Who’s Winning and Losing in Putin’s War Economy?

The war effort in Ukraine, however, is creating economic losers as well as winners. For the past several months, FilterLabs.AI has been tracking sentiment positivity and negativity in mainstream and social media discussions of the economy, Putin, elections, and the war in Ukraine in Russia’s various regions. Despite upbeat official statements, not all is well in the Russian economy, especially on a regional level. 

Many experts and Russia analysts have been discussing the Russian economy lately— both the resiliency it is showing and some areas of vulnerability. Powered by our AI tools, the FilterLabs team has been taking a close look at some vulnerabilities, and particularly how some of them vary by region. We’ll be releasing an in-depth report on our findings later this month, but in this newsletter we wanted to highlight just a few themes in one region: Crimea.

Case Study: Crimea

Crimea is the region most directly impacted by the war. Large numbers of Russian military personnel are stationed in the peninsula, which was annexed by Russia in 2014, and it is also vulnerable to Ukrainian drone strikes. 

Crimea is a special case in some ways, given its recent annexation, among other factors. The region has changed hands numerous times in the past century, so it is not surprising that its population holds a variety of allegiances and views regarding Russia and Ukraine. And Crimea is ethnically diverse — though less so than prior to the annexation ten years ago. By 2021, the number of ethnic Russians (already the majority) had risen sharply. The population of one of the two largest minority groups, Crimean Tatars, was holding relatively steady; not surprisingly, the number of Ukrainians, the other major group, plummeted. Other ethnic minority populations were declining as well. 

But in many ways the same on-the-ground realities seem to be affecting Crimeans that would come into play anywhere. Wars can be extremely economically disruptive, and sure enough, since last summer local news stories about the economy have included increasingly negative language:

Going into the summer of 2023, there was good news on the economic front. News outlets trumpeted a 110-billion ruble tourism cluster; the Russian National Commercial Bank promised to allocate 120 billion rubles to a company called SKG Park for the construction of “Our Crimea Park,” a massive theme park; and K-Telecom invested 4 billion rubles into the economy of Sevastopol, Crimea’s largest city. No wonder the stories were upbeat.

Things changed over the summer. As can be seen in the graph above, the sentiment in pieces in the media discussing the economy fell sharply, and it has trended downward overall since then. Looking more closely, we found that the media is reporting national and local economic problems. High inflation and interest rates, a problem across Russia, are impossible to ignore. The value of the ruble has fallen; local businesses like wineries, which depend on tourism, cannot make a profit, and yet rents remain high across Crimea, and especially in Sevastopol. The increasingly negative sentiment in the media’s coverage reflects these realities. 

Is the economic situation influencing the local political outlook? Perhaps. Consider this analysis of sentiment in regional news articles that mention both the war in Ukraine and Russian elections:

Once again, sentiment began to drop over the summer. Looking more closely, FilterLabs found that economic issues were prevalent in the election coverage, and much of the coverage of them took a negative view. News stories were bemoaning the low tourism rate in Sevastopol (surprise: nobody wants to summer in a war zone), and the negative effect that the war was having on construction, enterprise, and the retail trade. 

The economy’s effect on Putin’s standing was slightly more complicated. Once again, in an analysis of Putin and the election in regional news stories, FilterLabs found increasingly negative attitudes in the summer of 2023. But then attitudes became more positive:

Over the summer, even stories mentioning Putin included increasingly negative language. There were stories on budget shortfalls for construction projects, stories on the destruction of the Crimean bridge, and letters from Crimeans saying they wanted to leave the region immediately. 

Then stories suddenly became increasingly positive, and sentiment rose throughout the autumn. Putin and his party were mentioned in a lot of positive coverage of local festivals and awards, including a fifth anniversary of the Festival of Young Art, which was started in Kapsel Bay, Crimea. There were pieces on Sevastopol residents voting for Sevastopol in a national contest of cities.

Maybe this upswing in positive sentiment was spontaneous. Maybe it was the result of a propaganda campaign. But either way, it’s notable that attitudes toward the economy and the election did not move along with it. Negativity may not be surrounding Putin himself, but the war and economy are clearly placing a major burden on Crimea. The economic and human costs of warfare cannot be spun away so easily.

The Power of Large Language Models in Local Contexts 

Every day there are countless economic transactions, and nearly as many news stories and publications on social media, messenger apps, and online forums. How can we understand them all, especially when official sources, like the Russian government, are unreliable?

At FilterLabs we are using AI and Large Language Model tools to gather and analyze enormous amounts of data, which enable us to track hyper-local sentiment on a variety of topics. As a result, FilterLabs is able to identify often overlooked vulnerabilities in the Putin regime. In Crimea, for example, language in stories about Putin has been tending in a positive direction over the past few months, while language in stories about the economy and the war has tended in the other direction. Such a gap could lead to cognitive dissonance, a major step toward political dissatisfaction. 

A detailed report of key findings in our analysis of Russia’s current vulnerabilities, and how these play out in a number of Russia's regions, is in the works. Stay tuned.