by Stefano Caprio

Against all odds, Russia's GDP is growing at a fast pace. There is no longer any need to put something aside for the 'dark times', which have already arrived. Everything is pouring into immediate consumption, and of course the main bulk of the money ends up in the war industry, around which the various groups in an endless supply chain are growing.

With discussions in the Moscow Duma on changes to tax reform, seeking to introduce ever more extensive taxes and saying goodbye for good to the welfare system of recent decades, Russia is preparing to definitively redefine itself into the war economy, destined to shape the country for many years, even after the eternal reign of Tsar Putin.

The latest gimmick is the increase in the divorce tax, which kills two birds with one stone: it affirms the prevalence of 'traditional values' by defending the family and the principle of the indissolubility of marriage, and at the same time ensures abundant and guaranteed revenue, since Russia, beyond its proclamations, has little connection to those same values, with a much higher divorce rate than in most countries in the world (last year alone there were more than 700 thousand).

On the other hand, it has also been proposed to eliminate the marriage tax, for the same reasons.

The effect of these measures on the lives of Russians is actually paradoxical, as instead of impoverishment, a season of prosperity and enrichment seems to be opening. The President of the Central Bank of Russia, Elvira Nabiullina, has revealed that credit to individuals and companies is actually growing a lot, because 'the population is getting richer and richer'.

Against all odds, Russia is breaking all records for its GDP growth rate, which was 3.6 per cent in 2023 compared to the 1.8 that had been predicted, and in the first four months of this year rose to an indecent 5.4 per cent, creating popular enthusiasm for the 'mobilisation economy'.

One of Russia's most prominent economists, Professor Igor Lipsits, who now lives in Lithuania after being kicked out of academia and declared a 'foreign agent', explains to Radio Svoboda that 'previously Russia used to leave part of its export earnings as reserves abroad, now nothing is left and everything is reinvested within the country. There is no longer any need to set something aside for the 'dark times', because the dark times have already arrived, and no future awaits.

Everything pours into immediate consumption, and of course the main bulk of the money ends up in the war industry, around which the various groups in an endless supply chain grow. Soldiers need not only weapons, but also food, clothes, medicine and much more, and the whole population lives in a state of mobilisation, even those who do not have to go to the front, at least for the time being.

More than a 'war' economy, it could be called an 'end times' economy, a feeling of apocalypse experienced live. The religious dimension increasingly applied to politics and society creates the illusion that Russia is already in the kingdom of heaven, that it is above the earthly turmoil of peoples in the grip of the Western antichrist, and that the soldiers in Ukraine are angels descended to defend the purity of the saints.

President Vladimir Putin wished to confirm this feeling, making a pilgrimage to the St Sergius Trinity Lavra, where he and Patriarch Kirill venerated Rublev's icon of the Holy Trinity, which has now become a symbol of the heavenly reunification of the Slavic peoples, kissing the sarcophagus containing the remains of St Sergius of Radonež, patron saint of militant Russia.

The gross domestic product grows, but produces nothing for the future of Russia, which has now reached its sempiternal state. As Lipsits states, 'Russian GDP is now buried under the black soil of Ukraine, along with the fallen and the weapons on which so much money is spent'.

The 'gross product' is not so much about what is produced, but how much is collected in added value, while the large investments in the war add nothing: it is a huge waste of money, a 'dance of death', as the daily life of Moscow appears with the arrival of summer, a continuous gathering of parties and revelry in every corner and venue of the capital.

In theory, the government's new measures should inspire a great spirit of sacrifice and support for the needs of the moment: we are surrounded by enemies, we tighten our belts and give up luxuries. Instead, the opposite attitude is produced: if everyone is against us, we can enjoy it to the full, because we have nothing more to lose.

This illusion is unlikely to last long, but the current generation of Russians has lost the dimension of 'duration'; three years of war after three of pandemic are worth a geological era in people's minds.

The apocalyptic exaltation will inevitably be followed by a long 'Putinist stagnation', since by now all the parameters of Russian social life lead back to the mechanisms of the Soviet system, those of the 'horizontal economy' that is always the same.

Economists warn of the danger of the 'elastic' effect of GDP, which expands and then backfires, the money you have wasted comes at you, until you are left with nothing. Forty per cent of the entire Russian budget is defence spending, but the rest of the 'civil economy' also includes huge building investments for the reconstruction of Mariupol and other destroyed cities in Ukraine, a very un-civilised chapter of the programme. Many other points of the official budget text are secret, and much of it is about the 'closed economy', indecipherable and gloomy as it was in Soviet times.

When Mikhail Gorbačev inaugurated perestroika, the key step he failed to achieve was precisely that towards the 'civil economy', while the whole system was geared towards the aims of the Cold War, to be sustained indefinitely.

The items in the budget were classified as 'mobilisation potential', so that in every 'civil' item factory there was a war conversion procedure, to be activated at the slightest sign of new conflict. In the 1990s, these 'potentials' remained with the companies without any support from the state and ended up causing continual bankruptcies.

It could not be disposed of, because it was a 'sacred treasure' far more important than the development of civil society, and it was precisely this that was one of the main reasons for the collapse of the USSR economically: not being able to renounce war in order to build peace.

Gorbačev was accused of depressing the economy with the laws against alcoholic beverages, and many attribute the end of the Soviet system to the losses from the war in Afghanistan, but in reality these were trifles compared to the boulders of the war economy as a whole, which drained all the resources of the communist empire.

Today, we have not yet reached those levels, but Ukraine could turn out to be a new Afghanistan for Putin's Russia; not the Afghanistan of the Taliban, who now go hand in hand with Russian politicians, but the country that resists every new assault, with the support, albeit unwavering, of the entire West.

For now, however, the Russians want the war to continue in order to make money; in a relatively peripheral town like Ivanovo, 300 km east of Moscow, business with the weaving of military uniforms has generated a veritable boom in earnings, and the locals are just hoping for new mobilisations.

There are resounding paradoxes, such as the collapse of the real estate market in the face of the huge growth of the construction market: everything is done to sell properties that nobody needs any more, and instead go to build the new houses in the devastated areas not only in Ukraine, but also in the Belgorod region and other affected territories. Buyers throw themselves into it by buying for a few roubles, hoping to do business who knows when.

Domestic tourism has intensified dramatically, as not everyone is able to travel to pleasant Asian or Cuban beaches, and as a result, domestic flights are increasingly active, even though the planes are less and less reliable due to lack of maintenance and spare parts.

In the Crimea, the majority fears Ukrainian drone assaults, but the state is offering increasingly attractive incentives, including hotels at almost no charge, because otherwise they wouldn't fill up, not to mention the perverse allure of holidaying in a war zone, which stimulates the sense of omnipotence of those who want at all costs to feel victorious, and contemptuous in the face of any danger.

Not only war exaltation and apocalyptic carefreeness keep the Russian population in a state of hypnosis with respect to economic developments, and the future of the country. For years, Putin's only policy line was 'social stability', after the convulsive 1990s that had shattered all certainty.

People don't want to know how things really are, they take advantage of new and unhoped-for possibilities, and exploit the wave of certainties quite different from those of the communist sharing of assets, or the paternalist protection of the oligarchs. Russia has chosen to isolate itself in its own world, an increasingly phoney and incomprehensible Russian world, above and beyond geographical, historical, cultural and religious coordinates.

Just as it was for the Soviet Union in the last century, so in the third millennium Russia is attempting an unprecedented experiment: reversing the course of history, enjoying the present in order to return to the past, erasing the future forever.

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