Data for Understanding Russia

Media exaggerate the impact of sanctions. Also: prediction updates

The predictions in my Understanding Russia post from 12 days ago got picked up by Scott Alexander, Metaculus, The Hill, and others. I’m glad people found the post interesting!

Here are some updates:

Life is still normal in Russia

I remain in touch with many of the people I met during my three months in Russia. I’ve checked in with them, and here’s what they’re telling me as of March 17 (3 weeks into the war.) One friend in Moscow writes to me that things are:

…totally normal. McDonald's stopped working (which is for the best))) in other stuff... Nothing changed)

Oh, just one moment! No masks anymore, thanks god! [The Moscow mask mandate, already mostly ignored, was just ended. The mayor cited the need to help businesses facing sanctions as a reason.]

You know, after all these years... I am starting to think, that russians love sanctions 😂 sounds crazy, but people (mostly) are glad that something is closed, because we can improve our producing of stuff... There is almost ready Russian analog for Instagram [because Instagram was banned]

Another tells me:

I don’t see the difference in life here, yet. Only time will tell…

One in Belarus says:

… everyone I think calmed down a bit, seems like the war will end soon hopefully …

A fourth person, in Moscow, sent me video of a Ukrainian news anchor who cited the Nazi Adolf Eichmann and called for killing Russian children in revenge for the invasion. The video has been played all over Russian media, from the Twitter account of Russia’s Ministry of Foreign Affairs, to Pravda. If you’re interested in the video’s accuracy and context, see this footnote.¹

But the big picture here is that life in Russia is still normal, and that furthermore, plenty of Russians find the points made by their government convincing.

It’s important to get a sense of how Russians are faring, and their attitudes, if we want a sense of whether there’s significant popular pressure to remove Putin. It seems that there is not.

We also don’t need to rely only on anecdotes.

The Washington Post reports on an independent phone survey of 1,640 Russian adults between Feb. 28 and March 1:

About 46 percent of respondents said they firmly supported the action, and about 13 percent said they somewhat supported it. [16% firmly opposed it, and 7% somewhat opposed it. 12% said they didn’t know, and 1% declined to answer.]

I downloaded the full dataset, and the breakdowns are interesting. Takeaways:

• Every age and gender group was more likely to support the war than oppose it, except for women aged 18-24:

Men aged 18-24 back the war by a very thin margin (35% support vs 31% oppose, for a net support of +4 in the graph above), but women age 18-24 oppose it by a 2-to-1 margin (23% support vs 47% oppose, for -24 net support)

The millennial generation (25-39) is significantly more pro-war than Gen Z, per the poll; men support it 51% vs 24%, and women support it 38% vs 32%.

Support rises steadily with age. Senior citizens (over 65) support the war 75% vs 16%.

Are respondents being honest, though? Maybe they are afraid to express opposition? I suspect that is only a small factor based on my interactions with Russians, but — here’s what the chart would look like if we count all “maybe”, “don’t know”, and “refused” answers as “opposed”:

Then it’s a more mixed picture, but still slightly favoring war.

Here are other interesting notes (numbers below use the method of the first chart):

• Government workers are more pro-war (+42; 61%-vs-19%) than private-sector workers (+20; 49%-vs-29%)

• People with family members in the military are slightly more supportive of war (+41; 69%-vs-18%) than people without (+32; 56%-vs-24%)

• Moscow and St. Petersberg are much less pro-war (+14; 48%-vs-34%) than mid-size-city residents (+35 ; 58%-vs-23%) or rural people (+50; 66%-vs-16%)

• Russians who were in “constant contact” with “close acquaintances” in Ukraine were only somewhat less supportive of war (+22) compared to those without (+32)

• Virtually everyone said Russia would win the war, as of March 1 (73% to 8%)

• Young people (18-24) still report that TV news is a major source of information (42%), with 23% listing internet sites, 18% Telegram, 13% Instagram, and 10% YouTube. In contrast, 88% of Senior citizens listed TV as a major news source, with 11% internet, 6% YouTube, 0% Telegram, and 0% Instagram.

• People did not report financial hardship. 31% said their financial situation had improved over the last year, while 49% said unchanged, and 17% said it worsened. Recall that this poll was conducted Feb 28 - March 1, one week into the war. On March 1, the Ruble was at about the same level it’s at today.

Attitudes may have changed since March 1, but the people I am in touch with (generally age 25 - 39) do not seem to have changed their views, and they say life is normal.

The impact of sanctions is overstated in western media

Sanctions have indeed been extremely tough and swift, leading to headlines like this, in Fortune: “The sanctions against Russia went from toothless to devastating overnight as its economy began collapsing.”

Or the NY Times: “The New York Times Global Sanctions on Russia Are Taking a Toll … The effects on the Russian economy could be devastating.”

But the vast majority of Russia’s economy is still operating as normal.

See this report by JP Morgan, written for its institutional clients (not available online.) I obtained it from an American who works in finance:

Note that JP Morgan’s report says: “Despite widespread reports of supply chain disruptions, the financial flows, electricity consumption and other high-frequency data do not point to a big drop in activity through early March.”

