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Russia’s war with Ukraine has cost the Russian economy

MOSCOW – President Vladimir V. Putin has ushered in a crisis for his country – in terms of the country’s economy and identity.

The Kremlin is hiding the reality of the country’s attack on Ukraine from its own people, even cracking down on news outlets that call it “war”.

But the economic devastation and social turmoil caused by Putin’s invasion are becoming increasingly difficult to conceal.

Airlines have canceled once popular flights to Europe. The central bank attempted to deliver ruble bills as demand for cash spiked 58-fold. Economists warn of more inflation, greater capital inflows and slower growth; and credit rating agency S&P downgraded Russia to “junk”.

The insistence on concealing the true extent of the war is a sign of the Kremlin’s concern that the Russians will not accept a full-scale, violent invasion of Ukraine, a country where millions of dollars are lost. million Russians have relatives and friends.

Despite this, many public figures with ties to the state spoke out against the war, including a lawmaker in Russia’s rubber-stamped Parliament. Business owners have been trying to gauge the consequences of an economic crisis that appears to have begun, even before sanctions are fully in place.

Faced with the greatest test yet of its reality-distorting power, the Kremlin’s propaganda machine at the moment appears to be controlling widespread opposition to the war. There is no indication that the war could weaken Mr. Putin’s ability to hold power, and in the event of a quick victory, the analysts noted, it is not, the analysts noted. can end consolidation.

But the enormous risks of war, coupled with the economic pressure the country was suddenly under, created a new and more dangerous reality for both the Kremlin and Russia’s 145 million people.

The Russians were surprised at how quickly the economic impact of the war was felt. The ruble hit an all-time low against the dollar, trading at around 84 rubles on Saturday from 74 a few weeks ago. That sent import prices skyrocketing, while sanctions on Russia’s biggest banks wreaked havoc on financial markets and new export restrictions promise to disrupt supply chains.

Lalya Sadykova, owner of a chain of beauty salons in St. “They are shocked by what is happening, from how quickly prices are changing and how suppliers are stopping deliveries.”

The CEO of one of Russia’s largest electronics retailers, DNS, said on Thursday that the supply crisis had forced his chain to raise prices by about 30%. A few days earlier, the chief executive, Dmitri Alekseyev, posted on Facebook: “For the life of me I can’t understand why Russia needs a war.”

Mr. Alekseyev wrote: “I understand that prices in stores cause disappointment. “But that’s the reality.”

S7, Russia’s second-largest airline, has suspended all flights to Europe because Russian companies have closed its airspace, an early sign of how cheap and easy travel to the West is. The once used Russian middle class may become the past. Images of retailers changing or removing their price tags have gone viral on social media.

Anastasia Baranova said: “We are all waiting to see what happens next, describing the wave of cancellations on Friday at the hotel she runs in St.Petersburg. “It looks like the whole country is on pause.”

The Kremlin hastened to maintain its narrative, signaling the beginning of a new and more brutal phase in its long crackdown on dissent. The government’s communications regulator has slowed access to Facebook and warned 10 Russian news outlets that their websites could be blocked. The outlet’s claimed offense is publishing articles “in which the activity being carried out is called an attack, an invasion, or a declaration of war.”

Even as the fierce battle for Kyiv raged on Saturday morning, a statement by the Russian Defense Ministry on the situation in Ukraine made no mention of the Ukrainian capital or any Russian casualties. The ministry, which normally releases beautiful and rich daily footage of Russian troops in action, publishes no videos of their combat operations in Ukraine.

And Russia’s state news channel on Saturday showed footage of a peaceful day in Kyiv to try to combat violent videos circulating on the social network Telegram.

“As you can see, the situation in the cities is calm,” said the anchor. “No explosion, no bombing, unlike what some Telegram channels are writing.”

A hint of potential opposition emerged on Saturday when Mikhail Matveyev, a Communist lawmaker who voted in favor of Mr. Putin’s recognition of Russian-backed breakaway territories, Written on Twitter that he was duped.

“I voted for peace, not war,” he wrote, “and not let Kyiv be bombed.”

