On the menu today: A Latvian official offers a theory about a recent controversial drone strike on his country’s soil that raises serious questions about how autonomous modern combat drones have become; the Latvian state security bureau shares its thoughts on the militarization of the Russian economy and its consequences; and how internal documents from Russian institutions indicate how the widespread sanctions against Russia have had a crushing effect on that nation’s economy. Read on.
The Realities of Drone Warfare
Riga, Latvia — A Latvian official who works in national security offered an arresting theory about the two Ukrainian drones that struck the fuel storage depot in Latvia’s eastern city of Rēzekne back on May 7.
The first curious point is that there were two of them, so whatever Russian countermeasure caused them to go off course, it did not send them in a random direction or affect them differently. The second curious point is that of all the places the drones could accidentally strike, it was a fuel storage depot.
Ukraine has been targeting Russia’s oil infrastructure, with at least 21 strikes on Russian refineries, assets at sea — including export terminals — and oil pipeline infrastructure in April.
Now, a human operator might have recognized that images of the Rēzekne oil facility on some sort of monitor didn’t match the images of the intended target. Or a human operator could have made an error. I suppose it’s possible, but not particularly likely, for two human operators to independently make the same error and both strike the same erroneous location.
From IEEE (Institute of Electrical and Electronics Engineers) Spectrum, March 2024:
Outnumbered by the Russians and facing increasingly sophisticated jamming and spoofing aimed at causing the drones to veer off course or fall out of the sky, Ukrainian technologists realized as early as 2023 that what could really win the war was autonomy. Autonomous operation means a drone isn’t being flown by a remote pilot, and therefore there’s no communications link to that pilot that can be severed or spoofed, rendering the drone useless.
By late 2023, [engineer Yaroslav] Azhnyuk set out to help make that vision a reality. He founded two companies, The Fourth Law and Odd Systems, the first to develop AI algorithms to help drones overcome jamming during final approach, the second to build thermal cameras to help those drones better sense their surroundings.
“I moved from making devices that throw treats to dogs to making devices that throw explosives on Russian occupants,” Azhnyuk quips.
Since then, The Fourth Law has dispatched “more than thousands” of autonomy modules to troops in eastern Ukraine (it declines to give a more specific figure), which can be retrofitted on existing drones to take over navigation during the final approach to the target. Azhnyuk says the autonomy modules, worth around US $50, increase the drone-strike success rate by up to four times that of purely operator-controlled drones.
What are the odds that the two Ukrainian drones that struck the oil facility in Rēzekne were autonomous and using some sort of artificial intelligence algorithm or other visual-data-recognition program to spot the targeted Russian oil facility? And what if the AI or other visual-data-recognition program spotted the Rēzekne fuel depot and concluded it matched the targeted Russian oil facility?
I would characterize this Latvian official’s comments not as a confirmation or an accusation, but more along the lines of well-informed speculation of how two Ukrainian drones could stray about 40 miles into Latvian territory and target a completely different oil storage facility. (Another Latvian official told me that while the damaged fuel storage tanks were empty, there were other fuel storage tanks nearby that had fuel in them; events could have gone much worse that night.)
I would also note that I floated this theory to another high-level Latvian defense official, who was noncommittal, and pointed out that human error has not been ruled out.
As recently as March 4, Celia Ford of the AI newsletter Transformer wrote:
Today, weapons capable of autonomous behaviors like independently spotting and pursuing targets are actively being used in the Russia-Ukraine War. The US’s Replicator program is developing autonomous drone systems for Taiwan to defend against potential Chinese attacks, while China trains its own autonomous drones and robots.
But none of these weapons are fully autonomous yet, meaning humans are still involved at some point(s) along the kill chain — often as a hardware limitation, but sometimes just as a software choice.
If the first Latvian official’s theory is correct, it means autonomous weapons that can use deadly force without any human role in their decision-making process are not part of the warfare of a near future. It means they’re already here.
When You Militarize Your Economy, You Shrink Your Own Options
Separate from those officials, I had the chance to speak with officials from Latvia’s Constitution Protection Bureau — in Latvian, it is the Satversmes Aizsardzības Birojs, or known by the initials SAB. While the agency’s name makes it sound like a group that might work at the U.S. National Archives watching out for Nicholas Cage, the SAB is a state security bureau handling intelligence and counterintelligence. In other words, it’s Latvia’s equivalent to the American CIA and FBI counterintelligence division.
Nothing I was told was classified; it’s just not nearly as well-known as it ought to be. Russia has militarized its economy, and about half of all Russian government spending is dedicated to the military and security. Future economic growth in Russia will depend upon military production, even if the war in Ukraine stopped tomorrow.
Earlier this week, the United Kingdom’s senior military adviser, Colonel Joby Rimmer, told the Organization for Security and Cooperation in Europe:
[Russia’s] posture is closely linked to a growing structural challenge for the Russian system: an economy that is becoming ever more dependent on the continuation of war. Russia’s aggression against Ukraine has become the central mechanism through which the Kremlin sustains industrial output, channels employment, protects regime-linked interests, mobilizes society, justifies repression, and preserves the political narrative on which it increasingly relies. . . .
