Streetwise Professor

First off, a Happy New Year to all of you who visited SWP in 2025, and before. The site is nearing its 20th anniversary–anybody out there who started visiting in 2006? 2007? A special shout out to you, but thanks to all who have read me over the years.

SWP did not start as a Russia-oriented blog. To the contrary. I initially intended it to focus on subjects at least tangential to my academic research in commodities and financial market structure. I have done that, especially during the Financial Crisis era, but pretty early on my interest in the economics of institutions and the resource curse caused me to follow Russian events and to write extensively on the subject over the years. As of today, there are 1,426 posts with the tagline “Russia.”

As a result, I have been a close observer of most of the Putin years. Indeed, the main catalyst for associating Russia with the resource curse was the Khodorkovsky saga, which preceded the blog by a couple of years.

Despite recent aspersions on X that I am a Putin fanboi (due to the fact that I have been a realist about Ukraine’s prospects), if you have the endurance to scroll through my Putin posts over the years you’ll see that I have been harshly critical. So much so, in fact, that when I went to Russia in 2017 my family freaked out, thinking that I would be bound for Chita after setting foot in Moscow. (There’s a story about that trip–I’ll retell it in a future post).

Which brings us to the news of the day. Putin claims that Ukraine attempted a drone attack on his residence. Ukraine denies. According to today’s news, the CIA has briefed Trump that no such attack occurred.

I seriously doubt that it did, if only because it would be a colossally stupid move by Ukraine.

It would be stupid because the probability of success would be zero to multiple digits and even a failure would torpedo Ukraine’s/Zelensky’s already fraught relationship with the notoriously volatile Trump.

Why an almost certain failure? Well, for one thing, Putin claimed an attack on one of his residences. Which one? He has many all over the vast expanse of Russia. He is notoriously secretive, allegedly even having duplicate rooms in each so that when he is filmed (e.g., sitting across a table from Gerasimov) there is no idea of which of them he was in, let alone where he is now. So the odds of hitting where he actually is are infinitesimal.

Moreover, these “residences” are actually massive palaces, and drone strikes would do little more than chip some masonry and maybe make the chandeliers sway a bit even if Ukraine got lucky and he happened to be in one at the time they struck. And they are all equipped with bunkers! Furthermore, they arguably have the densest air defenses of any site in Russia. (From that perspective, they are one of Ukraine’s biggest assets, because they divert AA resources from other strategic targets).

Insofar as the politics are concerned, Trump would surely view a strike as a deliberate Ukrainian attempt to derail a peace agreement. Trump would take this as a personal affront and he would likely respond by telling Ukraine–“you’re on your own! Good luck.” Except he’d probably leave off the “good luck.” (A NYT article from yesterday quotes a source saying that Trump called Zelensky a “motherfucker.” He clearly intensely dislikes him, for many reasons, not least Zelensky’s role in Trump’s first impeachment).

Also consider the source of the story–Putin. Highly reliable! I jest.

Now, to be fair, the source of the denial–Ukraine–is not particularly credible either. After all, it has steadfastly denied involvement in blowing up Nordstream, although there is considerable evidence that it did. Nor is the CIA’s validation of Ukraine’s position definitive, given its track record of twisting intelligence to advance its objectives.

But even rating ex ante credibility as a push, the Ukrainian denial is far more credible than Putin’s allegation.

And by making the extremely dubious and inflammatory allegation, Putin is all but telling Trump he is not going to make a deal. The NYT article also claims that Trump has complained that Putin has been “jerking him off” by claiming to be interested in a deal then refusing to budge on his maximalist terms.

This allegation is arguably the jerking off of all jerking offs. And Trump is clearly pissed, posting on Truth Social a NY Post article headlined that Putin is the obstacle to peace in Ukraine.

Which is no doubt what Putin intended.

In his New Year address to Russia, Putin promised “victory” in 2026. It is quite likely that despite the havoc that the war is inflicting on Russia, and how much it is devastating the nation’s future, from Putin’s perspective his future depends on continuing the war. Stunts like the “attack ‘bluster'” are Putin’s way of tying himself to the mast to avoid chasing after the siren song of peace.

Which is an inauspicious beginning to a new year. It portends that the beat–and the killing–will go on in 2026, and perhaps beyond, barring Putin’s exit (which will have to be the result of some happy accident, not Ukrainian wet work). So though it’s all fine and dandy for me to wish you all a happy new year, such wishes are futile for those swept up in the death carnival that is Ukraine and Russia.