Writer and Putin critic Mikhail Zygar (42 years old) was forced to flee, but he told the VG channel that there is an economic boom in Russia. Experts do not believe this will continue.
While Putin’s war against Ukraine is far from going according to plan, the president is having much greater success on the economic front – at least if we compare it to the doomsday prophecies that Western experts have come up with as the West imposes more and more sanctions. .
– The Russian economy is in very good shape, says Mikhail Zygar, who is now publishing War and Punishment (brilliantly translated by Steiner Gill) and who was previously famous, among other things, for his book on All the Kremlin’s Problems. men”.
When VG somewhat helplessly asks what is the reason for this, the well-known author and journalist answers:
– It’s growth! Thanks to foreign sanctions, all the oligarchs and other companies that previously operated outside Russia have now moved home. The same was true for the middle class, which had real estate and businesses outside Russia.
The sanctions imposed by the West were so arbitrary that everyone who made money abroad had to return to their homeland, Russia, with their business and money.
Mikhail Zygar—described as a “foreign agent” in Russia who had to leave the country immediately after Putin ordered a full-scale invasion of Ukraine—continues:
– That is why there is an investment boom. The oligarchs’ money was in Western banks, they took it out of Russia, and now all the money from oil, gas, aluminum and everything else stays in the country. Oligarchs must invest at home. Therefore, there is a boom that helps Putin.
For many Putin critics, this poses a dilemma. They prefer not to support Putin, but they have no choice but to use the money domestically – and thus help the president. It is not possible for them to work abroad.
The author says this helps Putin’s regime create the image that everything is normal in Russia, despite the “special operation” in Ukraine.
– The state is making great efforts to inform the Russians that nothing is happening – and it has succeeded. Propaganda works. Not least because the economy is doing well.
– The question, of course, is how long the boom will last! Zegar says.
Economists ask the same question. The Moscow stock market has risen by more than 40% since Christmas 2022, and the flight of Western companies from Russia seems to have made little sense.
Experts say that famous brands have withdrawn from Russia, but their goods are still easy to find.
Besides, you have New Russian brands It replaced its foreign predecessors – such as Starbucks becoming “Stars Coffee” and McDonald’s becoming “Vkusno i Totjka” (“Delicious and a whole point”), and of course with the letter “M” as the logo.
In the second quarter, GDP increased by 4.9 percent, according to the Statistics Authority Ross State – To the extent that we can trust them.
– The Russian economy is currently in good shape, because money is flowing into the army and military industry, Veronika Tarnovskaja, lecturer at the University of Economics in Lund, tells VG.
This is similar to the Soviet Union’s military spending during the Cold War. This creates jobs and supports the economy. But when this ends, the economy will contract.
Philipp Schroeder, a professor at Aarhus Business School, says the Russian economy has long been “surprisingly strong,” but he is nonetheless skeptical about the future:
– In the past two months, there have been less positive headline numbers. The central bank was forced to raise interest rates to stabilize the ruble exchange rate. Although the numbers look good, Russian authorities have to fight hard to keep them that way.
– Another element is that we should take the numbers coming from Russia with a little caution.
Why has the Russian economy held up so well for so long?
The first is that Russia benefited from the rise in prices of oil, gas and raw materials. The second is that the sanctions network is not as tightly interwoven as we imagine. It turns out that the goods and components are still arriving. Talk that the economy might reach a dead end, because Russia lacks investment factors, did not resonate.
– Because many goods arrive through Turkey or countries neighboring Russia, such as Kazakhstan, says Professor Schroeder.
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