Russia’s Other Competition with the West: Economic Sustainability

As Russia’s invasion of Ukraine continues, Moscow is mired in a parallel conflict: a contest for economic and political endurance against the West.

Vladimir V. Putin, the president of Russia, was prepare for Russia for sanctions like those imposed after Russia’s 2014 annexation of Crimea, as if Western countries dared to cut their citizens off from Russian commerce and see who blinked first.

However, the severity of the Western measures has far exceeded expectations, not only wreaking havoc on the Russian economy, but also causing its people to travel and even to Western brands like Apple. and McDonald’s.

Now, both sides face the test of their ability to maintain domestic support for an impasse at the expense of ordinary citizens. More than a battle of wills, it is a test of two opposing systems.

Mr. Putin’s Russia, which rose to prominence around nationalist frenzy in 2014, now depends on propaganda and repression. Western leaders increasingly call for liberal ideals of international norms and collective welfare that have been in decline globally – they hope so far.

The economic balance favors the West at the extreme. Research estimate that a full-blown trade war would limit the combined gross domestic product of Western countries to 0.17%, but Russia’s to 9.7%.

Public opinion can also benefit the West, where investigations find widespread support for harsh measures against Russia, while Mr. Putin dares not even admit it. war level for fear of activation more protests.

However, Western leaders still have to maintain unity among more than 20 underwhelming democracies, convincing people from Canada to Bulgaria that soaring energy prices may be just the beginning of the shocks. economic – worth the sacrifice.

Jeremy Shapiro, research director at the European Council on Foreign Relations, said political rifts were bound to open in the West.

“The polls really tell us nothing about how people will actually react to the economic pain and the mass of refugees,” Mr. Shapiro said. The question is when.

Meanwhile, Mr. Putin must maintain his grip on both the Russian public and the network of political power brokers that back him. If their tolerance for war is growing rapidly in the face of Western resolve, that could affect not only his war but also his hold on power.

The question of who breaks first could shape Ukraine’s fate as much as any arms transfer or tank attack. And although the results are unpredictable, a variety of economic indicators and political signals provide some clues.

The Western countries’ secret weapon, almost as important as their economic advantage, may be their citizens’ sudden desire for cooperative and unified action.

In the polls, Europeans cross-country expressed a moral imperative to punish Russia’s aggression, as well as the belief that Russia is now a direct threat to their nations.

In seven countries survey carried out just before the invasion, the majority said they were willing to suffer the economic costs of isolating Russia, a major European energy supplier. Country-specific polls suggest rates may have increased.

In Germany – the European Union’s largest economy and often the one deciding on Russia affairs – only 38 percent has supported increased military spending since September, now it’s up to 69 percent.

In the past, European leaders often went against the will of voters when confronting Moscow, seeing it as a necessity.

Now, leaders like Olaf Scholz of Germany and Emmanuel Macron of France are seeing approval rating surge as they rallied against Russia. Far from reducing costs for ordinary people, some insist it’s a point of pride.

Political risks continue to be mitigated by the election calendar: Mr. Macron is almost alone among Western leaders facing re-election this year and is a man who loves to win.

However, Russia’s energy exports are slowing – has been and is happening as Russian companies are disturbed by anarchy – is expected to hit Europe heavily. German imports more than a half its gas from Russia, as well as Austria. Some Eastern European countries use almost 100% of Russian gas.

The West of Europe gets most of its gas elsewhere, such as from Norway and Algeria. However, when Russia has no more buyers, fossil fuels will become scarcer and therefore more expensive worldwide. Some German energy bills are was expected up two thirds this year.

To ease the burden, European governments are placing sweep energy allowanceworth 15.5 billion euros, or about 17 billion dollars, in France, 5.5 billion euros in Italy, 2 billion euros in Poland, 1.7 billion euros in Austria, etc. low-income households.

But maybe there is a timer on the resilience of the West. Unless European nations completely redesign their infrastructure to import gas or perhaps transition to renewable energy the fastest in history – both are considered technically feasible. technical but expensive – they will probably run out of fuel next winter.

Economic shocks can outweigh heating costs. Some European industries have production slows down because of rising energy prices. Russia also exports much of the world’s copper and other industrial raw materials.

At the same time, while Europeans express widespread support for welcoming Ukrainian refugees, it remains unclear whether this will last.

Europe has been expecting a big increase in refugee numbers this summer, many from Afghanistan. Western leaders have been extremely sensitive to the anti-immigrant backlash.

“There are still significant gaps that are buried in the emotions of the moment,” Mr. Shapiro said.

The West’s biggest ally in maintaining unity may well be Putin himself. By massing forces at NATO’s borders and creating shocking images of the devastation in Ukraine, he gave Europeans something to rally against, distracting from their disagreements. them, now.

In stark contrast to 2014, when many Russians cheered their country’s invasion of Ukraine, Mr. Putin almost immediately turned to repression and censorship, threatening prison sentences so severe that he called the invasion. strategy is a “war”.

This has fueled a kind of authoritarian feedback loop in Russia, with tightening repression generating discontent among the population, even beyond the extremes of recent years.

But Mr. Putin belongs to a particular group of dictators – personally powerful people, rather than military or partisan dictatorships – for whom popular support is of secondary concern.

Instead, such leaders draw their power from the backing of political elites, such as heads of security services or state industries, said Erica Frantz, an academic on authoritarianism by Michigan State University, said.

“This is not to say that ordinary citizens are not important, but that if we are looking for the regime’s vulnerabilities at the moment, the real focus should be on the indicators of discontent. of this elite,” said Dr. Frantz.

The authoritarian elite, hidden behind huge personal fortunes, can easily endure the economic hardship that ordinary Russians have to endure. They also tend to give leaders wide range in wartime, which is probably why the strong rarely lose power because of battlefield losses, research has shown.

Such elites, however, are not fooled by state propaganda. And they are not indifferent to the fate of their country.

Survey of Russian political elites conducted in 2020 suggests that most of Putin’s supporters have achieved exactly the achievements now at stake: stabilizing the country and earning respect abroad. Many also expressed concern about his handling of the economy – and opposed military adventurism in Ukraine.

“The crisis will be the most severe in at least three years. Oleg Deripaska, a prominent Russian billionaire, spoke during his unusual farewell to the Kremlin, referring to Russia’s economic crisis of the 1990s.

Sanctions could hurt Mr. Putin’s elite by limiting their ability to distribute the spoils they expect in return for their support. So widespread unrest is possible, if it grows severe enough to make that elite question whether Mr. Putin is promoting Russia’s stability.

“Russian public opinion is becoming an issue that Putin is effectively fighting in two wars: one in Ukraine and the other at home,” said Sam Greene, a Russia scholar at King’s College London, wrote this week.

The danger is not just anti-war protests, but mostly related to sections of society already skeptical of Mr. Putin. Mr. Greene argued that banking or other forms of mass economic crisis could induce a sense of national crisis, override even the optimistic lies of the state media.

Mr. Putin, by concealing the scale and nature of the invasion, is tying his own hands, making it impossible for his government to fully inform the people of the struggles ahead. You cannot ask citizens to rally around a war that you claim does not exist.

While European disunity is all but inevitable as tolls rise, apprehension among Russian elites may be only a matter of time.

“The indicators of elite discontent we have seen so far are unusual in Putin’s Russia and therefore need to be taken seriously,” said Dr. Frantz. , referring to comments made by Mr. Deripaska and several others.

Although she stressed that Putin can weather the self-made crisis, “in the long run, this external pressure – coupled with the instability at home – could lead to Putin’s downfall.” .

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