Once again, the russian federation rejects the effectiveness of Western sanctions and claims that the economy retains “stability of work and positive dynamics of development.” But russia has lost a significant part of the European market and access to the components for russian industry.
Difficulties arose with the production and fixing the weapons, due to which the russian federation is forced to remove them from storage and send outdated military equipment to the front, since it is simply not capable of producing new ones. Western-made microcircuits, the supply of which has been ceased, are used in the production of russian military equipment, including air defense systems, attack helicopters, and cruise missiles.
The situation in the agriculture of the russian federation might be difficult as well, since the country is significantly dependent on the import of sunflower seeds, potatoes, corn, and sugar beets, as well as agricultural machinery, equipment and materials for the production of food. Due to the sanctions, such goods are no longer supplied to russia by Western countries.
Due to the possibility of a food crisis in russia, the invaders massively export grain, vegetables and agricultural machinery from the occupied territories. Food prices in russia will inevitably increase because the experience of the previous eight years of russian aggression shows russia’s inability to provide import substitution.
russian metallurgy is experiencing difficulties as well. The lack of exports and low domestic demand stopped russia’s largest lead factory. Steel production has crucially decreased due to a 50% increase in the cost price and a 35% drop in market value to the 2020 level. Due to the lack of access to Western markets, blast furnaces and rolling lines are stopped, and 200,000 workers in the industry risk losing their income due to the unprofitability of steel production.
An appreciable impact on the russian economy have restrictions on transport connections with Western countries. EU countries, the US, and Canada have closed their airspace to russian aircraft, while Finland, Poland, and the Baltic states have limited or completely stopped rail traffic. The movement of trucks from the russian federation to the EU is also complicated. Air traffic within the country has been largely paralyzed due to the refusal of Western companies to service aircrafts.
The EU embargo on the import of russian energy carriers will deprive russia the largest sources of income. With its energy blackmail, the russian federation itself contributes to the acceleration of the abandonment of russian oil and gas. Oil production in russia has decreased by almost 10%, and will fall by at least 25% by the end of the year. Currently, India and China are buying up russian oil.
Though there was a time when part of the income from the export of energy carriers was directed to the reserve fund of the russian federation, now all these incomes are directed to the war, economy support, and pensions payment. Sanctions affected about 20% of russian exports. Imports from EU countries fell by 55%, and from China – by 26%. In the face of such circumstances, the russian GDP is expected to drop by at least 10%.
Under the conditions of rising prices and falling wages, outer and hidden unemployment increases. Industrial workers aren’t yet dismissed from work due to simple production, but are sent on vacation with payment of half or a third of the average wages. That very thing is in the aviation industry and at enterprises of foreign companies that left the russian federation.
And although according to official data, the unemployment rate in russia is 4.1% or 3.1 million people, it is much more in reality, and the trend is growing. By the end of the current year, the unemployment rate in the regions of the russian federation is expected to increase by 1.5-2 times.
The majority of russians have already recognized the negative economic consequences of the war against Ukraine and Western sanctions. In fact, the russian leadership recognizes this when it declares the need to resume negotiations with Ukraine and its Western partners.
Can something that hasn’t even started yet go according to plan for four months? Allegedly, during this war, the russian army did not fight, but only “warmed up”, having lost a significant portion of its military potential and having more than 37 thousand killed.
Therefore, Putin’s phrase “we haven’t seriously started anything yet”, in particular, is aimed at preparing public opinion for the possibility of general mobilization and a protracted war against the civilized world. Also, this signal of “willingness to negotiate” indicates a desire to fix temporarily occupied territories for the russian federation.
During the Second World War, Japanese admiral Isoroku Yamamoto said: “as soon as you start lying that the war was not serious, be sure, that the war has already been lost.”
