June 8, 2023


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Live updates: Biden addresses Finland and Sweden to apply to join NATO

Live updates: Biden addresses Finland and Sweden to apply to join NATO

LONDON – After sanctions have hampered production at the assembly plant in Kaliningrad, the Russian automaker Avtotor announce A lottery for 10 acres of land for free – and the opportunity to buy seed potatoes – so that employees can grow their own food in the far west of the Russian Empire during the “difficult economic situation”.

In Moscow, shoppers complained that a kilogram of bananas had risen to 100 rubles from 60, while in Irkutsk, an industrial city in Siberia, the price of tampons in a store had doubled to $7.

Banks Shortening receipts in response to paper shortages. clothing manufacturers They said they are running out of buttons.

“Russia’s economic prospects are particularly bleak,” Bank of Finland He said in this month’s analysis. “By waging a brutal war against Ukraine, Russia chose to become poorer and less economically influential.”

until the Russian Central Bank Expect a staggering 18-23 percent inflation this year, and a drop in total production of up to 10 percent.

It is not easy to know the impact of war and sanctions on the Russian economy at any time The use of the words “war” and “invasion” is illegal. President Vladimir Putin insisted that the economy bypasses measures imposed by the United States, Europe and other countries.

Moscow’s financial maneuvers helped mitigate the economic damage at first. At the beginning of the conflict, the central bank doubled interest rates to 19 percent to stabilize the currency, and recently managed to lower rates to 14 percent. The The ruble is traded at its highest level in more than two years.

credit…Vlad Karkov/SOPA Images/LightRocket, via Getty Images

And although Russia has been forced to sell oil at a discount, the staggering increases in global prices have caused tax revenues from oil to soar above $180 billion this year despite production cuts, according to Rystad Energy. Natural gas shipments will add another $80 billion to Moscow’s treasury.

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In any case, Mr. Putin has shown few signs that pressure from abroad will prompt him to scale back military strikes against Ukraine.

However, Avtotor’s vegetable patch lottery and what it says about the vulnerabilities of the Russian people, along with shortages and price increases, are signs of the economic malaise that has gripped some Russian companies and workers since the war began nearly three months ago.

Analysts say the rift with many of the world’s largest trading partners and technology powers will do deep and lasting damage to the Russian economy.

“Difficult times for the Russian economy are still ahead,” said Laura Solanko, Senior Adviser to the Bank of Finland Institute for Emerging Economies.

Ms. Solanko said the stock of supplies and spare parts that keeps the business going will run out in a few months. At the same time, the lack of advanced technology and investment from abroad will hamper Russia’s production capacity in the future.


The Russian Central Bank has already acknowledged that consumer demand and lending are declining, and that “firms are facing significant difficulties in production and logistics.”

Ivan Khokhlov, who co-founded 12Storeez, a clothing brand that has grown from a showroom in his Yekaterinburg apartment to a major corporation with 1,000 employees and 46 stores, is approaching the problem head-on.

“With each new wave of sanctions, it becomes difficult to produce our product on time,” said Mr. Khokhlov. The company’s bank account in Europe remains closed due to sanctions shortly after the invasion, while logistical turmoil has forced it to raise prices.

“We are facing delays, disruptions and price increases,” he said. “With the destruction of logistics with Europe, we rely more on China, which also has its own difficulties.”

Hundreds of foreign companies They have already scaled back or pulled out of Russia business, according to accounting held by the Yale School of Management. The exodus of businesses continued this week with McDonald’s. The company said that after three decades it planned to sell its business, which includes 850 restaurants and franchises and employs 62,000 people in Russia.

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“I went through the first McDonald’s restaurants that opened in Russia in the 1990s,” Artem Komolyatov, a 31-year-old tech worker in Moscow, said recently. “Now it is completely empty. Alone. The sign is still hanging. But inside everything is closed. He is completely dead.”

Not far away, two police officers in flak jackets and automatic rifles stood, ready to fend off any protesters, he said.

At the Leningradsky railway station, in one of the few concessions that remained open on Monday, Customers lined up For over an hour for a last taste of McDonald’s hamburgers and fries.

French car maker Renault It also announced a deal with the Russian government to leave the country on Monday, although it includes an option to buy back its stake within six years. The Finnish Paper Company, Stora Insusaid it was stripping itself of three corrugated packaging factories in Russia.

credit…Maxim Schebenkov/EPA, via Shutterstock

The greatest damage to the structure of the Russian economy is likely to be exacerbated in the coming years even in the area of ​​making money energy sector.

Europe’s pledge to eventually turn its back on Russian oil and gas will force Moscow to look farther from customers, particularly in China and India. The transition to Asia “will take time and will take massive infrastructure investments that will, in the medium term, see a sharp decline in Russia’s production and revenue,” said Daria Melnik, senior analyst at Rystad Energy.

Without sufficient storage capacity, Russia may have to reduce its overall oil and gas production. Wells are not like taps, however, they can be turned on and off easily. The first cap, and most likely can not be used again.

“Some of Russia’s spare capacity will be destroyed,” Melnik said of the country’s oil flow.

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Anton Siluanov, Russia’s Finance Minister, said the sanctions could cause up to 17 percent decrease in oil production this year.

The larger segments appear in the other sectors. passenger Auto production It fell 72 percent in March compared to the previous year.

In the industrial sector, which includes chemicals, oil and gas and manufacturing, the average volume of imports in four weeks was down 88 percent compared to early February, before the invasion, according to Four Kitts, which tracks supply chains. Consumer-related imports are down 76 percent, making it difficult for Russians to buy tampons and cell phones, and for hospitals to get parts and supplies for dialysis and ventilators.

In a survey of healthcare professionals in April, 60 percent of respondents said they had already experienced a shortage. Among the imported products, the most missing items included disposable gloves, catheters and suture materials.

credit…Gleb Stolyarov/Reuters

For consumers, price jumps on basic commodities have been so noticeable that a Twitter account Satirical posts circulated on social media as Russians lament price hikes on everything from Palmolive shampoo to nectarines. It’s called but what happened? He has nearly 44,000 followers.

The 26-year-old Muscovite, who asked that her name not be used for fear of reprisals, said the cost of imported fruit, such as the bananas she puts in oatmeal every morning, had skyrocketed.

“It’s the product I buy every time I go to the store, so I noticed it right away,” she said. She said her total purchases bill had risen by about a third.

In Irkutsk, a box of tampons doubled in price from $3.50 within weeks of the war’s start, said a 23-year-old designer who earned $450 a month and asked not to be named. “For the same amount of money, I can buy a basket of good groceries, or a new shirt,” she said, comparing prices before the war.

Outside the country, Russia’s economic prospects are also shrinking. Earlier this month, Fennovoima, a Finnish company that operates nuclear power plants, suddenly announce It was terminating its contract to build a plant in the northern city of Hanhekevi with Rosatom, Russia’s state nuclear energy corporation, which lists Mr. Putin as its founder.

“We are very disappointed” in . said Rosatom, which owns a third of the project through a Finnish subsidiary statment: “The reasons behind this decision are completely inexplicable to us.”

credit…Victor Birzkin/The Associated Press

Ivan Nikiburnko Contribute to the preparation of reports.