Why is the Russian leadership busy smashing its own economy?

Over the past year I have mentioned numerous times the criticism that is being addressed to Russia’s central bank and its director Elvira Nabiulina. Deputy chair of the State Duma Babakov has used his frequent appearances on the Evening with Vladimir Solovyov to explain at length how the extraordinarily high prime rates, which peaked at over 21 percent and held there for months on end though inflation was no more than 10 per cent was bankrupting small and medium businesses across the land and also starving high priority infrastructure and technology projects of the working capital they required to perform their mission of establishing economic sovereignty.

Now I stress how the growing power of the FSB (successor to the KGB) is also causing great harm to the economy, far more than Western sanctions presently when Russia is raking in hard currency from its unique position to serve countries starved of supplies by the Strait of Hormuz blockade.

Some readers have ridiculed my complaints over intermittent internet services and nonfunctioning GPS guidance for cars due to the temporary blocks, which may last several days at a time, which supposedly are hindering drone attacks on Russia. However, the problem has only multiplied and intensified several times over since my last visit in November 2025 and now is clearly a big hindrance to conducting business at the level where most people live and work.

I know from two days experience that I cannot access my bank in Belgium to order a payment to American Express. I cannot be sure that any email or WhatsApp messages I send actually are received by the addressees in a timely manner if at all. Now my real estate broker who is assisting us with a pending transaction told me that the internet disruptions are causing her great difficulty in getting documents to clients, in scheduling meetings and more.

As you know, my planned interview yesterday on Judging Freedom did not take place because the Petersburg fixed line internet has been slowed down from 4G to what is probably 2G. That is not a specific block on given websites but a blanket restriction that de facto makes it impossible to send or receive anything other than emails, and not even to accept their attachments if they are data heavy.

Some readers yesterday responded to my words about the FSB crackdown on civil society by saying that you have to be fully aligned as in North Korea if you want to survive the provocations and attacks from the West.

I have to ask how many defenders of those stripping away human rights would want to live in North Korea. These folks are talking geopolitics abstractly, without reference to themselves or you and me.

Beginning with Gorbachev and Yeltsin, then dramatically in the first 20 years of Vladimir Putin’s time in power, Russia became a very normal country where its citizens enjoyed the freedoms that we say are essential to ourselves. What right does any of us have to offhandedly say that Russians should go back into their caves so that Putin can champion the birth of a multipolar world. That is the same logic that the Europeans are using to justify sending Ukrainians to certain death on the battlefield so that Europe can be free of Russia. Easy to say when you do not feel the whip on your own skin.

In the last seven years of his life, I was a close collaborator of Professor Steve Cohen, who had long been a defender of human rights in the USSR. We shared common interests elsewhere – in bringing the Russian point of view to the attention of a broad US and Western audience at a time when a new Cold War was taking shape and a nuclear war once again loomed over humanity. However, in present circumstances I feel obliged to take up his other cause, human rights in Russia, that Cohen took deeply to heart. And what I see around me here prompts me to speak up.

Ordinary people with whom I am meeting are not at all happy with the war but just keep their mouths shut on political issues. They are especially unhappy with the security crackdown that I am describing. But their silence should not be our silence.

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I freely admit that for outsiders it is difficult to understand where the Russian economy is headed and why. You hear on media in Russia that their ruble is now the best performing currency in the world. After all it has risen by about 20 percent from my last visit in November, with most of that rise in the past few weeks.

I find it amazing that The Financial Times and other periodicals addressed to the business community do not comment on this fact and especially do not consider why this is occurring. I will hazard a guess that Russian oil sales at real world prices, not discounted, are presently booming and they are being paid in rubles bought with dollars or euros, driving up the exchange rate of the ruble.

However this exchange rate bonanza does not help the small and medium size companies here that are suffering from lack of normally priced working capital. And the disruptions to the communications infrastructure on which business depends is dragging down the economy, while providing Russians with no added security. Their security is not helped by the FSB. It can be helped only by the Ministry of Defense blasting Kiev to smithereens.

©Gilbert Doctorow, 2026

There are no former CIA agents

Many of you have probably heard that refrain before. To which I am now obliged to add: there are no former KGB agents. I have been saying for years that Putin showed enormous personal growth during his years in power, and those who harped on his career in the KGB were failing to see the changes in the man. Now, regrettably, I see that he is reverting to whence he came.

