Russia and Ukraine: 6 Months Later
Russia started a full-scale invasion of Ukraine on February 24, startling the West. Since the beginning of the war, it is estimated that at least tens of thousands of lives have been lost, at least 12 million Ukrainians have been temporarily or permanently displaced, and at least $100 billion worth of infrastructure has been devastated.
In addition, there is still no sign that violent combat will end after almost five months.
In this article we’ll take a look at Russia and Ukraine’s economic situation, the condition of the war, and what Putin wants from this war.
Russia’s economy was the 11th largest economy worldwide, but now the situation has changed ultimately. According to economists, investors, and diplomats, Russia’s quality of living will decline by at least 30 years over the next five years due to Vladimir Putin’s unjustified attack on Ukraine and the accompanying global reaction.
By restricting the country’s access to global markets and freezing its assets, sanctions imposed by the West are intended to deliver a severe blow to the economy. The sanctions begin a new era in Russia’s economic growth.
Since the Russian financial system and currency are collapsing on several fronts, the Kremlin has been compelled to shut the stock exchange and artificially support the ruble at home.
Initiated by former leader Mikhail Gorbachev, the forty-year endeavor to establish a thriving market-based economy in Russia fell prey to President Putin’s ruthless invasion of the nation.
In the 1980s, American-made goods were readily accessible in the Soviet Union due to the country’s major economic and social transformations in the prior decade.
The United States and the European Union have taken steps to wind down trade and tourism with Russia, thus ending decades of work to integrate the economy into Europe. A significant number of multinational corporations have departed the Russian market.
Among the penalties on Russia, two penalties have been particularly harmful. The first significantly restricted the capacity of Russia’s leading banks to undertake foreign transactions by excluding them from the SWIFT global payments network.
The second sanction was to freeze hundreds of billions of euros worth of Russian central bank reserve reserves. In the lack of reserve funds, there is little the Kremlin can do to prevent the ruble’s value from falling.
The increasing Russian economic crisis already threatens the typical Russian’s decades of growth. The Russian ruble is losing its value against the US dollar, rendering it almost worthless anywhere else around the globe.
Consequently, the ruble has become essentially worthless, functioning as money only inside Russia’s “fictitious economy,” where residents are prohibited from acquiring the ruble’s products. Decades of progress bringing the Russian economy closer to the rest of Europe are being lost due to these policies.
Since the invasion of Ukraine started on February 24, more than 300 of the most recognizable companies in the world have voluntarily ceased or decreased operations. It includes Goldman Sachs, one of the biggest banks in the world, the Big Four accounting firms, and notable companies in the consumer goods and automobile sectors.
Hess asserts that many companies are leaving Russia for reasons other than image concerns. He clarified this by stating that the Iranian leadership “is aware that they will not be able to make payments or move money in and out of the country for the foreseeable future” due to sanctions.
Several departures are anticipated to have a more significant effect on Russia than others. Generations of young people behind the Iron Curtain saw Pepsi, Levi’s, and Coke as emblems of individualism and freedom. They have all said that they would cease selling their primary products.
Due to the economy’s dependence on petroleum, the departure of the three oil giants, Shell, BP, and Exxon, had a significant impact.
Russians traveling overseas could not use their Visa, MasterCard, PayPal, or American Express debit cards, and Russian banks hurried to switch to Chinese card providers. McDonald’s exit was among the most significant.
In the early 1990s, the first McDonald’s restaurant opened in Moscow, marking a crucial turning point in Russia’s opening to the West. Last Monday, all 850 McDonald’s outlets in Russia announced their temporary shutdown.
Regular Russians are not running for their lives, unlike ordinary Ukrainians subjected to sustained missile bombardment. Unfortunately, NATO sanctions have not had time to have their full effect. Russia will soon experience the total weight of it, said Smart. Sadly, no medications may be brought in.
They refuse to accept any airplane components sent from elsewhere. That is, they will be unable to get financing to enhance oil production.
Due to war’s turbulent and ever-changing nature, it is difficult to predict how the conflict will impact the economy. The market analyst is projecting a substantially cut for their GDP growth this year, with some anticipating a down of up to 55%.
Due to declining exports, major infrastructure damage, and a significant population loss, the economy will suffer. The economy of Russia, which unprecedented sanctions have severely impacted, has already entered a severe recession, with output forecast to decline by 11.2% in 2022.