Additionally, the report estimates that Russia has experienced 4.3% inflation since the war started, and that it’ll be 17% over the whole year. That’s more than double the US’s already-high inflation level, but it’s not apocalyptically bad. It’s nothing like what Venezuela recently experienced.

JP Morgan also expects a 7% decline in Russia’s GDP this year. That is a lot, but not world-ending. For comparison, in America’s “Great Recession” of 2008, which we all lived through, GDP fell 4.3%. In the Great Depression, GDP fell 30% over the 4 years from 1929 - 1933.

JP Morgan also says: “the financial system appears to be stabilizing, with rubles flowing back to banks and RUB finding a tentative balance.”

The Russian 1000-ruble note ($10) contains a hologram of a bear with an axe, shaking its fist

Currently, one US dollar buys 105 rubles; still higher than pre-war, but also an improvement from the peak of concern, when a dollar bought about 140 rubles:

Now, could JP Morgan be wrong in its forecast that Russia is not facing an apocalyptic crash? It could be. But I trust them much more than flashy media reports about “devastation” from sanctions, given that JP Morgan advises clients with billions of dollars on the line.

Russia is signaling that it may end the war in the next couple of weeks. Will it?

Predicting the future is difficult here, but let’s at least go through some important facts that weigh on whether we should expect peace in the near future.

First, Russia avoided default on its bonds this week, paying out its creditors in US dollars as promised. A friend in finance, whose company received payment on such bonds, suggests that this hints at Russia intending to re-join world markets via a peace deal.

After all, why pay one’s debts, if the people you’re paying can never do business with you again, anyway?

It’s an action-based signal that Russia hopes to normalize things soon.

But what’s the rush, for Russia? Most of the info in this post suggests that Russia does not need to reach a quick resolution (though it might still want one) since it can withstand both internal popular pressure and also the economic impact of sanctions.

Another reason Russia might want a quick deal: the weakness in its low-morale, part-conscript, poorly-equipped, and poorly organized military. Russia has hardly made any gains in the last 10 days against Ukraine’s ultra-highly motivated army equipped with western weapons.

Russia’s military impotence may be its real motivation for peace.

Russia is really talking up the prospect of peace to its own people. Here’s a Pravda headline from this week:

“Putin and Zelensky may sign peace agreement within the next two weeks”

Of course, we can’t necessarily take Russia’s statements at face value.

The Washington Post argues:

Russia’s public optimism about a deal is a source of interest for diplomats. Officials familiar with the negotiations attribute it to one of two strategies. One is that Moscow is serious because the Kremlin wants to roll back existing sanctions. The other is that Russia wants to create the impression of seriousness in a bid to head off even more sanctions.

Vitrenko, the Naftogaz [Ukrainian gas company] executive, subscribes to the latter.

“Russians are now making this impression that there is progress with negotiations for a very obvious reason: they don’t want the West to impose tougher sanctions.”

Plausible. Maybe the sanctions greatly annoy Russian elites, even if they aren’t an existential threat to the Russian economy.

Russia also notes that peace talks are still hung up on questions of territory. A Pravda article this week titled “Moscow and Kiev find common language on key issues” says:

“Moscow and Kiev have reached maximum bilateral rapprochement on issues of Ukraine's neutral and non-bloc status, the head of the Russian delegation, presidential aide Vladimir Medinsky said.”

But, the sticking point:

Speaking about the question of the governance over Donbass [meaning both Donetsk and Luhansk], Medinsky said that it was up to the people of the Donbass to make such a decision.

“The Russian position on the Donbass has been clearly formulated. The Russian Federation has no opportunity to retreat from it,” Medinsky said. 

Note that Russia phrases this as wanting “the people of the Donbass” to decide, but that probably means holding a sham vote.

Putin also re-interated this goal in a public speech this week, stating that the security of these territories is the goal of his attack.

Another important thing to consider in assessing Russia’s seriousness in negotiating: what about all the new territory it has seized in the war? There is quite a lot of it, with much of it having strategic importance to Russia:

Wikipedia’s map, because it most clearly shows provincial borders. It closely matches other maps, such as one by the Institute of the Study of War.

Russia has occupied:

— Most of Luhansk, one of the two territories it declared independent before the war. But Russia has yet to capture the region’s biggest population centers, which it is currently bombarding. About half of the region’s population lives in these untaken cities. Russia has also failed to take most of Donetsk, the other formally-contested territory.

The city of Mariupol, in Donetsk, in on track to be taken at the cost of extreme brutality to Ukrainian civilian targets. An estimated 80% of homes in the city have been destroyed. Control over the ruins would give Russia a corridor to Crimea.

— Virtually all of the Ukrainian province of Kherson, just north of Crimea. The AP notes: “Control over Kherson allows Russia to restore fresh water supplies to Crimea; Ukraine cut off the water after Russia annexed the peninsula in 2014.”

— Most of the Ukrainian province of Zaporizhzhia, completing the land route to Crimea.