I say this because day by day it is clear that a crackdown on Russian society is proceeding under the false explanation that it is necessary to prevent drone strikes, to stymie assassination attempts by Ukrainians, and so forth. To that I say: nonsense. These measures are useless. The only way to ensure the safety of Russia and its citizens today is to decapitate the Zelensky regime by missile and bomb strikes on Kiev, on Lvov and other key cities in Ukraine: Everything else is make-believe.

Generally on these pages we talk geopolitics. Today I am talking politics, which is about who holds power. And today it is the successor to the KGB, the FSB, that daily acquires more power to monitor and control civil society. If you are not a Putin worshipper, watch out! The same vile oppression that Americans experienced after 7/11 under the Patriot Act is playing out here in Russia.

A day ago I called attention to the vicious words of journalist and talk show host Vladimir Solovyov when he denounced all those Russians who want to see the war ended very soon, calling them defeatists and agents of the enemy. Another straw in the wind was the announcement a couple of days ago that the internet platform that gives Russians direct interface with the government, Gos Uslugi, announced that it will be accepting and implementing requests from citizens that phone calls to them from abroad not be put through. The West may be basking in Russophobia. But the Russian authorities are now encouraging xenophobia at home..

I remain cut off from Substack, which appears to be blacklisted in Russia presently. And today I was cut off from an interview with Judge Andrew Napolitano on ‘Judging Freedom’ because the internet was dead – both mobile internet and cable internet – in the entire region of St Petersburg. I am told by friends and acquaintances that this occurs fairly frequently nowadays. This runs entirely counter to the notion of a country open to the world that Putin has claimed time and again.

*****

Yesterday I reported that the nearest Economy Class supermarket to me has reduced their product assortment and sacrificed quality to maintain prices compared to what I saw on my last visit in November 2025. Today’s visit to the upper middle class Perekryostok supermarket in my neighborhood showed a different picture. The product range has even grown since my last visit and quality is excellent. To be sure, on many items prices are approaching West European levels. Investment in technology is impressive, none more so than the scales that print price labels for fruits and vegetables that you choose to buy. The scales visualize the broccoli or pears that you put on them to weigh and ask you to confirm that it is indeed broccoli or pears. We have nothing comparable in Belgium or elsewhere in the countries of the EU that I visit.

On the other hand, that Perekryostok supermarket is short on labor. In their very large store, there was only one cashier on duty and she also had to look after parcels that had been preordered by customers and to assist the customers who were being directed to self service checkout machines but could not complete their purchases unaided. Simply, there are not enough workers to go around. This is reconfirmed by the sign I saw today on the side of a Yandex taxi – recruiting drivers with the promise of earnings of 2,000 euros a month. That figure is several times what it used to be before the Ukraine war and it comes not from some newfound generosity on the part of management.

I insist that apart from the several hundred thousand workers who left the private sector for the highly paid 6 months of service in the war zone, the labor shortage is also due to the vastly bloated bureaucracy that employs so many people doing what no one should be doing at all. During their 9 to 5 days, they are busy dreaming up new regulations and constraints on civil society. As I have said before, Russia badly needs its own Elon Musk to set things right.

Copyright: Gilbert Doctorow 2026

You have to love Russia very much to like it

To my subscribers and other readers of this WordPress platform, I say you are more fortunate for the coming 3 weeks or so than my subscribers and other readers of my Substack account, who will likely be cut off from my observations on the ground in Russia, where I will be staying during this period. Cut off, because it appears that the Substack site is rejected by the Petersburg service providers just as LinkedIn and youtube have long been. Why? As they say in Brooklyn: don’t ask. No rational reason comes to mind. However, my Substack access here may come back one of these days, just as WhatsApp works here one day and then goes black for a spell.

The situation with respect to the internet has moved from bad to worse in the nearly 6 months since my last visit here when I complained of intermittent mobile internet blackouts. Now it appears that hard wired internet by cable to private residences is also performing bizarrely. If you think this is just a nuisance without financial and life-style implications, then you are ignoring how engrained instant internet communications were to the daily lives of Russians, just as they are to all of us in the West: And the harm is entirely self-inflicted by the powers that be.