As the civilian economy weakens, the Kremlin relies more heavily on defense spending and state procurement to sustain output, employment and political control. The greater this reliance becomes, the harder it is for Russia to disengage from the war without triggering internal economic and political costs.
Consequently, major components of the Russian system now have material interests tied to the continuation of the conflict: defense manufacturers, recruitment structures, regional patronage networks, sanctioned intermediaries, security services and state-connected businesses. This is an economy seemingly being actively reorganized around coercion, mobilization and confrontation.
In a news conference following the May 9 Victory Day parade, Putin said regarding the war, “I believe the matter is coming to a close.” While it would be wonderful to see the war come to an end with a just peace, it’s somewhat hard to see Putin calling it quits after he’s reorganized his entire economy to fight wars at great cost in blood and treasure. (Note that even with oil and gas prices skyrocketing, the Russian government slashed its economic growth forecast for this year from 1.3 percent to 0.4 percent, and the Russian economy shrank by 0.3 percent in the first three months of the year.)
A French think tank observed last year, “A person who enlists in the army in an average Russian region, fights for a year and is killed in action (with all the necessary evidence) earns for his family members money he could not have earned over fifteen or twenty years, and in some cases even twenty-five years of work in the civilian sector in his region.” The surest path to economic security for a family in modern Russia is to send their son to get killed in Ukraine.
Some of the SAB’s work gets declassified, and in April they released a detailed analysis of the impact of Western sanctions on Russia’s economy. Among the key points:
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Despite Russia’s public announcements claiming its economy is successfully adapting to the impact of the Western sanctions, internal estimates made by several Russian institutions confirm that sanctions have already inflicted and will continue to create losses of up to several hundred billion USD to Russia’s economy.
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Russian estimates indicate that between the years 2022 to 2025 Russia was forced to spend additional 130 billion USD to buy sanctioned Western goods. The country’s own forecasts show that Western restrictions might lead to at least 136 billion USD in losses for Russia until 2030.
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The comparison of 2021 and 2025 export data shows that Russia’s export of iron ores has been reduced by 40%, iron and steel by 20%, chemical products by 35%, while timber and cellulose by even around 50%. Contrary to Russia’s public claims, internal forecasts by Russian institutions indicate that Russia will not be able to substitute the lost markets even over the next 5 years.
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SAB assesses these estimates to be an undercount – the losses are likely much higher. Such estimates tend to include only the direct effect of sanctions or calculate the losses in specific sectors, instead of the entire economic spectrum, not accounting for indirect effects like reduced income from taxation, increased prices for Russian population, etc.
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It is likely that that the main decision-maker in the Kremlin – Vladimir Putin – receives biased information on Russia’s economic developments, which emphasizes the narratives on successful economic developments, without highlighting the problems and risks that have been identified by Russian institutions. Such reporting is highly likely strengthening Putin’s confidence that sanctions’ impact is of secondary importance, especially in comparison to his obsession with gaining control over Ukraine. Therefore, Vladimir Putin is unlikely to change his aggressive foreign policy course even in a scenario of aggravated economic crisis in Russia.
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Even partial easing of sanctions would provide Russia with additional financial opportunities to accelerate the tempo of its military rearmament, allocate resources for influence campaigns around the world, and increase its support to hostile antiWestern countries like Iran, North Korea, Venezuela and Cuba, or finance paramilitary groups in Africa.
Right around here is where I would usually snarkily point out that in March, President Trump and his administration issued a 30-day waiver to allow Indian refiners to purchase Russian oil. But overall, the Trump administration has been pretty good on keeping sanctions in place on Russia, and in October announced new moves against a number of Russia-based Rosneft and Lukoil subsidiaries. As a U.K. House of Commons report concluded in late April, “The U.S. sanctions regime against Russia is extensive and remains largely intact under the Trump administration.”
ADDENDUM: It’s not that there are no Latvians who are persuaded by Russian disinformation efforts, or who have pro-Russian attitudes. But for a country with 23 percent ethnic Russians (who usually speak Russian), the pro-Putin, pro-invasion perspective hasn’t caught on much. If you know Latvian history, it’s not that shocking; Latvia spent most of the 20th century getting absolutely brutalized by two of the worst dictators that ever lived — first Joseph Stalin and the Soviet Union, then Adolf Hitler the Nazis, and then Stalin and the Soviet Union again for the entirety of the Cold War. (The Museum of the Occupation of Latvia tells the story vividly.) While Latvia declared its independence from the Soviet Union in May 1990, the last Russian troops did not leave Latvian soil until October 1999.
I liked this comment from Katarina Platere, the director general of the bilateral relations directorate within the Latvian Foreign Affairs Ministry, on why Russia’s sales pitch has largely fallen on deaf ears within Latvia: “You shouldn’t go to places where people know you.”