THE BELL WEEKLY: How Putin fell in love with hypersonic missiles

Hello! This week we look into Russia’s hypersonic missile development program, after Russia fired one on Ukraine, the first time a device of its type has been used in combat. We also analyze the latest fall in the value of the ruble and how Russia plans to write off debts for new army recruits.

Putin’s missile escalation

The war in Ukraine ratched up dramatically this week, with tensions running at arguably their highest level in the near three-year conflict. Kyiv, with the support of its Western allies, used US-supplied ATACMS and British-supplied Storm Shadow missiles against targets inside Russian territory for the first time. Russia responded with an attack on the Ukrainian city of Dnipro using a never-before-seen intermediate-range hypersonic ballistic missile, carrying multiple warheads. Dubbed “Oreshnik,” the missile is capable of carrying a nuclear payload. Hypersonic missile systems have been one of Vladimir Putin’s favorite defense topics for many years, with several scientists working on hypersonic technology having been detained in targeted arrests — often on trumped-up charges — by the secret services. The war in Ukraine has offered Putin an opportunity to test them on the battlefield, demonstrating their potential to the West.

• Putin’s passion for hypersonic weapons dates back to the early 2000s. In 2004, three years before his famous Munich speech, he said that Russia would develop a new hypersonic missile system capable of hitting “strategic targets at intercontinental range.” It would take another 14 years before Putin would share more detailed information. In his traditional address to the Federal Assembly in 2018, he unveiledthe Avangard missile system, capable of “evading air defense systems at hypersonic speed, exceeding Mach 20,” or almost 7km per second.  Under the slogan, “Russia cannot be contained”, he also outlined details on the “Kinzhal” hypersonic missile, which Russia has been using to strike Ukrainian cities since the start of the war.
• Russia began developing hypersonic weapons after the US withdrew from the Anti-Ballistic Missile Treaty in 2002, Putin said. This agreement was struck in 1972 between the US and the USSR and was intended to halt part of the arms race between the two superpowers. Shortly after the 9/11 terrorist attacks, US President George W. Bush announced America was unilaterally withdrawing from the treaty. Putin has repeatedly said that Russia needs contemporary hypersonic weapons in response to the deployment of US missile defense systems near Russia. “We suggested following a different path, but we were pushed aside,” he  said in an interview with American journalist Tucker Carlson earlier this year. Experts believe that the number of US systems deployed in Europe is insignificant and are anyway in the wrong locations if they were designed to counter Russian missiles. 
• Putin has repeated claimed that Russia’s hypersonic systems are unparalleled anywhere in the world (1,2,3) and impervious to air defense systems. He repeated those claims both in an address to the nation and in a meeting with military chiefs and commanders in charge of Russia’s nuclear arsenal after the Oreshnik strike.
• Russian scientists engaged in hypersonic research have spent the last few years working under the constant threat of prison. Since 2018, when Putin unveiled the hypersonic missiles, at least 12 scientists have been jailed on charges of treason. Three of them have subsequently died, the BBC Russian service wrote. The physicists were accused of passing state secrets to European countries that Russia considers “unfriendly”, as well as to “friendly” nations such as China. In private conversations, FSB officers said that arrests were ordered from “on high”, lawyer Evgeny Smirnov told the BBC.
• According to Smirnov, investigators themselves claimed that Putin received personal updates on the details of every new case. This is essentially a move by Russia’s security services to convince him that everybody is out to steal the country’s military secrets, Smirnov said. The scientists themselves say the FSB regards anything as secret information, even if it does not relate to the hypersonic missile program. In one experiment, physicists used a cone which was then rounded to achieve a turbulent air flow. FSB investigators regarded this as secret information because the experimental design of the cone resembled a missile. Scientist Vladimir Kudryavtsev, who was arrested because of that, did not live to see his  come to court.
• The last big treason case involving hypersonic research came to court in September 2024. Scientist Alexander Shiplyuk, who worked on experimental aerothermodynamics of hypersonic flows and had been published in leading international journals was sentenced to 15 years in a high-security prison after taking part in a conference in China. It was the toughest sentence yet handed to a hypersonic researcher, and one of the harshest in any of the many treason cases against Russian scientists.

Why the world should care

Putin’s enthusiasm for hypersonic technology has led to the world’s first use of a potentially nuclear-capable intermediate-range ballistic missile with multiple warheads. The Russian president is clearly exaggerating when he talks about the novelty and unstoppability of Russian hypersonic missiles — something that is only confirmed by the string of cases launched against scientists involved in the development program. Despite the hyperbole, the Oreshnik launch is still the most direct nuclear threat Putin has issued since the start of the war.

New U.S. sanctions push the ruble to its lowest since spring 2022

The United States has imposed the most wide-reaching range of banking sanctions on Russia since spring 2022 (read more here), hitting leading state institution Gazprombank, which had remained connected to SWIFT and conducted settlements in euros. The fallout of the potential disruption on Russia’s energy trade pushed the ruble to its lowest level against the dollar in two-and-a-half years.

• In exchange trading, the ruble slid below 104 against the US dollar the day after the sanctions were announced — the weakest value since March 2022, when it plummeted at the start of the invasion. The official dollar rate, which the Central Bank sets using over-the-counter transactions, has dropped more than 3% to 103.8 rubles. Against the Chinese yuan, the ruble also reached its lowest level in a year at 14.2 rubles.
• Apart from sanctions, the ruble is under pressure from geopolitical tensions over the escalation of the war in Ukraine, Moscow’s ramping up of spending, and demand for the currency related to exporters’ regular tax payments.
• Another drop in the value of the ruble is bad news for Russians at a time of high inflation. Over the course of November, inflation in Russia could increase by more than 1%, reaching 9% on an annual basis, against the Central Bank’s estimate of 8-8.5%, according to the authors of the authoritative economic Telegram channel MMI. In such a situation, it becomes even more likely that the Central Bank will raise rates yet again in December. Finishing the year with rates at 23% is entirely possible.

Why the world should care

The latest fall in the ruble will first and foremost hit Russians via increased prices for various goods. The war has already caused a disbalance in the Russian economy, and the main consequences have been a sharp rise in prices and prohibitive interest rates on loans in an effort to cool the overheating economy.

Writing off debts: Russia’s new army recruitment strategy

Vladimir Putin has signed a new law to write off the loans of fresh recruits to the war. This latest preferential credit scheme is clearly intended to lure as many people as possible to the front line.

• According to the newly-signed law, military personnel who sign up after Dec. 1, 2024 will be able to write off loans worth up to 10 million rubles (about $96,000). Other servicemen, including conscripts, can apply to write off their debts if a court order to collect the money came into force before this date.
• For those who are currently fighting, or have previously fought in Ukraine, Russia also offers other forms of preferential borrowing. Banks are obliged to write off any loans taken out by soldiers killed or seriously injured, as well as those issued to their immediate family. And all soldiers can receive “credit holidays” while serving at the front.
• Based on the data on credit holidays analyzed by Mediazona, Russian army recruitment is steaming ahead at a record pace. From July to September alone, banks issued 54,200 credit holidays for those fighting in Ukraine, including to both conscripts and contract soldiers — almost twice as many as in the equivalent period last year. 
• The new law is clearly another way of encouraging conscripts to sign contracts with the army, allowing them to be sent to right in Ukraine, lawyers believe.

Why the world should care

Russian regions have already this year hiked sign-up bonuses to new recruits, offering payments worth millions of rubles (tens of thousands of dollars), in a bid to fill-up Russia’s brigades.This new “carrot” of writing off Russians’ debts will help Moscow recruit even more soldiers and carry on accounting for massive human losses at the front.