It is a rare crack in the firm foundation of Congress, where disagreement over Mr. Putin’s key foreign policy decisions has been virtually non-existent in recent years. Tatyana Yumasheva, the daughter of former President Boris N. Yeltsin, who helped bring Putin to power, posted an anti-war message on Facebook.

The Garage Museum of Contemporary Art in Moscow, a glossy showcase of a Western-looking Russia founded by Kremlin-friendly financier Roman Abramovich, has announced it will stop developing exhibits. until the “human and political tragedy” in Ukraine ends.

“We cannot continue to have the illusion of normativeness,” the museum said. “We see ourselves as part of a larger world not divided by war.”

However, it appeared on Saturday that the Kremlin’s coerced blind people were doing their job, as was the obvious danger of voicing dissent. The spontaneous anti-war protests that dragged thousands into the streets in cities across the country on Thursday, with more than 1,500 arrests, were not repeated on that scale on Friday.

While many in Russia’s intellectual elite voiced horror and the fence opposite the Ukrainian embassy in Moscow was covered with flowers, there is little evidence of broader opposition.

“Propaganda is working very well,” said Anastasia Nikolskaya, a sociologist in Moscow. “Not everyone welcomes war, but it is being viewed as a necessary last resort.”

Of course, the main determining factor for what happens next will be what happens on the Ukrainian battlefield – the longer the war drags on and the greater the loss of life and property, the harder it will be for the Kremlin to wage war. as a limited operation not aimed at the Ukrainian people.

Andrei Kortunov, director general of the Russian Council of International Affairs, a think tank close to the Russian government, said he believes the Kremlin expects the fighting to last no more than two weeks.

“If Russia is forced to surrender to the Ukrainian army in the meantime, with limited destruction and civilian casualties, and Russia has limited,” Kortunov said, Putin can count on continued support, Kortunov said. domestic aid.

But if the war doesn’t go as planned, Kortunov warned, the country could see “severe political consequences and consequences for the popularity of the leadership”.

“Winning will wipe out a lot – not all, but a lot,” Mr. Kortunov said. “If there is no victory, then there could be some complications because of course, many people suspect that there are no other policy alternatives.”

There are signs that recent days are just the beginning of a new chapter in Mr. Putin’s conflict with the West and his crackdown on freedoms at home. Dmitri A. Medvedev, vice chairman of Putin’s security council, speculated in a social media post on Saturday that Russia could reinstate the death penalty or confiscate foreign assets in Russia as a response to Western sanctions.

“The fun part has just begun…,” he wrote.

Analysts said that, despite the economic difficulties, sanctions are unlikely to change Russia’s direction in the near future. Russia has reserves to prop up the ruble, and the Kremlin has worked to insulate its economy from external shocks since the country was hit by sanctions over its annexation of Crimea in 2014.

Yevgeny Nadorshin, chief economist at consulting firm PF Capital in Moscow, said the real cost of sanctions would be Russia’s long-term development. Incomes will continue to stagnate and the country’s middle class will continue to shrink. Many of the country’s manufacturers, which have launched trains, cars and other products over the past decade, would be in serious trouble if the West banned the export of technology to Russia, he said.

The country will be stable, Mr. Nadorshin said, but this stability “will be like a swamp where nothing happens and changes even if the forest burns around it”.

“Some reeds will bloom in this swamp, but there will only be scorched lands around it,” said Mr. Nadorshin. “You can get into that swamp, but you’ll get stuck in it and you might end up drowning.”

And beyond the economic impact of war, many Russians still cannot imagine living in a country that has carried out an unprovoked attack on its neighbour. A steady stream of people arrived at the Ukrainian embassy in Moscow on Friday, carrying flowers. A police officer who stopped a woman also left a small sign that read: “Yes for peace.”

A designer named Aleksei, 28, said: “I was afraid to meet Ukrainians and look them in the eye for fear of the consequences of the security services. “It was the scariest thing of all.”

Alina Lobzina and Oleg Matsnev contributed reporting from Moscow.

https://www.nytimes.com/2022/02/26/world/europe/russian-economy-ukraine-war.html Russia’s war with Ukraine has cost the Russian economy

Fry Electronics Team

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