How Vladimir Putin is Ruining the Russian Economy Italian President Mattarella will visit Switzerland at the end of November

The representatives of Russia also wanted to participate in the climate conference in Egypt. Among others, they sent former ice hockey star Vyacheslav Fetissow to Sharm el-Sheikh on the Red Sea. This is the chairman of a Russian nature conservation organization and wanted to discuss proposals at a round table on how to protect the North Pole. It shouldn’t be. “I invited everyone, but nobody showed up,” Fetissow told the Washington Post.

Meanwhile, Russian troops in Ukraine suffer one humiliating defeat after another. In the east the soldiers fled headlong, in the south the Russians had to leave Cherson again. And the Ukrainians are not thinking about taking a winter break. General Valeriy Saluschnyj, the commander-in-chief and new national hero, recently unequivocally posted on Facebook: “Our goal is to liberate every country in Ukraine from Russian occupation. Under no circumstances will we give up on this goal. There is only one condition for peace negotiations: the Russians must return all the land they have conquered.”

A strong ruble equals a weak economy

So far so bad for the Russians. But economically, so those who understand Putin would still have us believe, the West’s calculations are not economic. Despite all the sanctions, the Russian economy has not collapsed. On the contrary, the ruble is stronger than ever and inflation is more or less under control.

This assessment can only come from those who turn the economic situation upside down. Konstantin Sonin shows this in an article in the magazine “Foreign Affairs”. Sonin is an economics professor at the University of Chicago.

The strong ruble is not a sign of economic strength, on the contrary, it shows that the sanctions are working. Russia can no longer import goods from the West, imports have fallen by 40 percent. A slump of this magnitude was not expected. As a result, Russia now has a huge trade surplus. “As a result, the ruble has appreciated against the dollar,” says Sonin.

Sanctions do not take effect immediately. That is common knowledge. But the fact that Russia has limited access to chips and semiconductors is already having enormous consequences. “Between March and August, Russian car production fell by as much as 90 percent,” Sonin said. “The malaise in the aircraft industry is equally high.”

The war also changed the ownership of the Russian economy. After the 2008 financial crisis, Putin again nationalized key industries. “In some cases he has placed them under the direct control of the government, in others under the control of state-owned banks,” Sonin said.

This backdoor nationalization has already damaged the economy. Between 2009 and 2021, Russia’s gross domestic product grew at an average meager 0.8 percent per year. The war against Ukraine further spurred creeping nationalization.

The Kremlin has been issuing laws and regulations since March that allow the government to close stores, impose production targets and dictate prices. Also, the fact that hundreds of thousands of Russians either fled the country or were conscripted as soldiers has not really stimulated the economy.

Private armies increase corruption

Thanks to the private armies of Yevgeny Prigozhin and Ramzan Kadyrov, the already rampant corruption in Russia has gained new impetus. In the 1990s, the then oligarchs maintained their own security forces, creating mafia-like conditions. A sequel to this movie is in the works. “The mercenaries that Putin has created against Ukraine will play the same role in the future,” Sonin said.

So far, there is no way out of this unfortunate situation in sight. Putin is still firmly in the saddle and – unlike Nikita Khrushchev at the time – is not prepared to negotiate with the West. The formerly most powerful man in the USSR finally gave in to the Cuban Missile Crisis in 1962 and agreed to a face-saving deal.

The Biden administration is trying to persuade Putin to make a similar deal, so far without success. “Biden and anyone calling on the White House to convince Kiev to negotiate with Moscow should remember: the war on Ukraine is not like the Cuban Missile Crisis, and Putin is not Khrushchev, as he likes to assure everyone,” said Timothy Naftali. . in “Foreign Affairs”.

There is a possibility, at least in theory, that Putin will be overthrown. This would not change the economic woes. “Even if Putin loses power and his successors implement sweeping reforms, it will take at least a decade for economic output and people’s quality of life to return to the level of a year ago,” Sonin said. “These are the consequences of a disastrous, misguided war.”