Can Russia endure economically?

Even now, more than a week after the start of the war in Ukraine, Russia continues to experience economic bleeding. The ruble continues to fall as more and more foreign companies flee the country. The Kremlin acknowledges that the Russian economy is suffering a “serious blow” and its integrity is at stake. So can Russia see the economic collapse under the influence of sanctions? What is the impact on Russia’s population, which has been getting poorer for 10 years?

To talk about it, we called Caroline DufyLecturer of Economics and Sociology at Sciences Po Bordeaux, Expert of Russian Economy, Floran Parmentier, CEVIPOF Secretary-General, HEC Geopolitical Center Deputy Researcher, Olivier Dogans, Ashhurst’s associate lawyer and expert in litigation and advice against companies dealing with international sanctions.

Russian resources in the face of economic weakening

After the Russian troops invaded Ukraine on February 23, the European Union immediately announced a series of pre-planned sanctions in the event of such a situation. However, Europeans acted on Wednesday, March 2, and decided to go further by excluding certain Russian banks from the SWIFT interbank exchange system. In any case, Europeans seem to give a lot of power to these decisions. However, the question of the effectiveness of economic sanctions to constrain national policy remains much debated.

On the other hand, to ensure a certain degree of independence, Russia is approaching its major goal of food self-sufficiency. We can also expect half-hearted support from China.

Is it possible to break sanctions from a financial perspective?for Caroline Dufy, “The Central Bank of Russia has approved the use of Bitcoin. Many analysts found this result surprising, but realized that Russia could de-dollarize the economy. But is it financially credible? Financial and volatility risks are significant.“Russia is also suspected of wanting to act like nationalization, which would make the territory dangerous in the long run, but the psychological consequences of sanctions are not negligible. .. Floran ParmentierSanctions also have psychological factors (…): Their mission is to attack confidence in the economy, which is fundamental to financial transactions and international trade.“”

Poverty, instability and increased control of the Russian population

The Russian population, which is particularly subject to sanctions, can play a very special role in heightened tensions, although tax havens are an option.according to Olivier DogansThe oligarchs are very attached to seeing themselves being deprived of access to the western space and seeing themselves disposing of their property. At the same time, they are also very influential. This is a very unknown number. Their ability to intervene in Vladimir Putin’s political choices.“When it comes to the rest of the population, the collapse of the ruble and the withdrawal of major Western brands (Apple, IKEA, etc.), they are very specifically suffering from sanctions. Caroline Dufy, “The Russian population is accustomed to a very Western lifestyle. Therefore, the purpose of the sanctions reveals Russian support for Vladimirputin by causing dissatisfaction among Russians and directly affecting their purses. To reduce. It’s really new compared to 2014.“And when certain opposition to war is asserted, population management is becoming more and more threatening.

Regarding the economic impact of sanctions on the western population, Olivier Dogans Reminds me of that“Emmanuel Macron immediately emphasized the lasting economic impact on the population and mentioned resilience plans to counter them. (…) Politicians said fire, society before the fire began. I want to put out a fire. “

Sound reference

  • Statement by Bruno Le Mer, France, March 1, 2022, 24
  • Testimonials from Russians facing rising prices, 1:00 pm news, TF1, February 27, 2022
  • Russians facing price inflation and devaluation of the ruble, Antenne 2, 1998

Music reference

Putin, Putout (Unofficial Russian National Anthem)-Klemen Slakonja (2016)