2024-04-02 00:20:30
Economists point out that Russia’s economic resilience will be challenged this year in the face of sanctions. They predict that Russian President Vladimir Putin may lose popular support if the West tightens sanctions and makes life more difficult for Russians.
Russia has so far weathered the impact of Western sanctions, but two researchers at Yale University, Jeffrey Sonnenfeld and Steven Tian, believe the country may see a turning point in November’s U.S. presidential election. They believe that if President Biden is re-elected, the West may continue to provide support to Ukraine while tightening sanctions on Russia.
They say more economic pressure might make Russians more resistant to Putin’s leadership. As Putin drags Russia into its third year of war, Russians have been chronically complacent.
Tian said in an interview: “People are living a normal life now, but this is a completely unsustainable strategy. The fundamental driving force supporting economic growth is deteriorating before our eyes.” “If Biden is re-elected, all of this will come to light.” … The house of cards (will) collapse.”
Sergei Guriev, a Russian economist and incoming dean of the London Business School, also believes that social unrest may occur in Moscow. He said Russia’s economic conditions were echoing those of the late Soviet Union, when the government’s strong economic support had just waned, causing some industries such as manufacturing to fall into a “deep recession.”
Putin’s Economic Fantasy
The chaos predicted by Sonnenfeld and Tian appears to contradict what Russia appears to be seeing on the surface. According to the Russian Federal Statistical Service, the Russian economy grew by 3.6% in 2023. Meanwhile, a record 56% of Russians believe the economy is improving, according to a 2023 poll.
But Sonnenfeld believes that polls and economic statistics from Russia are “more than misleading.” He has previously said that Russia’s growth data are “Putin’s imagination” and that the Kremlin only selects favorable data and does not let the public see worse data.
“There is no confidence in the objectivity and security of Russian polls,” Sonnenfeld said, adding. “This is all propaganda.”
Putin claimed that Russia is becoming the new growth center of the world. Guriev thinks this might also be a lie.
Guriev analysis: “Putin does not think Russia is doing well. Putin understands the shortcomings of statistics, but he needs to convince Russians that everything is fine.” “This is his job as a dictator, to spread these messages.”
Other economic indicators show Russia’s financial situation is decidedly bleaker. In 2022 alone, 1 million citizens fled the country, accounting for 15% of millionaires, and overseas direct investment reached $19 billion. While strong military spending has propped up Moscow’s economy, it is unlikely to last long, with European researchers predicting Russia’s growth trajectory will be even slower through 2024.
Economist: Putin may step down if Biden is re-elected (Image: shutterstock)
Sonnenfeld has previously said the statistics show Russia’s economy is being “cannibalized” by the war in Ukraine, no matter how much Putin touts Russia’s resilience to sanctions.
Sonnenfeld and Tian said Biden’s re-election and tougher sanctions might be the events that awaken Russian citizens to this reality. They estimate that if the West goes beyond oil trade and imposes sanctions on Russia’s steel, copper and other metal commodities, it might deal a serious blow to the Russian economy. These goods account for approximately 20% of Russia’s total revenue.
At the same time, Russia’s living standards are already declining. Civilian infrastructure is crumbling, in part because Russia spends too much on war. Data from the Russian Ministry of Economy show that Russia’s inflation rate is also very high, reaching 7.58%.
Economists note: “When the Russian people realize that the path to victory that Putin promised will not materialize as he promised, when people realize that there is no path to victory in Ukraine, there will be massive unrest. “
Guriev believes the Russian economy will not collapse completely as central bankers will work to limit the damage. But inflation and slower growth will be huge problems for Moscow, leading to painful economic restructuring.
Guriev mentioned: “It is unlikely that the Russian economy will fall into a macroeconomic collapse, and neither will the Russian political system.” “The necessary condition to end this war is of course regime change, especially Putin’s resignation.”
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