European and American sanctions were supposed to isolate the Russian economy. But reality was always going to be more complicated
dealer from a provincial Russian town, never supported the war. Indeed, he broadly backed the West’s sanctions on Russia: how else could you stop the “monsters” intent on destroying his country, as well as Ukraine, if not by hitting their pockets? But when the West’s measures hit the supply of parts he needed from his distributors, he followed business logic and sourced them from wherever he could. The search took him to Turkey.
The restrictions were part of a package of extreme measures introduced by Russia’s technocrats to stabilise the economy in the months following the invasion. They have succeeded far better than their authors might have hoped. Before the invasion, many of them were clearly unhappy with the idea of an unprovoked war that risked wrecking the modernising economy they had spent their careers creating.
Emboldened hardliners are agitating for more radical change at the heart of government. Some dream about removing important figures that they perceive to be pro-Western. But as long as those people keep his war effort funded, Mr Putin is unlikely to oblige. It is difficult to know how well they are doing, as many key statistics are now secret. But back-of-the-envelope calculations are possible. Russia’s 2022 budget was planned at 23.7trn roubles .
The Kremlin would clearly like to militarise the economy further. In October the government established a new council designed to co-ordinate government and industry. But finding fresh sources of cash is about to become much trickier. Mr Putin’s invasion coincided with high prices for hydrocarbon. In the first five months of 2022, such revenues were two-and-a-half times higher than in the year before.
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