President Vladimir Putin (TV) and writer Mikhail Zygar (th). Photo: AFP and AFP
Putin critic and author Mikhail Zygar (42) has himself had to flee – but he tells VG that there is an economic boom in Russia. Experts don’t think it will last.
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Russian economy is experiencing an investment boom, believes Putin critic and author Mikhail Zygar. Growth is due to the return of oligarchs and the middle class to Russia due to Western sanctions. Zygar’s book “War and punishment” is now available in Norwegian. Propaganda and economic growth contribute to a normalized image of Russia despite the war in Ukraine. Economists question how long this boom will last. Russia’s economy has held up well due to high prices for oil, gas and raw materials, as well as the ineffectiveness of sanctions .View more
While Putin’s war against Ukraine is far from going according to plan, the president is having much more success with the economy – at least if we compare it to the doomsday prophecies that Western experts have come up with as the West has imposed more and more sanctions.
– The Russian economy is doing so well, says Mikhail Zygar, who is now publishing the book “War and Punishment” (sparklingly translated by Steinar Gil) and who has previously, among other things, become known for the book about “All the Kremlin’s men”.
When VG asks somewhat helplessly what is the reason for that, the well-known author and journalist replies:
– It’s growth! Thanks to the foreign sanctions, all the oligarchs and other businesses that previously operated outside Russia have now moved home. The same applies to the middle class, who used to have property and business outside Russia.
– The sanctions from the West were so arbitrary that almost everyone who made money abroad had to return home to Russia with their business and their money.
BURGER: What was once McDonald’s is now “Vkusno i Totshka” in Russia. With an “M” as symbol. Photo: MAXIM SHIPENKOV / EPA / NTB
Mikhail Zygar – who is branded a “foreign agent” in Russia and had to leave the country right after Putin ordered a full-scale invasion of Ukraine – continues:
– That is why there is an investment boom. The oligarchs had their money in western banks, take it out of Russia, now all the money from oil and gas and aluminum and everything else stays in the country. The oligarchs must invest domestically. Therefore, there is a boom that helps Putin.
– For many who are critical of Putin, it is a dilemma. They would rather not 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 operate abroad.
The author says that this helps the Putin regime to be able to create an image that everything is normal in Russia, despite the “special operation” in Ukraine.
– The state makes great efforts to tell the Russians that nothing is happening – and it works. The propaganda works. Not least because the economy is doing so well.
– The question is, of course, how long the boom will last! Zygar says.
Economists ask the same question. The Moscow stock market has risen more than 40 percent since Christmas 2022, and the flight of Western companies from Russia has apparently meant little.
NEW BANKNOTE: The Russian Central Bank recently presented the new 1000 ruble banknote. Photo: NATALIA KOLESNIKOVA / AFP / NTB
Well-known brands have pulled out of Russia, but their goods are still easy to find, experts say.
Besides, have new Russian brands replaced foreign predecessors – such as Starbucks becoming “Stars Coffee” and McDonald’s becoming “Vkusno i Totjka” (“Tasty and full stop”), of course with an “M” as the logo.
In the second quarter, gross domestic product increased by 4.9 per cent, according to the statistics authority Rosstat – to the extent that we can trust them.
– The Russian economy is currently doing well, because money is being poured into the military and the military industry, says Veronika Tarnovskaja, lecturer at the University of Economics in Lund, to VG.
– This is comparable to the Soviet Union’s military expenditure during the Cold War. This creates jobs and sustains the economy. But when this is over, the economy will shrink.
EXCHANGE: During 2023, the Russian ruble has weakened sharply against the dollar and euro. Photo: YURI KOCHETKOV / EPA / NTB
Philipp Schrøder, professor at Aarhus School of Business, says that the Russian economy has long been “amazingly robust”, but he is nevertheless skeptical about the future:
– In the last couple of months, there have been less positive key figures. The central bank has had to raise the interest rate 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 have to take the figures coming from Russia with a small caveat.
– Why has the Russian economy held up so well for so long?
– One is that Russia has benefited from the fact that the prices of oil, gas and raw materials have been high. The second is that the sanctions net is not as tightly meshed as we imagine. It turns out that goods and components still arrive. The talk that the economy would come to a standstill, because Russia lacked investment factors, has not caught on.
– Why?
– Because many goods arrive through Turkey or Russia’s neighboring countries, such as Kazakhstan, says Professor Schrøder.
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Published: 04.11.23 at 01:23
Updated: 04.11.23 at 02:24
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2023-11-04 00:23:15
#Putin #critic #economy #laughable
