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.
There [was] a lot of intel suggesting that they will start the mobilization. We'll see.Vladyslav VlasiukSpecial envoy for Ukrainian President Volodymyr Zelenskyy
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, something which is very unpopular. As you can imagine, even with higher taxes, he's running significant budget deficit. It's not something that will break [the] Russian economy, but it's creating more and more unhappiness and dissatisfaction throughout Russia," he added.
Russia's Embassy in London was not immediately available to comment.
'A very temporary boost'
Analysts said one key reason why the State Duma elections may matter more than one might think is that the elected lower house of parliament will sit through to 2031, encompassing the 2030 presidential election.
That means if Russia was to undergo a profound political transformation during the next five years, the Duma will play a major role in managing and legitimizing it.
The United Russia party, which currently has 310 seats, will need to win at least 300 seats to maintain its supermajority and deliver constitutional changes without having to rely on support from other parties.
Ukraine has ramped up its attacks on Russian oil facilities and logistics hubs in recent months, seeking to raise the cost of the war for Russia and test Putin's resolve to continue the conflict.
A recent spike in oil prices as the U.S. and Iran battle for control over the Strait of Hormuz has provided a major financial windfall for the Kremlin's war chest, although not everyone is convinced it will make a big difference over the long term.
"It's a very temporary boost," Katia Glod, deputy head of foreign policy at the New Eurasian Strategies Centre think tank, told CNBC.
She added that even with a near-term oil price boost, the Kremlin cannot sufficiently prop up Russia's budget to keep paying "very high" contractual salaries promised to soldiers recruited to fight.
"So, we don't expect that this will translate into a bigger economic boost for the Kremlin that there will be more disposable money," Glod said.
Mobilization speculation
Some external observers have said Russian authorities appear to have been preparing the ground for a fresh wave of military mobilization after the State Duma election, a prospect that is deeply unpopular within Russia. The Kremlin has repeatedly denied plans for compulsory mobilization.
"There [was] a lot of intel suggesting that they will start the mobilization. We'll see. To me, it looks like something quite opposite to the peace negotiation," Vladyslav Vlasiuk, special envoy for Ukrainian President Volodymyr Zelenskyy, said during his trip to Singapore on Tuesday.
Vlasiuk also described his disappointment with what he perceived to be a lack of anti-war protests in Russia, concluding that perhaps this means most Russian citizens support Putin's war. "That's worrying. That's really worrying," he added.
One of the key indicators for investors to watch over the coming months is how the situation develops on the front line.
If Putin thinks Russian forces are moving forward in the eastern Donetsk region, Guriev said the Russian president will likely conclude "time is on his side" for peace talks.
"Once this line is frozen completely, and there are indications that Ukrainians may be actually getting there, eventually this year, Putin may start reckoning maybe it's time to negotiate in earnest," he added.