When Vladimir Putin announced the invasion of Ukraine, war seemed a long way from Russian territory. But within days, the conflict came alive – not with cruise missiles and mortars, but in the form of unprecedented and unexpectedly extensive volleys of sanctions by Western governments and economic punishment by corporations.
Three months after the February 24 invasion, many ordinary Russians are reeling from those blows to their livelihoods and emotions. Moscow’s massive malls have turned into eerie sprawling shuttered storefronts once occupied by Western retailers.
McDonald’s — whose opening in Russia in 1990 was a cultural phenomenon, a gleaming modern convenience that came to a bleak country ravaged by limited choices — withdrew completely from Russia in response to the invasion of Ukraine. IKEA, the embodiment of affordable modern comfort, suspended operations. Tens of thousands of jobs that were once secure are now suddenly at stake in a very short time.
Major industrial players, including oil giants BP and Shell and car maker Renault, walked out despite their massive investments in Russia. Shell has estimated it will lose about $5 billion trying to redeem its Russian assets.
As the multinationals left, thousands of Russians who had the economic resources to do so also fled, fearing harsh new government moves linked to the war, which they saw as a plunge into full-blown totalitarianism. Some young men may also have fled for fear that the Kremlin would impose compulsory military service to feed its war machine.
But flights had become much more difficult than it had ever been – the 27 countries of the European Union, along with the United States and Canada, had banned flights to and from Russia. The Estonian capital Tallinn, once an easy destination for a long weekend, a 90-minute flight from Moscow, suddenly took at least 12 hours to reach via a route through Istanbul.
Even vicarious travel via the internet and social media has shrunk for Russians. Russia banned Facebook and Instagram in March – although that can be circumvented by using VPNs – and closed off access to foreign media websites, including the BBC, the US government-funded Voice of America and Radio Free Europe/Radio Liberty and the German broadcaster Deutsche Welle.
After Russian authorities passed a law calling for up to 15 years in prison for “fake news” stories about the war, many major independent news outlets shut down or ceased operations. These included the radio station Ekho Moskvy and Novaya Gazeta, the newspaper whose editor Dmitry Muratov shared the most recent Nobel Peace Prize.
The psychological costs of the repression, restrictions and diminishing opportunities can be high for ordinary Russians, albeit difficult to measure. While some polls in Russia suggest strong support for the war in Ukraine, the results are likely biased by respondents who remain silent and wary of expressing their sincere opinions.
Andrei Kolesnikov of the Carnegie Moscow Center commented that Russian society is currently gripped by “aggressive submission” and that the degradation of social ties could accelerate.
“The discussion is getting wider and wider. You can call your compatriot – a fellow citizen, but someone who happens to have a different opinion – a “traitor” and consider him an inferior person. You, like top state officials, can speculate freely and fairly quietly about the prospects of nuclear war. (That is) something that was certainly never allowed in Soviet times during Pax Atomica, when the two sides understood that the resulting damage was completely unimaginable,” he wrote.
“Now that that understanding is waning, it’s another sign of the anthropological disaster Russia is facing,” he said.
The economic consequences have yet to be fully developed.
In the early days of the war, the Russian ruble lost half its value. But the government’s efforts to support it have actually increased its value beyond pre-invasion levels.
But in terms of economic activity, “that’s a whole different story,” said Chris Weafer, an experienced economics analyst for Russia at Macro-Advisory.
“We are now seeing a deterioration in the economy across a wide range of sectors. Companies warn that stocks of spare parts are running out. Many companies put their employees to work part-time and others warn them 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 and retail sales and investment,” he told The Associated Press.
The relatively strong ruble, encouraging as it may seem, is also posing problems for the national budget, Weafer said.
“They actually receive their earnings in foreign currency from the exporters and their payments are in rubles. So the stronger the ruble, the less money they actually have to spend,” he said. “(That) also makes Russian exporters less competitive, because they are more expensive on the global stage.”
If the war continues, more companies may leave Russia. Weafer suggested that the companies that have only suspended operations could resume them if a ceasefire and peace deal for Ukraine is reached, but he said the window to this could close.
“If you walk through shopping malls in Moscow, you see that a lot of the fashion stores, western business groups, have just pulled the shutters down. Their shelves are still full, the lights are still on. They just aren’t open. So they’re not out yet. They are waiting to see what will happen,” he explains.
Those companies will soon be pressured to resolve the uncertainty their Russian companies find themselves in, Weafer said.
“We’re now getting to the stage where companies are running out of time, or maybe just out of patience,” he said.
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Follow all AP stories about the war in Ukraine at https://apnews.com/hub/russia-ukraine.
