Russian President Vladimir Putin speaks at the medal ceremony of the annual Vladivostok Yigoro Kano International Cadet Judo Tournament at the Fetisov Arena on day two of the 2018 Eastern Economic Forum. Mikhail KlimentyevTASS via Getty Images
According to two Yale scientists, Putin has begun a “merciless exploitation” of the Russian economy.
The researchers pointed to the chaos unfolding in Russia as Putin tries to cover the country’s growing budget deficit.
Russia’s demonstration of economic strength is a “facade,” the researchers say.
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Vladimir Putin is ruining his country’s economy as the Russian president is disrupting the financial order in his bid to conquer Ukraine, according to two Yale researchers. In a recent op-ed for Time magazine, Jeffrey Sonnenfeld and Steven Tian, two researchers at the Yale Chief Executive Leadership Institute, pointed to the economic chaos unfolding in Russia’s war against Ukraine.
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Although some estimates show that Russia is spending surprisingly little on its “special military operation,” official statistics show that the country has run a budget deficit of about $40 billion so far this year, thanks to increased military spending and declining revenue. The reason is that Western sanctions are affecting key areas of the Russian economy.
“A far cry from the prevailing narrative of how Putin is financing his invasion, his financial lifeline is the ruthless exploitation of Russian economic productivity,” say Sonnenfeld and Tian. “He burned the living room furniture to fund his struggles in Ukraine, but that’s where it ends now beginning to backfire amid deafening silence and a lack of public support.”
For his part, Putin has been trying to raise more money as the war effort rages on, but he has done so in a way that has largely ignored Russia’s fiscal responsibilities, the researchers said. These include measures such as printing record amounts of the Russian ruble “out of thin air”, forcing institutions to buy “nearly worthless” Russian debt, hefty taxes on “basically anything that moves” and taking billions out of it Russian sovereign wealth fund to restructure the country’s finances.
These measures have contributed to the exodus of millionaires and ordinary workers who left the country in search of better opportunities. This has severely impacted the country’s production and productivity. And while Putin has flaunted Russia’s economic strength, his actions have only bought Russia more time, researchers warn.
“This resilience is nothing more than a Potemkin facade maintained not by real economic productivity, but by extorting the whole country for pennies to put into the war,” according to Sonnenfeld and Tian. “Putin can continue his invasion of Ukraine this way, while still ripping off his own people. By avoiding total economic collapse, by mortgaging Russia’s future, he will become increasingly unloved by his people and thus increasingly weakened.”
Sonnenfeld and Tian have been critical of the state of Russia’s economy, despite Putin’s attempts to reassure the public that Russia is doing well. Unreleased statistics from the Kremlin are likely to paint a weaker picture of Russia’s economy than the government is letting on, according to Sonnenfeld and Tian, who previously claimed that Russia’s economic numbers were merely “cherry picking” and that the economy was in fact imploding.
“In the midst of such blatant plundering of the Russian economy, cannibalized for war toys, it is perhaps no surprise that Prigozhin’s failed coup last weekend revealed no lost love for Putin among Russian people and elites,” the researchers said.
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2023-07-10 12:42:33
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