— A buffer zone just about everywhere that Russia borders Ukraine.

Will Russia keep any of these expansions?

On the one hand, Russia expended an enormous amount of lives and efforts to get these places; would they really give them all up?

On the other hand, maybe Russia sees that these places would be an enormous headache to occupy in the long run.

Updated Predictions

Based on all the above info, I’ll try adjusting the predictions from 10 days ago. These are rough attempts, but putting thing is probabilities helps keep our thinking about things rigorous. First, I’ll add a new scenario:

0. Bloody slog, Ukrainian “victory” (0% → 5%) — Ukraine gains a military advantage due to high motivation and modern weapons, and over the next several months pushes Russia out of Ukraine — everywhere but Crimea, at least.

This seems unlikely due to Russia’s numerical advantages, and ongoing negotiations — but on the other hand, Ukraine is already successfully pushing Russians back in some areas, so it is possible.

Now, to adjust the old scenarios:

1. Bloody slog, Russian “victory” (15% → 5%) — Russia continues fighting for months, kills Ukraine’s President or forces him into exile, establishes either direct or puppet control over all of Ukraine, or, at least Kiev plus all of Ukraine that borders Russia.

Explanation for change: Russia gained almost no ground in the last 10 days, and furthermore, even Russia is starting to disavow this scenario — claiming that it never wanted to depose Ukraine’s government, and that it doesn’t need Kiev.

2. Bloody slog, “draw” (10% → 20%) — Russia’s military tries for months, but proves simply unable to take and control Kiev. Russia instead contents itself with taking Ukraine’s south and east … and calls it a win.

This still seems quite plausible, especially if Russia is just “faking it” regarding a peace deal, and actually intends to hold its extensive captured territory.

3. Peace treaty, Russian “victory” (20% → 10%) — Ukraine’s government gets to survive in some remaining part of the country (e.g., Lviv, maybe Kiev), but Ukraine and NATO agree to never allow Ukraine to join NATO. Russia also gets, at least, all of Donetsk and Luhansk (not just the parts they had pre-war)

Russia’s stalled military makes this less likely than before, and I can’t find any coverage of peace talks even suggesting that Ukraine might accept this.

FYI, there are also new betting odds at Polymarket on: “Will Ukraine formally cede Crimea, Luhansk, or Donetsk by May 31, 2022?” Bettors put the odds of that at 23%, which seems roughly in line with my 10% for ceding both Luhansk and Donetsk in full.

4. Peace treaty, “draw” (40% → 60%) — Ukraine’s government and NATO agree to never allow Ukraine to join NATO, but Russia returns essentially all land captured in this war; it does not get to take the entire Donetsk or Luhansk territories, or any other additional Ukrainian region.

More likely by the day. The public releases from both Ukraine and Russia point to this resolution.

5. Russian internal collapse (15% → 5%) — Putin tries to keep up a bloody flight, but the impact on Russia’s population or military become intolerable, and Putin is removed. Prediction markets basically put this at 22% [now 24%]

Based on polling data, my contacts in Russia, reports about Russian elites, and economic data, I think this is less likely than people realize.²

Conclusion

Let’s hope for a quick resolution to the war.

This is a tough topic to write about given how much we don’t know. It’s hard to be confident about anything in such a case.

But I think the specific facts that I do know, above, are still worth sharing.

I hope you found them informative!

Kiev in relatively peaceful times (July 2021.) Though on the lower-right is a wall with names of the thousands of Ukrainian soldiers killed fighting over Donetsk and Luhansk between 2014 and 2021.

1. Regarding the accuracy of the clip, it was on Ukraine’s Channel 24, a major broadcaster. Here’s what we know the presenter said on the air:

"As long as they call us Nazis and fascists in Russia, I will let myself quote Adolf Eichmann, who said that in order to destroy a nation, one should destroy children first. When one kills their parents, children will grow up and take revenge. When one kills children, they will never grow up, and the nation will disappear. The armed forces of Ukraine cannot destroy Russian children because it is prohibited by the rules of war. It is also prohibited by various conventions, including the Geneva Convention. Yet, I am not from the Armed Forces of Ukraine. When I get a chance to do away with the Russians, I will definitely do it.”

What’s false, per the Ukrainian outlet, is the photo of Eichmann on screen, which was not placed there by the TV station.

Cathy Young digs further:

… it immediately followed a segment in which the presenter, Fahruddin Sharafmal, burst into tears while talking about the death in combat of his friend, marine company commander Pavel Sbitov. (Indeed, Sharafmal can be seen wiping away tears at the start of the clip …

Nor did it mention that the very next day, Sharafmal made a statement of apology on the air:

I ask your forgiveness for my outburst yesterday. It was unacceptable from both a journalistic and a human standpoint…

… Sharafmal is … a rather poor candidate for “Ukrainian Nazi”: he is a brown-skinned ethnic Afghan, i.e., the kind of person who would not fare well in a country dominated by neo-Nazis …

2. I also took my own advice, and bet against this at PredictIt. In general, I back these predictions with a willingness to bet on them, so they’re not merely empty words.