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From globalization to innovation sustainability to market volatility, there's always more than one side to a story. Explore different perspectives on today's most important business and economic issues with the Flipside podcast from Barclays Investment Bank. Hear two research analysts in a lively debate and get insights from every angle.
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To further inform your view, listen to
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the Flipside on your favorite platform. This intelligence podcast is sponsored by Back Market, the leading global marketplace for refurbished tech. When the kids need phones, laptops or tablets for school, buying refurbished tech makes sense for families trying to save money without sacrificing quality. At backmarket tech costs up to 50% less compared to new. All devices have been professionally refurbished and come with a 1 year warranty and 30 day return policy. Start saving money. Visit backmarket.com or the back Market app to shop now. The economist.
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Hello and welcome to the Intelligence from the Economist. I'm Rosie Blore. Today on the show life in Kyiv as attacks intensify and our week long journey down Route 66 reaches its destination. But first. Four years of war have vastly changed Russia. As the fighting has come closer to home, the conflict has become everyone's problem.
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Russia is facing a growing fuel shortage as Ukraine expands drone strikes on Russian energy sites, including the country's largest strikes on Kyiv.
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The Russian leader is now facing trouble at home. As we hear from now, a sense of nervousness is palpable in Moscow and discontent is becoming more audible. Russia's elite feel that the country has reached a dead end. One of them, a billionaire industrialist called Andrey Melnichenko, has been thinking about a way to change that for the past few months. He's spent over 60 hours speaking to our Russia editor, Arkady Ostrovsky. Today I'm joined by by Arcadi and our deputy editor, Ed Carr to discuss the future of Russia and Melnichenko's vision for it. Hi Ed. Hi Arkady.
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D
Hi Rosie.
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Hi Rosie.
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C
Ed, let's deal with the nuts and bolts first. Who is Melnichenko and why are we featuring him so prominently in the Economist this week?
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D
Well, he is an oligarch. He is one of, I would say, along with Abramovich, Russia's two most important oligarchs. He's different from many of them in that he didn't acquire his riches and wealth in assets in the 1990s during the chaos there. He rather built it up as an industrialist. He's the fertilizer king. He's big in coal, big in steel. But he's also a guy who was forced back to Russia because of personal sanctions and having played by the normal rules of oligarchs, ignoring politics, make as much money as you like, he's now back in Russia. Politics matters to him. Russia matters to him. And he sees Russia heading in a bad direction.
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And, Arkady, tell us about the time you've spent with him. What's striking about what he says and why should we be listening to him?
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Yes, as you say, I spent about 60 hours over the past three months, and it started with one meeting in Istanbul. It was not supposed to be part of an interview. And he said something to me which made me sit up. He said, for the first time in my life, I feel Russia is my country. I've come back to him. It's now the only country he's going to have. This is the guy, as Ed said, who's lived this global life. I don't think it's just sanctions. I think the whole kind of order of his life has fallen apart. His factories are getting attacked by Ukrainian drones. He is also facing attacks, not just from Western sanctions, but from some rapacious Russian security services who want to take part to it. And the fact that this guy is starting to speak is actually the most striking part of it, not just what he is saying.
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D
He's not an anti Putin figure, he's not an opposition figure, he's not an anti war figure. His plants have supplied ammonia that's gone into explosives for the war. He's not a rebel. That's the wrong way to think of this. This is a man who was able to forget about his homeland. He was a global citizen. He's now back in Russia. What happens in Russia affects him directly, and so he feels he's got to do something about it.
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C
We all know how dangerous it is to speak out if you're inside Russia. So something big has changed here. What's changed within Russia?
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D
Well, my view is that what's changed is that the Ukrainian deep campaign has started to affect mass feeling in Russia. For most of the war, Russians have just kind of shut it out of their minds. They haven't want to think about the war. Well, the deep strikes are affecting ordinary life most directly through fuel shortages, big queues. We've seen videos of bus stops and fist fights at petrol stations. At the same time, Crimea, big success for Putin when he annexed it in 2014, is now isolated again. Bloggers have started to speak out. There's just a feeling that the stalemate is becoming a real problem. The war seems futile and unending, and that is producing discontent. Now Putin has to respond to that. And I think Malenchenko is worried that he responds to it by escalating and repressing, and that's something he's desperate to avoid.
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Yeah, I think there is a sense that the war has come home for somebody like Milichenko, whose factories do get hit. I think they all feel that it cannot carry on as it is because whatever Putin is doing is not working. So he sees two scenarios. One is Putin increases the cost of it, which means escalation, repression, all that stuff, the security services locking down, or he scales back and makes the country more inclusive to avoid this cliff. But the sense of it's become everybody's problem. And therefore, if it's everybody's problem and these are the guys with resources, they want to play a part in it, it's very existential. It's not some theoretical scenarios to these people is the question of life and death and their future.
