Vare: Russian elections will reinforce the Kremlin’s war economy

Economist Raivo Vare told ERR that the main purpose of Russia’s elections is to demonstrate public support for the war. He said the Kremlin would secure the result it needs on paper, while a closed-door struggle over shrinking resources and the redistribution of assets could also bring changes among the ruling elite.

Vare said the rise in fuel prices in the United States was primarily linked to disruptions around the Strait of Hormuz, rather than Ukrainian attacks on Russian refineries.

“A significant share of diesel, not only crude oil, came from there, and now that the strait is closed, there is a shortage,” Vare said. “That naturally pushes up global market prices.”

He added that some refineries were also scheduled for maintenance ahead of the autumn season, further reducing supply. Global prices were affecting the US market, where freight transport relies heavily on diesel. Gasoline prices had also started to rise, he said.

With the US midterm elections approaching, the price increases created problems for Republicans and especially for President Donald Trump, Vare said. In his assessment, Trump needed someone else to blame for the situation and had therefore accused Ukrainian President Volodymyr Zelenskyy.

Vare said Zelenskyy had not accepted calls to stop attacks on Russian energy infrastructure, particularly after Russian strikes on energy and utility facilities. He added that Zelenskyy had initially asked Russia to provide a list of facilities that should not be attacked, but that Moscow had not supplied one.

Asked whether the bombing of an oil refinery near Moscow was connected to Russia’s election weekend, Vare said this was partly the case. The Kapotnya refinery was particularly vulnerable if Ukrainian drones broke through the air defences surrounding Moscow, he said.

According to Vare, the refinery’s production infrastructure was built vertically rather than spread out, meaning a single strike could hit several industrial units needed for fuel production.

He said the facility’s sixth primary processing unit had been put out of operation. That unit processed 60 percent or more of the refinery’s oil, after which other units produced diesel and gasoline.

Vare said the disruption had left Moscow facing fuel shortages. Queues had formed at petrol stations and fuel was being rationed, while some stations had run out of fuel entirely.