The battle has generated a humanitarian catastrophe without parallel. Anna Bjerde, vice president of the World Bank for Europe and Central Asia, asserts that the Russian invasion has caused severe harm to Ukraine’s economy and infrastructure.
Ukraine urgently needs substantial financial aid to support its failing economy and government in providing for its people, which are enduring a dire situation.
The battle has increased concerns about a devastating global recession, increasing prices and debt, and a massive rise in poverty. The economic earthquake has affected commodity and financial markets, trade and migration linkages, and consumer confidence.
The World Bank Group is swiftly taking steps to assist the Ukrainian people. Since Russia’s invasion of Ukraine started on February 24, the Bank Group has mobilized an emergency financial package of more than $900 million in support of Ukraine.
This rapidly dispersed help will be utilized to assist with the payment of wages for healthcare workers, pensions for the elderly, and social programs for the most disadvantaged sections of society. Due to the invasion, Europe is seeing the most significant number of migrants since World War II. The Bank Group prioritizes determining ways to assist refugees who have sought asylum in other countries.
Even though Russia launched talks with Ukraine just a few days after invading it, experts believe it is doubtful that the ongoing conversations would produce results until one side gains momentum on the battlefield. In the Turkish resort city of Antalya, the Russian and Ukrainian foreign ministers met to discuss a peaceful conclusion to the crisis.
President Putin said there had been “some positive advances” in the conversation, while President Zelensky of Ukraine stated that the Russians had adopted a “fundamentally different position” in recent negotiations.
According to experts, Russia’s current approach consists of issuing ultimatums demanding that Kyiv disarm, reject NATO membership, and recognize Russian territorial claims in eastern Ukraine. Ukraine has rejected these suggestions, and discussions look futile until one party takes a short military position.
According to Oleg Ignatov, a Russian expert at the think tank International Crisis Group (ICG), “it is a form of deadlock or impasse since Russia continues to expect Ukraine to meet its demands.”
According to one researcher, neither Ukraine nor Russia will prevail in this battle by military means alone.
Natia Seskuria, a Russia specialist at the Royal United Services Institute (RUSI), a British think tank, asserts that the conflicting parties have been unable to agree on humanitarian corridors or even brief local ceasefires.
She said, “I believe Russia is now attempting to realise its maximalist aspirations in Ukraine.” Everything hinges on whether Russia can persuade the Ukrainians to accept its proposals at the diplomatic table. Nevertheless, “if they are unable to do so, the fight will continue.”
There might be several causes for this. The world community is more vital now that Russian President Vladimir Putin’s invasion of Ukraine has been internationally denounced. In recent years, Russia has prioritized weakening Western democracy and partnerships.
The independent republics of the former Soviet Union, Georgia, Lithuania, Latvia, Belarus, Estonia, and Ukraine, are said to be at the heart of Putin’s plans to reestablish Russia’s sphere of influence in eastern Europe. He has often voiced grief over the alleged “loss” of the Soviet Union after its demise.
Putin may also want to mislead the West (and his people) into believing that Russia is still a great power when, in reality, it is a faltering middle power (geography and nuclear arsenal excepted).
Putin is worried that Russia’s southern border, which Ukraine controls, will become increasingly linked with the West. He opposes the country being too close to NATO. Furthermore, Putin opposes Ukraine’s attempts to strengthen ties with the European Union.
To make things worse, he believes Ukraine is a democracy in which its people have the freedom to choose their leaders, express themselves, and circulate knowledge. Russians do not have such liberties; if Russia followed Ukraine’s lead, Putin would not stay long.
Putin, a sentimental revisionist, sees Russia’s loss of Ukraine as proof of its Cold War failure since Ukraine is a vital part of Russia’s history.
To break the standoff, Putin has demanded NATO openly proclaim that Ukraine (or Georgia or Moldova) would never be admitted as members (maybe).
Former Warsaw Pact members Poland, Romania, and Bulgaria are the intended objectives for the alliance’s exit. He demands that Ukraine give the Donbas area autonomy and abandon its claim to the Crimean peninsula (as part of the so-called Minsk accords).
Putin, in particular, wants the US to stop deploying so many of its new medium-range missiles to eastern and southern Europe or to reduce the number severely. His plans to rebuild Europe’s “security infrastructure” to restore Russia’s preeminence and geopolitical reach are even more grandiose.
In most situations, such applications are denied by the United States of America. We are currently working on this issue.
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