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D
And it's not as if Russia's about to rise up. It isn't a popular revolution or something. That's not what's happening. What's happening here is an understanding of futility, an understanding that Putin's got to respond and that if he responds in the wrong way, people like Melnachenko and other oligarchs fear this could go very, very badly for them.
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And do you buy that?
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D
We've always thought, right from the beginning of this war, if there was a stalemate in the front, the war would be decided in Moscow. And I haven't been able to see the mechanism. I don't know this is going to result in something. But this is exactly the kind of scenario in which you see gathering forces in Russia demanding a voice. And Putin faces a very, very difficult choice. Milotuko's too careful to challenge him directly, but he is presenting Putin with a dilemma. You either cling onto your power and things get worse, or you can give up power and there might be something better. That's a choice that he's trying to force on Putin before Putin's committed to escalation.
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I do buy it. I think if you look at Russian history, the big changes actually always start happening at the top. The people then respond to them, but they don't lead necessarily the revolution. It can only happen, however, if there is a discontent around. If he is starting to lose the war, that is what strips somebody of legitimacy. Whether you're called the tsar or the general section of the Communist Party, doesn't matter. This is why I think this is all starting to happen. It's the combination of the sense of the elite that it cannot carry on its dead end. It's the discontent building from below. And it's coming at the time when the war is achieving absolutely nothing. So that's the background, I think these are the elements from which something might happen. A lot depends on Ukraine, a lot depends on the West. But my sense is something is happening.
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C
I have to ask this, even with the generalized discontent, even with the state of the war, Melnichenko, how much of what he says is self serving is about him? Could he be using us?
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D
Of course it's self serving, yes. I mean, he's not doing this because he's high minded. He's not doing this because he's anti war. He's doing it because he thinks this is the route to survival. And you have to remember people like Melanchenko have taken risks and bets throughout their lives. You don't end up as the most powerful industrialist in Russia unless you have a big appetite for risk. So it is self serving. But the question is whether his analysis is right about the structural forces that are shaping Russia now.
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The most interesting things in history happen when the self interest of the people who have resources start coinciding with the forces of history and the interests of the country. That's what happened at the end of the Soviet Union, ultimately, was the self interest of the elites that wanted to retain their status. That's what led the transition from the Soviet Union to Russia.
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We're talking about the forces of history. Where does this leave Russia's future, Putin's future?
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It shows that the war he had started, as I thought from the beginning, will change Russia. Russia will not, I don't think, in the longer term, continue to be what it was. I think what we're seeing with this intervention is that there is a force entering the scene. It will be the question of whether Russia can transition into a different entity with genuine parliament, with genuine participation. Minichenko takes a very long view. This is the guy who invests for 35, 40, 50 years. By the time it happens, he won't be around. He understands that you can't do this by violence. And he sees Russia only has a future if it's attractive to people inside and predictable to the world outside.
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D
I think, though, it's important to remember that he doesn't cast himself as a democrat. His idea of sovereignty is much more inclusive. It's much more about the Kremlin serving the people. But he doesn't propose a democracy. I can quite easily see Russia being, by our standards, authoritarian, but just much More effective.
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C
Ed Arcadi, thank you so much for talking to me.
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D
Thanks, Razi. Thank you.
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It was a new one even for me. We were at the Kyiv Central Station at a midnight train Preparing for a 27 hour journey back to the UK.
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Oliver Carroll, our Ukraine correspondent, has just arrived in London.
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The train coming in from Kharkiv was late. Anyway, these things happen in Ukraine. Not so much leaves on the line as exploding ordinance around the train. But as it arrived, we hear these ballistic missiles going off all around the station. You see drones, you see lasers tracking them. When we eventually get the go ahead to leave, this is about an hour later, the train is already two hours late. We were actually very lucky. It was the last train which was allowed to leave the station. But I think that sort of story tells you a little bit about the kind of air war this has become for people living in Ukraine and especially the capital, Kyiv.
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C
Oli, we've just been talking to Arkady about the war finally coming home to ordinary Russians. But of course for the people of Ukraine and for you who've been there for four and a half years, the war has been at home all of that time. You say this is a new escalation. Just explain how bad the attacks have been.
