Putin is cannibalizing Russia's economy as war in Ukraine derails financial order, Yale researchers say

• Putin has begun a "merciless cannibalization" of Russia's economy, two Yale academics said.
• Researchers pointed to the chaos unfolding in Russia as Putin tries to cover the nation's growing budget deficit.

Vladimir Putin is ruining his nation's economy, as the Russian president is derails the financial order in his quest to conquer Ukraine, according to two Yale researchers.

In a recent op-ed for TIME, Jeffrey Sonnenfeld and Steven Tian, two academics from the Yale Chief Executive Leadership Institute, pointed to the economic chaos unfolding in Russia as the war in Ukraine drags on.

Though some estimates show that Russia is spending surprisingly little on its "special military operation," official statistics show that the nation has racked up around a $40 billion budget deficit so far this year, thanks to increased military spending and falling revenue as western sanctions bite into key sectors of its economy.

"Far from the prevailing narrative on how Putin funds his invasion, Putin's financial lifeline has his merciless cannibalization of Russian economic productivity," Sonnenfeld and Tian said. "He has been burning the living room furniture to fuel his battles in Ukraine, but that is now starting to backfire amidst a deafening silence and dearth of public support."

Putin, for his part, has tried to shore up more money as the war effort continues, but has done so in ways that have largely ignored Russia's fiscal responsibilities, the researchers said. That includes measures like printing record volumes of Russia's ruble "out of thin air," forcing institutions to buy "near-worthless" Russian debt assets, hefty windfall taxes on "basically anything that moves," and taking billions out from Russia's sovereign wealth fund to square the nation's finances.

Those measures have contributed to the flight of millionaires and everyday workers, who have left the country to look for better opportunities, significantly hurting the nation's output and productivity. And though Putin has made a show of Russia's economic strength, his actions have only bought Russia more time, researchers warned.

"That resilience is nothing but a Potemkin façade, sustained not through genuine economic productivity but rather through shaking down the entire country for pennies to direct towards war," Sonnenfeld and Tian said. "Putin can continue to sustain his invasion of Ukraine this way, but in doing so, continues to rip off his own people. In avoiding outright economic collapse by mortgaging Russia's future, he grows more unloved by his people and is thus increasingly weakened.

Sonnenfeld and Tian have been critical of the state of Russia's economy, despite Putin's attempts to assure the public that Russia is doing just fine. Unpublished statistics from the Kremlin are likely to show a weaker picture of Russia's economy than the government has led on, Sonnenfeld and Tian said, who previously argued that Russia's economic figures were merely "cherry-picked" and that its economy was actually imploding.

"Amidst such undisguised plundering of the Russian economy, stripping it down for war toys, it is perhaps no surprise that Prigozhin's failed putsch this past weekend revealed no lost love for Putin domestically from the Russian populace and elites," the researchers said.