Western sanctions imposed after the Ukraine invasion are leading Russia to devolve into a secondhand economy dependent on poor substitutes, where shortages are stirring memories of the consumer wasteland that was the Soviet Union.
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Supply disruptions, however, have hit not only assembly lines that rely on advanced technology but also those using imported materials. Sanctions “on the Russian Federation have practically broken all the logistics in our country,” Russian Transport Minister Vitaly Savelyev, conceded to journalists last weekend during a visit to Russia’s Astrakhan region.
Those industries requiring microchips and other difficult-to-acquire advanced technology are being hit the hardest. “Automobiles, tanks, hygiene products, even print paper. This is where you need microchips, but also specialized chemicals and other imports that Russia is having problems getting,” said Anders Aslund, an economist who has long studied Russia.In the aviation sector, even Russian-manufactured planes rely on critical Western-made components.
“Even if all other cities in Russia are suffering and barely have bread to eat tomorrow, there will still be money in Moscow,” said a cocktail bar owner in Moscow, who spoke on the condition of anonymity because he was not authorized by his investors to discuss business matters. “Plus, people seem to have grown used to the situation … My main problem right now is [the lack of] American alcohol.”
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