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Yeah, I think it's useful perhaps to think of the attacks on Russia as sort of a political messaging, because in the main, these Ukrainian drones, they're far less powerful than the combined Russian ballistic cruise drone attacks. There are exceptions when interceptions and electronic warfare mean they go into buildings, but generally speaking, they're not really affecting civilian buildings that much. It's a political message in Ukraine. What you're seeing is, first of all, less of these attacks, but more intense when they happen. So the Russians are stockpiling their missiles, they're sending all they can in a quick series of strikes. So for example, one year ago, 200 or 300 drones coming into Kyiv would be considered an excessive night. Now, 700 is pretty ordinary. And when you're combining this with the huge power that you have with Russian ballistic missiles, new hypersonic quasi ballistic missiles, anti ship missiles that they're increasing the amount they can launch in a night and they're perfecting this opera, this is becoming very hard to defend against. And it's all increasingly concentrated on the capital. July 2nd was the biggest aerial attack since the war began. And all 29 ballistic missiles and anti ship missiles which were launched landed. There were no interceptions and they killed 31 people.
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So what are you really seeing on the streets of Kyiv? How does this come Home.
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B
You know, it really depends which part of Kyiv you're talking about, because there are relatively safe and relatively less safe parts. But for example, Sunday night, Monday morning, the attacks effectively leveled eight streets in a suburb called Vishnu. What had happened there was a Russian missile had essentially targeted an ammunition dump. You saw first responders trying to pull survivors out for hours after. It was in a very grim scene after the attacks. In the morning you often wake up to this sunrise. You can barely see smoke covering the horizon, this black fog.
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C
Ollie, you've just arrived in London, but obviously you've been sitting there for four and a half years watching all of this. The people of Kyiv have been sitting there for four and a half years watching all of this. And how is the mood there now? And how does it feel to suddenly leave?
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You know, when you're in one particular gig for like essentially four and a half years, you're obviously not a local, you're able to rotate out every two or three months, but you still feel the same kind of most Ukrainians are feeling. And this new uptick in the aerial attacks, you've seen people essentially when they wouldn't be paying that much attention to them, they're now really taking serious attention. So they're sleeping in the metro, they're fleeing cities again. And despite the more positive news you're seeing from the front lines and certainly there's a story which we can talk about there, there is a real sense of anxiety and tiredness and frankly exhaustion. And you see it most especially, for example in young military age males. The mobilization at the moment is becoming incre aggressive. So for them it's a very difficult picture. So every two or three months I'm sort of teleported to Europe or America, if that's what you could call 27 hours on the road. And it's really strange where you see these different worlds where a major worry for people is getting the restaurant booking for the evening.
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C
There's a military logic to all of this. I can see that. Tell me how it's going down politically.
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Right. So at the beginning of July, you saw Zelenskyy announce this 40 day intensification of drone operations. Basically 40 days in Russia is the period after death when basically the soul departs. So it was essentially saying that Putin was already dead and this was a matter of him reckoning with that. Obviously quite cheeky. The attacks on Russia are serious, but it's really the mid range drone operation, which is between sort of 20 and 200 kilometers, that's really the defunct defining trend of this summer. And basically the drones are coming online now in numbers, in types, and using this Starlink satellite technology, which Russia basically can't use anymore after Elon Musk removed their right to use it in the occupied territories. And that's given Ukraine a huge advantage in precision weapons and it's been able to use that to create these. Maybe chokeholds is too strong a word, but pressure on the supply lines coming into Crimea, and that's an issue for Putin, that's the new story of this summer. But at the same time, there is still fierce fighting going on along the front line in the Donbass fortress belt. And the mix match between that 40 days rhetoric and the more nuanced picture on the front lines, that's political theatre.
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There seems another mismatch though. The abundance of drones. And yet the cities are virtually defenceless with the lack of interceptors.
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So yes, drone interceptors, the Ukrainians are doing much better on, they intercept roughly 95% of the drones coming in, which is an amazing statistic. The real problem you're sort of referring to is the anti ballistic interceptors. And the problem here is there is a huge mix match between the global production of anti ballistic missiles and the production of Russian missiles. Even if all the global production of Patriot interceptors went to Ukraine, it wouldn't be enough. And then you add on top of that the Middle east war, which essentially ate into a huge number of the global pool of Patriot missiles. And this is not a new story. Ukraine has been screaming out about this for many years. On Wednesday, President Trump offered a kind of solution.
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So one of the things we're going
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to be talking about is you'll.
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We're going to give a license to you to make patriots.
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That's pretty cool.
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Right this way. You can't complain that we're not giving them enough. I'd say make them yourself. We haven't informed the company of that yet, but that'll work out all right. I'm sure they'll be thrilled.
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Problem is, none of that is going to come online soon. The thing that got people through this last very difficult winter was the inevitability of nature. However dark Putin's spell might be, the sun will still follow the frost. And right now people are trying to extract every bit of life, however difficult. But the pendulum will swing back. And if there isn't a ceasefire deal by the winter, which I think is the default assumption, you have to be fairly apprehensive about what might ensue.
