Besieged by an onslaught of sanctions that have largely undone 30 years of economic integration with the West in the space of two weeks, President Vladimir V. Putin on Thursday opened the door to nationalizing the assets of Western companies pulling out of Russia and exhorted senior officials to “act decisively” to preserve jobs.
With Russia in danger of defaulting on its sovereign debt and facing a sharp contraction in its economy, the West is betting that the looming, generation-defining economic crisis could make Russians turn on their president. It is also possible, however, that the crisis could end up strengthening Mr. Putin, validating his narrative that the West is determined to destroy Russia.
“I have no doubt that these sanctions would have been implemented no matter what,” Mr. Putin said in televised remarks on Thursday, arguing that his intervention in Ukraine served merely as a pretext for the West to try to wreck Russia’s economy. “Just as we overcame these difficulties in years past, we will overcome them now, too.”
But the sanctions imposed in the two weeks since the invasion — combined with multinational companies that employ tens of thousands of Russians voluntarily deciding to withdraw amid the global outrage — dwarf any other economic pressure that Russia has faced under Mr. Putin.
With the ruble having lost nearly half its value in the last month, prices of basic goods have risen sharply, causing panic buying at supermarkets. The central bank, which has kept the Moscow stock exchange closed since the war began, has introduced new capital controls, preventing companies from withdrawing more than $5,000 in cash for the next six months.“This will be a gigantic, transformational downturn,” said Ruben Enikolopov, rector of the New Economic School in Moscow.
The Institute of International Finance, a Washington-based association of financial firms, predicted that Russia would see a 15-percent decline in its gross domestic product this year, which would wipe out much of the economic growth that Mr. Putin has presided over since taking office in 1999.
And things could get even worse. Further escalation of the war could lead more countries to refuse to buy Russian energy, the institute’s economists said, “which would drastically impair Russia’s ability to import goods and services, deepening the recession.”
The alarm with which Russian planners view the downturn is reflected in the radical measures they have proposed to arrest it.
Of particular concern are Western companies that once symbolized post-Soviet Russia’s integration into the world economy, like McDonald’s and Ikea, that have now shuttered hundreds of stores and factories. Mr. Putin told officials in the televised meeting that the assets of such companies should be put under “external management” and then transferred “to those who want to work.”
Dmitri A. Medvedev, the vice chairman of Mr. Putin’s security council, said the Kremlin could respond to Western companies leaving the Russian market with the seizure of their assets “and their possible nationalization.”
The risk for the West, some warned, is that the crushing sanctions could spark a backlash.
“The medicine could turn out to be worse than the illness, even from the point of view of declared goals,” Mr. Enikolopov said, arguing that the sanctions could end up entrenching anti-Western views. “No one is looking at the collateral damage at all.”
On the shore of western Russia’s Lake Valdai, Tatyana Makarova, an entrepreneur, said that she supported Mr. Putin’s war in Ukraine — and that the impact of the sanctions only shows that Russia has been excessively dependent on the West. Ms. Makarova, who owns a small cleaning company, said in a phone interview that she believed the economic crisis would finally force Russia to develop homegrown technology.
“Perhaps this will be good for us,” she said. “This will wake Russians up, and thank God.”
Timofey Bordachev, a prominent political analyst, wrote that the new “Iron Curtain now descending between the West and Russia” offered the country “an absolutely fantastic chance to start a more meaningful and independent life.”
Multiple thoughts come to mind.
One is that the West has committed a colossal mistake by remaining reliant on carbon energy. Europe needs Russian oil and gas. For at least the last ~20 years, the Europeans and Americans should have been building nuclear power plants as fast as they could. Not only do we face an environmental disaster, we also face blackmail by tyrants with oil or natural gas. On both environmental and national security grounds, Western politics has failed miserably.
And, just like some Russians believe that Russia should not have let itself become dependent on the West, The West should not have remained dependent on Russia energy.
Another is that nationalization of Western assets in Russia makes sense. Putin and Russian elites run an autocratic kleptocracy. Stealing Western assets is perfectly reasonable to a kleptocrat who thinks they can get away with the theft with an acceptable cost-benefit outcome.
Also the matter of the Russian people is important. Will they turn toward or away from Putin and his kleptocratic police state? People in a nation under siege as Russia now is tend to rally around the flag and the leader, even a brutal, corrupt tyrant like Putin. At present, all the Russia people get to hear is an endless stream of lies about poor, innocent Russia being brutally attacked by those evil Western fascist countries. The entire Russian nation is one gigantic echo chamber. Only Putin speaks in it. There is no war in Ukraine, just an innocent little 'special military operation' to stop Ukrainian fascists from slaughtering innocent, defenseless pro-Russian Ukrainians.
Maybe this is, as Mr. Bordachev says, an absolutely fantastic chance to start a more meaningful and independent life.
Assuming we don't self-annihilate, if this conflict wakes the West up perhaps it will be good for most people. And thank God if it does wake us up. Unfortunately, there is no way this will be any good for Ukraine any time soon. They're royally hosed. The West needs to build a (sanctions) wall and make Russia pay for who they murdered and injured and to fix what they broke.
One can also hope that if waking up does happen in the West, it will make the threat of China clearer. China is an even deadlier threat to the global economy, democracy, truth and the rule of law than Russia. Both are about equally deadly in terms of nuclear weapons.
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