In a moment, I will turn from these smaller irritations to big picture issues. But first let me share a couple of offsetting positive points felt in the 24 hours since I set foot on Petersburg soil. First there is the weather. It is now and tomorrow will remain sunny, with cloudless skies and an ambient temperature of 29 degrees. So in meteorological terms, we are enjoying far more summer like days than in Western Europe. More to the point, was my experience in a visit to the local farmers’ market in the center of Pushkin, this outlying district of Petersburg. The fruits, vegetables and other produce from Iran; Serbia, and other locations that none of you see as suppliers to Europe or farther afield were fantastic: The enormous dried, brilliantly white boletes, the highly aromatic porcini as most of you better know these mushrooms, were extraordinary, all the more so because they were unavailable at what should have been the peak season, November, when I was last here. In short, the temptations of visiting the many vendors’ stands were as striking and picturesque as what my wife Larisa Zalesova described in passages of her recently published novel Nadine’s Story. Those scenes in her book were from the late 1970s. But the impossibility of leaving the market stands and their remarkable vendors without purchasing many treats that were not on your shopping list is as striking today. Very colorful. Very different, say from French or Italian street markets.

I balance out this enthusiasm with the less positive observation from my visit to the Economy Class supermarket just across from my apartment complex in Pushkin. Clearly there has been continuing churn in the suppliers and products on the store shelves, with a downward trend in terms of honesty of recipes in the prepared foods section, which amounts to hidden inflation. Indeed, my first impression from Day One, is that in various goods and services, prices in Russia are truly on the rise and in some categories are approaching the highly inflationary prices I see now in Western Europe. Also there is a narrowing of choice in some areas, like yoghurts, where Danone and other Western brands that now have left the market created demand and took a lot of shelf space. Of course; in some other product areas, like hard cheeses, what I see of Russian production is continuing expansion of product lines that do make dining more interesting.

*****

Now let us turn to the higher issues of politics, where I have some observations to share coming from my watching and comparing the latest broadcasts of Russia’s two most serious and widely watched programs of commentary that we call ‘talk shows’: the Evening broadcasts of Vladimir Solovyov and The Great Game hosted by Dmitry Simes. These two shows are headed in very different, indeed contradictory directions in terms of respect for the broad Russian public:

To my surprise and shock, in his Sunday evening show Solovyov was simply awful: he has stopped all pretense at neutral analysis and has become a vicious propagandist for Vladimir Putin and venomous denouncer of anyone who does not speak of the Commander in Chief in glowing terms: Specifically, Solovyov told his audience that Deep Russia supports the war, understands that its leaders have no obligation to make public their plans for its further prosecution; for any offensives or attacks they may be pondering. He denounced those who say that the war should be ended quickly, calling them agents of the enemy, defeatists. My, my our Putin cheerleaders in the West must have been heartened to see their view of things validated by a leading personality on Russian state television, which they have repeatedly denied as having any relevance to Russian political life.

In that same show, one panelist, a member of the State Duma objected to Solovyov’s denunciation of Russia’s own deplorables, noting that he receives a great many letters from constituents asking why the war is being dragged out and not ended quickly with the weapons at Russia’s disposal that have been held back. He added that these letter writers appear to be highly patriotic and well wishers of their country’s future. To all of this, Solovyov replied that he and the Duma member would remain on different sides of the issue.

I contrast this Politburo like position of Solovyov to the far more serious words that I heard a day ago from Dmitry Simes and a Senator (member of the upper house of the Russian bicameral legislature) on The Great Game. They were in agreement that the latest developments in the Ukrainian drone attacks were posing an unacceptable threat to state security of Russia, and that the Europeans are now openly at war with Russia. The reasonable conclusion they both drew is that the conduct of the war by Russia must be greatly altered now, that all self-imposed restrictions on use of its weapons arsenal against Kiev must be dropped. And in saying this they also say that it is not a criticism of how the war has been fought till now; it is merely recognition that the war has changed in nature and so a different response is required from Russia. This different response must begin with real destruction of the decision making centers in Ukraine, destruction of their bridges across the Dnieper and other major rivers, putting an end to ‘political tourism’ of Western leaders to Kiev, and so on. Beyond that, Simes and his panelist were saying that it is time to consider direct attacks on Europe, beginning with attacks on the Baltic States, which have been especially obnoxious in their provocations and calls to other European states to bring Russia to its knees in a humiliating defeat.

All of this brings us to the question of what may be the issues driving the accelerated timing of President Putin;s two day visit to Beijing this week for talks with President Xi. Surely it is not to hear from the source what Xi may have discussed privately with Donald Trump last week, as some of our Western media are suggesting. I venture the guess that it is to discuss the coming Russian change from war of attrition to an “escalate to de-escalate’ scenario that analysts like geopolitical expert Sergei Karaganov have been urging on Vladimir Putin for more than two years.

Copyright Gilbert Doctorow, 2026