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C
Ollie, thank you very much.
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Thank you Rosie
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foreign. Investors at the highest level of sophistication, those with strong advisory support. The natural outcome is two distinct portfolios, one public, one private. Each plays a different role in the overall strategy. Uncover new investment opportunities for you@creativeplanning.com New
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What if you had a room where no one interrupts? No notifications, no expectations, just space to
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F
Elvis Presley in 1963 came. He spent the night in Shamrock and they ate breakfast in here about 4:30 in the morning. My mama was the one that was the cook back there, so she cooked the breakfast. But when my sister and I, when we got here after school about four, that's all we heard. Elvis Presley was here and I love Elvis Presley. My oldest brother thought he was Elvis Presley from playing the guitar, driving convertibles.
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DuckTales that was Aleta Stone, who volunteers as a guide at the U Drop Inn in Shamrock, Texas.
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Every day this week we've brought you a travelogue from John Fasman, our senior culture correspondent, as he journeys down America's famous Route 66.
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The U drop in is a restored gas station and diner. It's a beautifully proportioned low brick building with some art deco touches and it might look familiar to fans of Pixar films. It was the model for Ramone's House of Body Art in the film Cars, which had a huge impact on Route 66.
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Trying to find the interstate.
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But you do need a paint job, ma'.
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Am.
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Ramon will paint you upright. Hey, anything you want.
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But first let Alita tell you about what happened to Shamrock starting in 1974. When the interstate arrived, it just died.
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Like all the little towns on Route 66, most of them are dead. But the only thing that saved shamrock was 83 right here because it goes from Canada to Mexico. 83.
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When you say it died, what does that mean? What did it feel like?
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Everybody had to leave. Everybody had to leave to go make a living because the businesses all died. You see all the empty buildings on Route 66 from Chicago to California. There was no business. They didn't. Nobody stopped because nobody's going to go 55 miles an hour anymore when they can go 75, 70.
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She's right that you can go much faster on interstates. Route 66 is picturesque because it's Main street in so many small towns, but you can't drive down Main street like a bat out of hell. Congress allocated money for a new system of high speed interstate highways in 1956. I40, which runs from Wilmington, North Carolina to Barstow, California, functionally replaced much of Route 66 by 1970. Another pair of highways running from Chicago to Oklahoma City via St. Louis replaced most of the rest. It didn't physically replace the road, of course. It just made Route 66 slower and less convenient. I spent hundreds of miles driving a windy two lane road next to the interstate, watching cars pass by at double my speed when those drivers needed to eat or fill their fuel tanks. There are rest stops right off the interstate. They don't need to venture into towns like Shamrock or Luther, Oklahoma, or Atlanta, Illinois anymore. But some travelers still want to.
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I just love this place. I never thought I'd get to work in here again. After I got married and left in 65, my husband retired from Montana and we moved back.
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One winner, 42 losers.
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I eat losers for breakfast after the movie Cars. Within two years, it's like. Like a miracle happened. People from all over the world. I never thought I'd work in a place where I'd meet people from China and Russia, Australia, which I love. That's my favorite. I've never been, but I love to go. But anyway, that I'd meet all these people from all over the world. The pins on our map, it's just three months old. We take all the pins out every February and you can already see the people from all over the world coming
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from all over Europe.
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Yes, Finland, South America, China, Russia. They love Route 66. They love the music. And a lot of them will come dressed in the 40s and 50s clothes, you know, so it's just amazing.
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Everybody likes a happy ending. So I guess that's where I'll leave you. But I hope this series has made clear that Route 66 isn't just any decommissioned highway. The story of its ambition, its construction, its centrality to moving troops and munitions during the Second World War and to the car culture that sprung up afterward in the 1950s and 60s. All of that is the story of America's emergence as a world power. That story is not without contradictions and pitfalls, as Mr. Threat's family business and Ms. Stone's tales of Shamrock's decline testify. But it's worth celebrating all the same.
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Tomorrow, the weekend Intelligence is about homeschooling and why more and more parents are choosing to educate their kids themselves. That's all for this episode of the Intelligence, the show's editors are Chris Impey and Jack Gill. Our deputy editor is Sarah Larnouk and our sound designer is Will Rowe, with help this week from Mark Burrows. Our senior producers are Henrietta macfarlane and Alize Jean Baptiste. Our senior development producer is Rory Galloway and our senior creative producer is William Warren. Our producer is Anne Hannah and our assistant producer is Kunal Patel. With extra production help this week from Katie Peterson. We'll all see you back here for the weekend Intelligence tomorrow.
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