(Bloomberg) — A mood of deepening gloom is gripping Russia’s elite about prospects for President Vladimir Putin’s war in Ukraine, with even the most optimistic seeing a “frozen” conflict as the best available outcome now for the Kremlin.

Many within the political and business elite are tired of the war and want it to stop, though they doubt Putin will halt the fighting, according to seven people familiar with the situation, who asked not to be identified because the matter is sensitive. While nobody’s willing to stand up to the president over the invasion, absolute belief in his leadership has been shaken by it, four of the people said. 

The most favorable prospect would be negotiations later in the year that would turn it into a “frozen” conflict and allow Putin to proclaim a Pyrrhic victory to Russians by holding on to some seized Ukrainian territory, two of the people said.  

“There is elite deadlock: they are afraid to become scapegoats for a meaningless war,” said Kirill Rogov, a former Russian government advisor who left the country after the invasion and now heads Re:Russia, a Vienna-based think tank. “It is really surprising how widespread among the Russian elite became the idea of a chance that Putin won’t win this war.”

The growing despondency is likely to intensify a blame game over responsibility for the faltering invasion that’s already stirred bitter public divisions between nationalist hardliners and Russia’s Defense Ministry. With the Kremlin facing a Ukrainian counteroffensive that’s backed by billions in weapons from the US and Europe, expectations are low among Russian officials for any significant advances on the battlefield after a winter in which Moscow’s forces made little progress and incurred huge casualties. 

The catastrophic breach of a giant dam in Ukraine on Tuesday that the government in Kyiv blamed on Russia further complicated the conflict as floodwater swept across parts of the conflict zone. Russia denied responsibility.

Attacks inside Russia are adding to a sense of insecurity, including the largest drone strikes last week targeting Moscow since the war began. Fighting has spread into the Belgorod region bordering Ukraine, challenging Putin’s image as the guarantor of Russia’s security. 

Even some who support the invasion and want to intensify the fight against Ukraine have become deflated about Russia’s prospects in a war that was supposed to conclude within days and is now in its 16th month. Nationalists led by Yevgeny Prigozhin, founder of the Wagner mercenary group, have raged against Defense Minister Sergei Shoigu and Russia’s army chief Valery Gerasimov for military failings, as they press for a full-scale mobilization and martial law to avert a potentially catastrophic defeat. 

“There have been too many big mistakes,” said Sergei Markov, a political consultant with close Kremlin ties. “There were expectations a long time ago that Russia would take control of the majority of Ukraine but these expectations didn’t materialize.”

Putin and his top officials insist Russia will win, even as it’s no longer very clear what would constitute victory after its army failed to seize Kyiv early in the war. There’s no sign of any challenge to his leadership from within his circle.

Most in the elite are keeping their heads down and getting on with their work, convinced they can’t influence events, according to four of the people with knowledge of the situation. Putin shows no indication of wanting to end the war, five of the people said.

State media explain away repeated reverses by pumping out the message that Russia is fighting a proxy war in Ukraine against the US and its North Atlantic Treaty Organization allies, though it was Putin who initiated the unprovoked invasion in February 2022.

The Kremlin has imposed the harshest repression in decades to punish even mild dissent with jail terms. Russia’s middle class who’d formed the bedrock of support for opposition to Putin’s rule in major cities in the past decade have been cowed into silence or have fled the country as part of the biggest wave of emigration since the 1990s after the Soviet Union’s collapse.

So far, polls show most ordinary Russians continue to back Putin, who’s mixed Soviet-era nostalgia with Russia’s imperial past to assert that he’s defending the country’s interests and reclaiming historical lands by annexing areas of eastern and southern Ukraine.

Still, concern may be ticking up again after spiking last fall when Putin announced a draft of 300,000 reservists. A May 19-21 survey of 1,500 Russians by the FOM polling company found 53% considered their family and friends were in an anxious mood, a jump of 11 percentage points since April and the highest in nearly four months.

Prigozhin toured Russian cities last week warning of a “difficult” war that may last years as he argued for martial law and full mobilization. He said in an interview last month that Russia risked a revolution similar to the one in 1917 because of the divide between the Kremlin elite and ordinary Russians whose children “come back in zinc coffins” from Ukraine.

The ruling United Russia party began an investigation after a senior State Duma lawmaker, Konstantin Zatulin, told a forum that the invasion had achieved none of its declared aims, Vedomosti reported Monday. “Let’s get out of this somehow,” Zatulin said.

Konstantin Malofeev, a Russian Orthodox nationalist supporter of Putin, wants Russia to keep fighting because “the Ukrainian state should cease to exist.” He rejects any talk of a cease-fire, though he said many within the ruling elite including a “huge number” of business people would support China’s recent peace initiative that envisages a truce.

“They say they support the special military operation but in reality they’re against it,” said Malofeev, a multi-millionaire who’s also sponsoring a volunteer force fighting in Ukraine. “In six months, we’ll have clear superiority in ammunition and shell production and we’ll be ready to go onto the attack.” 

To be sure, Russia still possesses enormous resources for the fight. Its troops are dug in on the front lines in eastern and southern Ukraine and Ukrainian air defenses have been kept busy as Russian missiles and drones have rained down on the country throughout the past month.

Ukraine has ruled out a resolution of the conflict that leaves Russia occupying any of its territory, as it begins to unleash the counteroffensive that’s been months in preparation. 

“It’s time to take back what’s ours,” Ukrainian Commander-in-Chief Valeriy Zaluzhnyi said in a Telegram post May 27. 

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Putin Visits Saint Petersburg

With no end to the fighting in sight, Russian officials and billionaire tycoons know they face potentially years of international isolation and deepening dependence on the Kremlin as Putin pushes businesses to back the war effort and bans those around him from leaving their posts. 

They and their families have been hit with asset freezes and travel bans under US and European penalties that have also made Russia’s economy one of the world’s most sanctioned, upending decades of integration into global markets.

“Officials have adapted to the situation but no one sees any light at the end of the tunnel – they’re pessimistic about the future,” said Alexandra Prokopenko, a former Russian journalist and central bank advisor who’s now a non-resident scholar at the Berlin-based Carnegie Russia Eurasia Center. “The best they hope for is that Russia will lose without humiliation.”

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