Ukraine attacks pressure point in Russia’s economy

Ukraine’s drone attacks on Russia’s biggest online retailer Wildberries have ratcheted up the pressure on Moscow’s wartime economy, with Kyiv seeking to force President Vladimir Putin back to the negotiating table after nearly four-and-a-half years of war.

Ukraine has been targeting major logistics centers, such as Russia’s Amazon-style retail giant, as part of a push to severely disrupt the country’s supply chains and increase the financial burden facing Russian banks and businesses.

It marks a significant change in approach for Ukrainian forces, following months of long-range drone strikes targeting Russian energy infrastructure.

Wildberries evacuated a warehouse in the central Russian city of Ryazan on Wednesday morning, the company said, after Ukrainian drones struck several industrial facilities.

The Russian government has acknowledged it may need to prop up Wildberries, Reuters reported Tuesday, citing two unnamed sources, with state-controlled bank VTB expected to play a key role. Russia’s Foreign Ministry was not immediately available to comment when contacted by CNBC.

Since Russia launched its full-scale invasion of Ukraine in early 2022, Russian businesses have faced numerous disruptions due to the war, according to Natalya Kovaleva, a researcher in the Russia and Eurasia program at Chatham House.

“Western sanctions fractured supply chains. Tax increases squeezed margins. Internet blackouts disrupted operations. And recent fuel shortages drove up costs while adding to inflationary pressures,” Kovaleva said Tuesday in an online post.

“Russia’s business owners have largely absorbed these shocks. But Ukrainian strikes on Wildberries present a significant new development, reflecting Kyiv’s broader effort to ratchet up economic pressure on business and ordinary Russians.”

Kovaleva said Ukraine’s hope is that by raising the cost of war for Russian businesses, internal opposition will mount and Putin may be forced to the negotiating table — or at least halt his bombardment of Ukraine’s cities.

“It remains to be seen if this strategy will have the desired effect. Even as it becomes even harder to do business in Russia, the country’s elites appear more dependent on – and wary of – the Kremlin [than] ever before,” Kovaleva said.

Ukrainian President Volodymyr Zelenskyy has said that warehouses targeted by Ukrainian drones were involved in providing Russian forces with drone components, navigation equipment and other military components.

Wildberries is Russia’s biggest online retailer and its equivalent to U.S. e-commerce giant Amazon. Founded in 2004, the company currently employs about 48,000 people.