Russia’s State Duma election puts Putin’s economy to the test

Russian President Vladimir Putin is bracing for a wartime reckoning as the Kremlin prepares to hold its first parliamentary election since the country’s full-scale invasion of Ukraine in early 2022.

The tightly controlled vote, which takes place over a three-day period from Friday to Sunday, is widely expected to shore up the dominance of the ruling United Russia party in the 450-seat State Duma, the lower house of parliament.

While the result is not in doubt, external observers will be paying close attention to voter turnout and the margin of United Russia’s victory for any signs of public discontent after more than four-and-a-half years of war.

Opinion polls have shown United Russia, a party backed by Putin, far ahead of its rivals, although the party’s approval ratings have slumped to a four-year low amid a nationwide fuel crisis and Ukrainian drone strikes on delivery warehouses.

All parties on the ballot have, at least to some degree, publicly pledged their loyalty to Putin and his political views. The Yabloko party had been the only registered political party to oppose Russia’s war in Ukraine, but last month the country’s top court barred the liberal party from contesting the vote.

“It is becoming a consensus and overall feeling in Russian society that the war is costly, to the extent that even members of Putin’s elite start talking about the need to bring it to a close,” Sergei Guriev, dean and professor of economics at London Business School, told CNBC.

The Kremlin reportedly fired Andrei Klepach from Russia’s state-controlled development bank VEB last month, after the former chief economist presented a report warning that Russia could not win a prolonged war of attrition with Ukraine and predicted a major social crisis.

Putin had also previously clashed with Sberbank’s German Gref. Speaking at an economic forum in September last year, the CEO of Russia’s largest bank issued a recession warning for the country’s economy, prompting Putin to push back.

“You also look at the polls, however biased they are. You see that Russians feel the pain of war in economic terms. Economy stopped growing. Indeed, as you rightly said, [the] budget is not in the best situation,” Guriev said.

“So, Putin had to raise taxes,…