‘A bad déjà vu’: Under the crush of Western sanctions, Russians fear a return to dark



Harsh sanctions from Western nations on Russia have reminded citizens of the country’s 1998 debt crisis.

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  • McDonalds and other American businesses have closed in Russia amid its invasion into Ukraine.
  • One expert estimates more than 200,000 Russians have left the country since the start of the war.
  • To counter economic turmoil, Putin has demand “unfriendly” countries pay for natural gas exports in rubles.

The once bustling corner of Moscow’s central Tverskaya Street looked deserted on Wednesday, as Russia’s first-ever McDonald’s franchise – opened in 1990 in a move that symbolized the Soviet Union’s opening to the West – shut its doors.

A large mural depicting a giant, Soviet-era medal – the Order of Victory, the highest military decoration awarded in World War II — loomed over over the empty sidewalk.

“We are proud,” reads a sign on the mural.

Less than a month after Russian President Vladimir Putin ordered more than 150,000 Russian soldiers to invade neighboring Ukraine, Western sanctions leveled against Moscow have sent the economy into free fall. McDonalds and other American businesses have closed operations in the country amid outrage over Putin’s decision to invade Russia’s sovereign, democratic neighbor.

Generations of Russians experienced Soviet and post-Soviet economic crises described simply as “deficit,” weighted Russian shorthand for the deprivation that marked those periods. In the early 1990s, for example, Russians faced long lines for basic goods and had to use stamps instead of money to purchase sugar, soap and other items. 

Putin came to power in 1999 with a promise to make sure “Russia rises from its knees,” after years of economic difficulties and violent criminal gang wars.

But now, experts in Russia and the West predict that by this summer, Russia’s economic climate will be reminiscent of the country’s 1998 debt crisis. “Imports and GDP will collapse,” JPMorgan Chase & Co.’s economists said in an analysis earlier this month.

Andrei Yuryveich, a 67-year-old Saint Petersburg teacher, doesn’t need Wall Street bankers to tell her about the economic pain. 

“The biggest problem is the shortage of medicine, I almost died while waiting in line for three hours in the pharmacy but when I finally reached the counter, it turned out they  had run out of my medicine,” Yuryveich, who had coronary angioplasty last year, said in an interview earlier this month.  

Putin’s invasion has ‘changed everything in Russia’

Konstantin Sonin, an economics professor at the University of Chicago and native of Russia, said he could never have imagined that once decision – in this case Putin’s invasion of Ukraine – could do so much harm to one of the world’s largest economies. 

“It’s changed everything in Russia,” Sonin said.

“It’s not that there are bread lines,” he said, at least not yet. But the short-term and long-term outlook for Russia’s economy has changed dramatically. 

In the near term, it has stoked fears of inflation, lost wages and a host of other pocketbook concerns among average Russians.  

‘This is my land, I stay’: These Ukrainian women are among thousands choosing to fight, not flee

Marina Kuznetsova, a 58-year-old musician, said she stocked up on sugar – buying two kilos at a supermarket just a short walk from the former flagship McDonald’s – earlier this week.

“There is something about mass psychosis, I guess – everybody is scared of deficit and runs to buy sugar, so I should also run,” Kuznetsova told USA Today on Wednesday.

“I have always been proud of my country winning the war against the Nazis,” she said, referring to the motto near the Order of Victory. “But when I think we might have to live with long lines in shops and pharmacies again, I feel a bad déjà vu. It makes me more depressed than proud,” Kuznetsova admitted.

‘A tragic exodus’

Many Russians say the country’s current financial freefall has made them feel like Putin’s decision to invade Ukraine has sent the country backwards into its dark past – one without a Western banking system, without air travel and even without some basic necessities for daily life. 

Sonin estimates that more than 200,000 Russians have left the country since the start of the war, calling it a “tragic exodus not seen for a century.” Many of those who have left are middle class – people with the means to uproot and relocate, he said.

Other well-off Russians who have stayed aren’t suffering yet, at least by the measure of Moscow’s most expensive restaurants and theaters. Tickets to Swan Lake ballet were sold out this week at the Bolshoi Theater, one of the priciest in Russia.

Russians’ views about the war and the resulting economic crisis vary widely across age groups and occupation. Some Russians feel proud, others panicked.  

Piercing the propaganda veil: US, Schwarzenegger, hackers try to give Russians uncensored view of Ukraine war

“This magic time machine that Putin brought us to 1991 is going to play back and correct all the mistakes. We’ll be free of the dollar economy, of our dependence on the West,” said Yuriy Krupnov, a political expert who is close to the conservative wing of Russia’s government, said in an interview Thursday. He was referring to the year the Soviet Union collapsed. 

Krupnov and other Kremlin advisers have long pushed for Russia to quit the dollar economy and use a more centralized model to boost industrial production. They want Russia to halt its dependence on imported goods.

A move to rescue the ruble?

Putin announced on Wednesday that Russia would demand “unfriendly” countries pay for the country’s natural gas exports only in rubles from now on, citing the West’s “illegitimate decisions” to freeze Russia’s assets. 

“It makes no sense whatsoever,” Putin said, “to supply our goods to the European Union, the United States and receive payment in dollars, euros and a number of other currencies.”

Economists said the move appeared designed to try to support the ruble, which has collapsed against other currencies since Putin invaded Ukraine on Feb. 24 – triggering far-reaching sanctions from the U.S. and European countries. But it’s far from clear the move will rescue the ruble. 

And the same day that Putin made the announcement, his longtime adviser Anatoly Chubais, who had championed liberal economic reforms, quit his post and left the country. A spokeswoman for Ministry of Foreign Affairs, Maria Zakharova, described both developments as “fortunate” in a post on Facebook. 

Meanwhile, videos of frantic shoppers grabbing bags of sugar flooded Russian social media this week. Many Russians have been shocked at how fast prices were increasing.

“People are afraid of the war, so everybody is stocking (up) on salt and sugar, just in case, which causes the prices grow by 100 percent,” Vladimir Khrykov, a businessman from Nizhny Novgorod, a city in western Russia, told USA Today on Thursday. “Our country suffers because of this panic.”

Sonin said the “panic” is quite rational. 

“People are worried about inflation. People are worried about their wages. People are worried they cannot buy dollars,” he said. “So they’re trying to buy something which is easily storable and … which is always in high demand.” 

Aleksander Asmolov, a psychologist, told the Russian Kommersant newspaper that Russian society seemed to be bracing for a long economic winter.

“This was also the case at different times of blockades and defaults,” Asmolov said. “And the favorite products are, as a rule, buckwheat, sugar and salt.”

But Krupnov’s explanation was much simpler: “Russians traditionally buy sugar to produce moonshine.”

Contributing: Deirdre Shesgreen and Associated Press

More:

Piercing the propaganda veil: US, Schwarzenegger, hackers give Russians uncensored view of Ukraine war

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