, Focus writes. Employees can be forced to work in night shifts, on holidays and without holidays. Thus, Putin effectively introduced the old socialist planned economy. According to Stefan Meister, an expert on Russia from the German Council on International Relations, the Kremlin is putting the Russian economy on a “war-rails”.
“The law actually allows the state to dictate to Russian companies how much they will produce, how long they will work what should be the price for their products and services,” Meister explained.
This means that there will no longer be market rules in Russia.
“Now there will be a powerful intervention in the Russian economy by the state, aimed at the reorientation of certain companies to support the army in the war against Ukraine,” the German expert added.
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According to Meister, all this speaks of the Kremlin's preparation for a long-term war. Now the Russian army has lost supply chains, there is a shortage of materials for the repair and maintenance of military equipment. The sanctions have caused serious problems for the country's military industry. According to the expert, entire parts of the Russian economy will be reoriented to support the Russian Armed Forces and security services against the background of the war with Ukraine.
“This means that military needs will take priority over civilian production,” Meister said.
At the same time, he doubts that the Kremlin will be able to achieve its goal of conquering Ukraine. Sanctions have created a shortage of Western technologies and components in Russia, which will continue to hinder the production of modern military technologies. Even with the transition to a “war economy”, certain things will still be in short supply. However, according to the expert, “Putin will turn everything around to fill the deficit and better provide for his army.” The law he signed is an admission that the war will last a long time. And the Russian economy will be able to compensate for the losses only if it switches to a completely different production regime.
“We will see whether this will work over time,” said Meister, adding that the further course of the war will be more influenced by whether the West will increase arms supplies to Ukraine, not Putin's decision.
