- The Russian economy is paralyzed, and the Russian war machine is still able to survive by dismantling state-owned companies.
- That’s according to Yale professors who are pushing back on the comment that Vladimir Putin is one of the big winners in 2023.
- “We cannot fall into the trap of believing that everything is in Putin’s favor, nor can we abandon effective measures to pressure him.”
The Russian economy is paralyzed, and the Russian war machine depends on dismantling state-owned companies, according to researchers from Yale University.
in Foreign policy editorial On Friday, Jeffrey Sonnenfeld and Steven Tian sought to walk back recent comments portraying President Vladimir Putin as one of… Big winners in 2023 Amid signs of economic resilience.
But they said Western sanctions and the exodus of multinational companies from Russia that followed had imposed heavy costs on the country’s economy.
“We cannot fall into the trap of believing that everything is in Putin’s favor, nor can we abandon effective measures to pressure him,” Sonnenfeld and Tian wrote, noting that the transfer of “worthless” assets confiscated from Western companies to Putin’s cronies does not make matters worse. difficulty. Russia is richer.
They also listed several other signs that the Russian economy is faltering.
Since Russia’s invasion of Ukraine in early 2022, at least 1 million Russians have fled to other countries, including top tech talent. This has contributed to a labor shortage approaching 5 million workers and led to high inflation rates.
Meanwhile, $253 billion in private capital left Russia between February 2022 and June 2023, Sonnenfeld and Tian said, citing Russian central bank data.
In addition, Russia has lost access to the Western technology and expertise on which its companies relied, while foreign direct investment has almost completely dried up.
What makes matters worse are strict capital controls that have made Russian ruble-denominated assets virtually worthless on global markets.
The sanctions, which cut off Moscow from a large portion of international financing, prevented Russian companies from issuing any new shares or any new bonds in the Western market.
“Russia, which has never provided any finished goods — industrial or consumer — to the global economy, is paralyzed,” Sonnenfeld and Tian said. “It is by no means an economic superpower, as all its raw materials can be easily replaced from elsewhere. The war machine is driven only by the dismantling of the institutions now controlled by the state.”
Even the Kremlin is preparing for more pain to come. Russian Central Bank Governor Elvira Nabiullina said on Monday that she expected more sanctions in the future.
While Russia has weathered the economic storms of the past two years, Nabiullina warned against thinking that the country is “ten feet tall,” according to a report published by the British newspaper “Daily Mail”. Translated by TASS state news agency. She added that the pressures resulting from the sanctions may intensify, and the country must prepare for that.
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