International sanctions are working: Russia feels economic pressure

Inflating the value of the ruble compared to the US dollar on screens in St. Petersburg, Russia, is one way the Kremlin hides the impact of international sanctions on the Russian economy, says a new study.・Lovetzky/AP image)

Business exits and sanctions imposed in response to President Vladimir Putin’s unjust war in Ukraine have severely weakened the Russian economy, despite Putin’s claims and Kremlin economic statistics saying otherwise. I am making it

More than 30 countries have imposed sanctions on Russia, cutting energy imports, cutting off financial transactions and suspending shipments of key imports such as semiconductors and other electronics. Over 1,000 foreign companies have ceased operations in Russia.

Meanwhile, imports to Russia have fallen by more than 50% this year. Personal consumption has plummeted and President Putin has fallen into a budget deficit. Undoubtedly, the Russian economy faces a major fallout from President Putin’s brazen war with Ukraine. But the Kremlin’s propaganda machine is working overtime to paint a fictional picture of economic stability.

“Moscow is picking economic data to back up Putin’s claims that all is well and the Russian economy is going strong,” Secretary of State Antony Brinken told reporters in Washington on July 27. ‘ said. “It’s simply not true.”

A recent economic analysis by the Yale School of Business and the Institute for Chief Executive Officers details the real economic losses of international sanctions and business exits. Here are some key facts that debunk the Kremlin’s latest myths about the country’s economic stability and performance.

(State Department/M. Gregory)

mythology: Russia should redirect its natural gas exports to Asia.

fact: Russia’s energy infrastructure limits the shift to Asia.

Exporting large amounts of natural gas to countries outside Europe is not an option for Russia for the time being. More than 90% of Russia’s gas is transported by pipeline, and most of Russia’s pipelines lead to European markets and refineries.

mythology: The Russian economy and domestic consumption are strong.

fact: Economic pressure limits Russians’ access to international goods.

Russia has seen the withdrawal of global companies and luxury brands, and lost many of its best and brightest workers as a result of sanctions. Foreign car sales in Russia have fallen by about 95%, say researchers at Yale University. foreign policyAccording to their analysis, it caused a massive exodus of 500,000 people fleeing foreign investment, most of them highly skilled and educated workers.

Sanctions, coupled with the withdrawal of businesses and talent, have a domino effect on the economy that will only grow and worsen over time. Meanwhile, consumer spending and retail sales have fallen by around 20% over the past year.

mythology: Russia replaces declining imports from the West with imports from Asia.

fact: Russian imports, including imports from China, fell by 50%.

While Russian imports have fallen by more than 50% this year overall, imports from the People’s Republic of China (PRC) have also fallen dramatically, from over $8.1 billion per month to $3.8 billion from January to April 2022. decreased, the study authors said. Say.

A shortage of imported goods means that Russian manufacturers have to recycle technical parts that cannot be produced domestically. Russia uses microchips taken from refrigerators and dishwashers in military equipment. At home, purchasing managers are placing fewer new orders, and consumers are losing access to products that were once a part of their lives.

mythology: There is a lot of money available in the Kremlin and you can rely on cash reserves.

Fact: Putin’s depleted reserves cannot sustain the Russian economy.

Russia’s past energy exports have allowed the Kremlin to accumulate significant state wealth. Half of these funds are now frozen abroad, thanks to restrictions imposed by our partners in the US, Japan and Europe in response to Putin’s continued attacks.

Putin’s remaining foreign exchange reserves have plummeted by $75 billion since the February 24 invasion. Putin insists the ruble is still strong, but an analysis by Yale University found that the Kremlin “made it virtually impossible for Russians to legally buy dollars or even access a large portion of their dollar deposits.” The restrictions on making the Russian currency artificially inflate.

“Headlines claiming that the Russian economy has recovered are simply untrue,” the authors conclude. “The fact is that by every indicator and every level, the Russian economy is in turmoil.”

Putin claims all is well, but the facts show otherwise.The economic damage of sanctions is real and significant.

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