How the Russian economy defies and resists Western sanctions
Since Russia first invaded Ukraine in February 2022, Western media have frequently suggested that economic sanctions against the Russians will stifle the war effort or even bring the country to its knees.
As recently as early November, for example, the the wall street journal reported that “mobilization, sanctions and lower energy pricesare hurting the Russian economy and that the economic outlook “bodes ill for Vladimir Putin’s ability to fund Russia’s war in Ukraine.”
credit agency Standard and Poor’s so-called Global Russia Services Purchasing Managers’ Index is a good example of the type of data used to argue that sanctions are now starting to really hurt Russia.
The data is based on information provided by Russian companies willing to talk to them. Therefore, the survey could rely on a biased sample.
The impact of mobilization
Nevertheless, the media coverage also contains statistics from the Russian government and other Russian sources that highlight some of the economic issues facing the country. An example is the impact that the recent mobilization of reservists to fight in Ukraine had on Russian labor.
According to both Kommersant and the the wall street journal, a third of Russian companies said they had been affected by war-related labor issues. But Kommersant also went on to report that half of the affected Russian companies were able to adapt quickly to the new circumstances.
It wouldn’t make much sense if the Russian economy hadn’t been hurt by unprecedented Western sanctions and the broader burden of war. But media coverage of Western sanctions against Russia rarely mentions that Western economies are also struggling, in part because of these measures — as Standard and Poor’s recently pointed out.
Is Russia really doing worse? In some key areas, no.
Russia’s current economic situation has been helped by a bumper grain harvest this year. Russian agriculture produced more than 150 million tons of grain in 2022giving him enough to send free to Africa.
As in the West, The Russians also faced high inflation in double digits. But Russian pensions, the country’s minimum wage and wages keep pace with inflation better, in some cases, than those in the West.
There is also evidence that in recent months, the Russian inflation rate has fallen after the peaks of spring.
There are other positive trends and areas where the economic situation could improve for Russia, including the replacement of Western products and companies with Russian equivalents.
Companies quickly replaced
As someone who has recently visited Russia, I can personally attest to my recent visits to Vkusno i tochka restaurants in both Murmansk and Moscow do a brisk trade offering products that are essentially identical or very similar to McDonald’s Eves.
There’s been a lot of reporting in the West about how Russia is finding it difficult to get microchips for his weapons. What is less frequently reported are the efforts made by the Russian government to try to solve the problem.
Russia is working on accelerate its own production of microchipsalthough Russian media have also pointed out that he faces a fierce struggle to be autonomous on this front. But even basic, older chips intended for consumer electronics can be used in the defense sector as Russia adapts to new realities.
An underrated Russia?
The West seems to have underestimated Russia’s ability to withstand sanctions and Russian acceptance and understanding of difficult economic times.
As a Russian remarked to me recently, “We know why we have to put up with inflation, Westerners, don’t we?
Russian support for the leadership of Vladimir Putin and the war in Ukraine remains high. Anecdotal evidence from my many conversations with Russians from all walks of life in Moscow and Murmansk in late October and early November certainly confirms this.
Some young Russian university graduates opposed to the war have left the country avoid mobilization or continue to work for Western companies that have left Russia. The absence of this group leaves the Russians more engaged in the war than ever, given that older citizens are more likely to support it.
In the face of recent Ukrainian successes on the battlefield, many Russians are finally waking up to the seriousness of the war in Ukraine.
Four Ukrainian regions have now been nominally incorporated into Russia. The slogan of the Russian government “we do not abandon ours” seems to resonate with many Russians who view the war as a matter of protecting a Russian-speaking minority in Ukraine.
The Russian population as a whole is likely able to tolerate more economic hardship, given what Russians see as at stake. It remains to be seen whether the same can be said for Western European populations who are also struggling. under the weight of Western sanctions.
This article is republished from The conversation, an independent non-profit news site dedicated to sharing ideas from academic experts. It was written by: Alexander Hill, University of Calgary. Like this article ? Subscribe to our weekly newsletter.
Alexander Hill does not work for, consult, own stock or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond his academic appointment.