DISINFO: Putin’s Russia stood firm despite Western sanctions
SUMMARY
There were earlier expectations of a severe decline in Russia, akin to 1917 or at least 1991, predicting economic deterioration and social unrest. However, despite almost two years of war, the country's economy remains stable, with well-stocked stores and regular payments of salaries and pensions. Surveys indicate a high level of calm among the general population, and there is no anticipation of a new mobilisation as the Defence Ministry is successfully recruiting contract soldiers.
RESPONSE
Recurring disinformation narrative by Russian officials about the impact of Western sanctions on Russia. The claims about Russia’s economic success contradict factual evidence.
Assessing the true state of the Russian economy is challenging. For over a year, both the Russian Central Bank and Rosstat—the national statistical agency—ceased publishing several key economic indicators. Additionally, the data they do publish has become less detailed than in the past, lacking specifics in areas such as banking, production, trade, and consumption.
However, we can still deduce that the war and western sanctions transformed the Russian economy in several ways as can be seen from this infographic from the Council of the EU published in October 2023. As the Council states:
"Economic indicators are showing that the restrictive measures taken in Europe and elsewhere against Russia have had an impact on the Russian economy".
It details how the Russian economy is shrinking, trade declining, Russia's revenues from fossil fuels are diminishing and over EUR 300 billion of Russian Central Bank reserves are blocked.
In addition, economic stakeholders changed, as many foreign companies left the country and the share of state-controlled companies now reaches 70%. Part of the skilled manpower emigrated to foreign countries to avoid draft or repression. The brain drain represents hundreds of thousands of skilled professionals. It is estimated that 1.3 million people under the age of 35 left the country in 2022. Additionally, foreign investments have nearly collapsed.
In April 2023, Russia's economy ministry revised its 2023 gross domestic product (GDP) forecast to 1.2% growth from a 0.8% contraction, but lowered its forecast for 2024, mirroring a wider trend that anticipates sluggish longer term prospects.
The International Monetary Fund raised in July its forecast for Russia's 2023 economic growth, but said the country may see a sharply wider budget deficit, and a smaller current account surplus this year. A lot of the economic activity is generated by the military industry and the state's procurement of weapons which is eventually discharged in Ukraine.
It said Russia's global isolation and lower energy revenues could harm its growth potential for years. Some analysts consider that the Russian resilience is nothing but a Potemkin façade, sustained not through genuine economic productivity but rather through shaking down the entire country for pennies to direct towards war.
Read an earlier detailed analysis of the Russian disinformation narratives about EU sanctions.
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