When Vladimir Putin announced the invasion of Ukraine, the war seemed far removed from Russian territory. Within days, however, the conflict came home, not with cruise missiles and mortars, but in the form of unprecedented and unexpectedly extensive barrages of sanctions by Western governments and economic punishments by corporations.
Three months after the February 24 invasion, many ordinary Russians are reeling from these blows to their livelihoods and emotions. Moscow’s huge shopping malls have become eerie expanses of shuttered storefronts once occupied by Western retailers.
McDonald’s, whose opening in Russia in 1990 was a cultural phenomenon, a brilliant modern convenience arriving in a dreary country crushed by limited options, withdrew from Russia entirely in response to its invasion of Ukraine. IKEA, the epitome of affordable modern conveniences, has suspended operations. Tens of thousands of jobs that were once secure are now suddenly in doubt in a very short time.
Major industrial players, including oil giants BP and Shell and carmaker Renault, have pulled out, despite their huge investments in Russia. Shell has estimated that it will lose about $5 billion if it tries to divest its Russian assets.
While the multinationals were leaving, thousands of Russians who had the financial means to do so were also fleeing, frightened by the new government’s harsh measures related to the war that they saw as a plunge into total totalitarianism. Some young men may also have fled out of fear that the Kremlin would impose conscription to fuel its war machine.
But fleeing had become much more difficult than it was before: The 27-nation European Union, along with the United States and Canada, had banned flights to and from Russia. The Estonian capital of Tallinn, once an easy long-weekend destination 90 minutes by plane from Moscow, suddenly took at least 12 hours to reach on a route through Istanbul.
Even indirect travel via the Internet and social media has been reduced for Russians. In March, Russia banned Facebook and Instagram, though that can be circumvented through the use of VPNs, and shut down access to foreign media websites, including the BBC, the US government-funded Voice of America, Radio Free Europe/Radio Liberty and the German broadcaster. Deutsche Welle.
After Russian authorities passed a law requiring up to 15 years in prison for stories including “fake news” about the war, many major independent media outlets closed or suspended operations. Among them were the Ekho Moskvy radio station and Novaya Gazeta, the newspaper whose editor Dmitry Muratov shared the most recent Nobel Peace Prize.
The psychological cost of repressions, restrictions and reduced opportunities could be high for ordinary Russians, although difficult to measure. Although some public opinion polls in Russia suggest that support for the Ukraine war is strong, the results are likely to be skewed by respondents who remain silent, wary of expressing their genuine views.
Andrei Kolesnikov of the Carnegie Moscow Center wrote in a commentary that Russian society at the moment is gripped by “aggressive submission” and that the degradation of social ties could accelerate.
“The discussion becomes broader and broader. You can call your countryman, a fellow citizen, but who has a different opinion, a ‘traitor’ and consider him an inferior type of person. You can, like the highest state officials, speculate freely and quite calmly about the prospects of nuclear war. (That is) something that was certainly never allowed in Soviet times during Pax Atomica, when both sides understood that the resulting damage was completely unthinkable,” he wrote.
“Now that understanding is slipping away, and that is another sign of the anthropological disaster that Russia is facing,” he said.
The economic consequences have not yet been fully developed.
In the first days of the war, the Russian ruble lost half its value. But the government’s efforts to shore it up have actually increased its value above its pre-invasion level.
But in terms of economic activity, “that’s a completely different story,” said Chris Weafer, a longtime Russia economics analyst at Macro-Advisory.
“We see a deterioration in the economy now across a wide range of sectors. Companies are warning that they are running out of spare parts inventories. Many companies are putting their workers on part-time jobs and others are warning them that they have to close completely.” … So there is a real fear that unemployment will rise during the summer months, that there will be a big drop in consumption, retail sales and investment,” he told The Associated Press.
The comparatively strong ruble, encouraging as it sounds, also poses problems for the national budget, Weafer said.
“They actually receive their income in foreign currency from exporters and their payments are in rubles. So the stronger the ruble, the less money they have to spend,” he said. “(That) also makes Russian exporters less competitive, because they are more expensive on the world stage.”
If the war drags on, more companies could leave Russia. Weafer suggested that those companies that have only suspended operations could resume if a ceasefire and peace deal is reached for Ukraine, but said the window for this could be closing.
“If you walk through the malls in Moscow, you can see that many of the fashion stores, Western business groups, have just lowered their shutters. Their shelves are still full, the lights are still on. They just aren’t open.” . So they haven’t retired yet. They are waiting to see what happens next,” she explained.
Those companies will soon be under pressure to resolve the limbo their Russian businesses find themselves in, Weafer said.
“Now we’re getting to the stage where companies are starting to run out of time, or maybe out of patience,” he said.