Putin’s Big Mistake, and the Coming Russian Brain Drain That May Lead to a Failed State.

Everyone I know with large business interests is hedging against a failed Russian state.

The hedge looks like this, citizenship or the equivalent elsewhere. Family outside of Russia, ownership outside of Russia, in case Putin reinstates some sort of draft that seeks to scoop up fighting-age males to plus up the invading force. There are some rumors that Putin will order a general mobilization of the population on the occasion of their May 9th celebration of beating the Nazis.

Conscription is a red line for many and will surely result in further Russian brain drain. This I’ve heard from the Russians I’ve spoken to confidentially from the business community.

Several Confidential Russian sources revealed the following to SOFREP:

“30% of my friends in the business community have already left Russia, and more will go if Putin decides to conscript adult males.”

“Outside of the older generation of Russians, nobody under 50 wants this war or to die fighting in Ukraine. There is no fighting spirit in Russia like we see in Ukraine’s population.”

Russian rubles (Petar Milošević, Public domain, via Wikimedia Commons)

“The ruble declining was actually good for Russian business owners because loans in ruble were paid off in US dollars.”

“While extremely tough to deal with, most can move money around the sanctions with offshore bank accounts in Georgia, Turkey, and elsewhere, then convert to dollars. If you are personally named in the sanctions, this is a major problem.”

“I’m in the process of applying for US citizenship for my family.”

President of Russia Vladimir Putin at a meeting Federal Chancellor of Germany Olaf Scholz in the Kremlin in Moscow. (Kremlin.ru, CC BY 4.0, via Wikimedia Commons)

Prior to invading Ukraine, Putin could have given a Master Class on Foreign Policy. Now, he would struggle to teach Foreign Policy in community college in what has been a massive miscalculation on his part.

And like an obsessive alcoholic gambler in Las Vegas, he’s doubling down with his chip stack while the crowd winces in anticipation of what comes next.

Some scenarios come to mind that are worth considering:

1. Ongoing war that lasts years and eventually ends with Ukraine bombed flat, massive civilian casualties, and Russia firmly in control but at great cost. It could eventually lead to #3 as well.

2. The US and EU give Putin a face-saving off-ramp that cedes Ukrainian territories loyal to Russia and creates a land bridge to Crimea. This negotiation would likely be brokered by Chinese leadership (the big winners in any outcome) and would be the best path forward, in my opinion.

3. Failed State scenario. A massive exodus from Russian industry and total economic collapse ushers in an era of splinter States like we saw when Yugoslavia collapsed. A civil war breaks out in Russia as Putin and the Kremlin fight to hold the country together.

4. The Nuclear option. Putin uses a tactical Nuclear bomb to bring Ukraine to its knees and shake the global leaders to their core as a way to get what he wants. This would be incredibly bad for everyone, the Russians included. The scary part of this scenario is that I think the Biden administration and the EU would “Bend the knee” for Putin. It would also wreck our nuclear deterrence strategy forever. Putin could then take back Poland, Hungary, Romania, Estonia, Latvia and the rest of the old Soviet empire with the threat of using nuclear weapons if his conventional forces fail on the ground.