Mythology became the basis of Russian politics. With the outbreak of the war against Ukraine, the Kremlin’s political communications had been sharply intensified by the propaganda. There are systemic political myths both for the world and for domestic consumer that explain almost all the processes of Russian existence.
Economic myths are a priority for the Russian leadership. Recently, President Putin voiced the thesis about the leading position of the Russian economy. According to the Kremlin, Russia ranks first in economic development in Europe, surpassing even Germany. According to Kremlin analysts, Russia has also overtaken Japan and is now in fourth place in the world in terms of economic potential.
Another cornerstone of Russian economic mythology is Russia’s phenomenal resistant to Western sanctions. The fact that the widely publicized “turn to the East” actually failed (the East did not accept Russia, fearing banal predation), and Russia turned into a huge “kingdom of pirate goods,” where almost impossible to find out original products.
Tales of the prosperity of the Russian economy are intended for a gullible audience of satellite countries and their own citizens, who are traditionally accustomed to be easily satisfied.
Russian officials doing their best to “show Kuzka’s mother” to the “decaying” West, hoping to frighten the United States, Great Britain, Germany and the pro-Ukrainian coalition as a whole with an unprecedented economic leap and thereby weaken Western assistance to Ukraine.
The Russian corridors of power and media chose not to cover the fact that the Russian economy has shown its growth on military orders. In fact, the civilian part of the economy was phased out. All Russian potential, both intellectual and industrial, is working for the war. Of course, this is a negative signal for the West, which must consolidate resources and determine technological priorities. However, at the same time, this is a negative signal for the entire Russian society. Under Putin’s rule, Russians have no alternative but to live for war and die for this war.
Russians are offered to eke out an isolated existence with a clearly weakened ruble and an unclear policy of the Central Bank, manipulating the discount rate. From time to time, the head of the Central Bank, Elvira Nabiullina, hints at a possible cessation of foreign exchange trading on the Moscow Exchange. And this is nothing more than a big nail in the coffin of the Russian national currency — the ruble.
Foreign investment in the Russian banking sector has practically ceased. Russian banks are forced to borrow on the domestic market, which entails an endless increase in the discount rate, and therefore an increase in the cost of loans for the population and business. The number of overdue loans is growing rapidly. By the way, mortgages in Russia are also becoming more expensive.
The US Treasury Department has announced sanctions against banks that facilitate financial and trade transactions aimed at maintaining Russia’s military potential. Controlling sanctions circumvention is a priority for the European Community.
Rising prices for eggs and their shortage are events that have become memes of the presidential election campaign in Russia; this is just the tip of the iceberg which Putin’s “Titanic” faces. Omitting such an important index as the almost monthly increase in prices for tomatoes and cucumbers, it is worth noting that just one massive shelling of Ukraine costs Russian taxpayers over a billion dollars. This is the cost of missiles and drones flying at a neighboring sovereign state.
At the same time, there is a collapse of the housing and communal services sector due to severe frosts in Russia. In 25-30 degree frosts, citizens are left without electricity, heating and hot water, holding flash mobs “Putin, helps!” near bonfires in the courtyards of high-rise buildings.
Entire sectors of the Russian economy are in deep crisis. In civil aviation, planes break down almost every day, some of them are simply dismantled due to a shortage of spare parts.
The oil and gas sector is surviving on record supplies at price dumping in India. At the same time, supplies to China, which the Russian leadership had high hopes for, are being reduced. It seems that the Chinese are disappointed in the economic potential of the “little” brother, as well as in the Kinzhal missiles.
Falling oil prices and growing discounts on the Russian Urals declines sales revenue from oil and petroleum products. The Kremlin’s “gas weapon” — the Gazprom company — has every chance of becoming a record-breaking bankrupt, a monument to disastrous economic and energy expansion.
Russian assets abroad also risk turning into the same monument to senseless imperial ambitions. The 300 billion dollars of “frozen” gold and foreign exchange reserves of the Russian Federation should be used more effectively — for the restoration of Ukraine, which is being brutally destroyed by the Russian “imperials”.
The Kremlin’s frantic attempts to find “the property of the Russian Empire” risk turning into another farce. These “Potemkin villages” are for the man in the street. In reality, the Russian Federation’s assets has fallen sharply. Private companies — by 50 %, and public companies — by 75 %! Here, the depreciation of the ruble, which actually participates in the military adventure, played a significant role.
The real state of the Russian economy is revealed in an article by Jeffrey Sonnenfeld, a professor at the Yale School of Economics. There is a gigantic outflow of business in Russia. And these are not only about fashion or beauty industry. These are companies that produce and supply equipment. Otherwise, how can we explain the endless accidents at Russian industrial enterprises, which have become more frequent? Obviously, “import substitution” does not work, despite calls from Russian officials at almost every economic forum.
Along with foreign capital, the latest technologies left Russia (by the way, Russian scientists have no access to promising technologies as well). The Russian oil and gas sector has suffered greatly from the loss of access to modern oil production and refining processes. For example, leading Russian company Rosneft was forced to spend an additional 10 billion US dollars on capital investments, which added 10 US dollars to the cost of each barrel of oil.
The outflow of private capital from Russia amounted to 253 billion US dollars, 33 % of Russian millionaires left the country.
With the outbreak of the war against Ukraine, over a million highly qualified specialists left Russia, preferring emigration to a shameful death somewhere in the Ukrainian steppes. Among the relocants are representatives of the IT sector and promising development scientists.
Against the background of such losses in the economic sector, statements by the Russian authorities about explosive economic growth are an outright bluff designed to scare the West and make it more flexible on the “Ukrainian issue.” The unprecedented, almost “Stalinist” growth of the military-industrial complex may also turn into a grandiose myth. Ukrainian forces are successfully attacking key military-industrial targets in Russia. The other day, for example, the largest Russian gunpowder plant was on fire.
The West must provide Ukraine with such opportunities that Russia’s military and economic advantage will come to naught. This will minimize the Russian threat to the entire Western alliance.