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PUTIN’S WAR WILL BE A CALAMITY FOR RUSSIA

Submitted by christian on Mon, 02/28/2022 - 11:03
  1. Russia is diplomatically isolated and its international reputation is smeared.
  2. Putin’s war has exposed the Russian nation to potentially crippling economic warfare. Sanctions and countersanctions will hurt everyone. They will hit Russia harder and damage it more deeply. If the sanctions regime is robust, unified, and lengthy, Russia will not be able to escape this economic noose.
  3. Purchasing power of Russian people’s savings, pensions, and scholarships will disappear.
  4. Russians will see their living standards and livelihoods lowered.
  5.  If this conflict is bloody and protracted, it will be deeply distressing and increasingly unpopular with the average Russian. It will also be deeply destructive to Putin’s political image and domestic reputation as a competent and rational technocrat.
  6. War will be a disaster and lead to Russian political isolation.
  7. Sanctions will destroy Russian economy.
  8. The Russia’s energy sector will be hit by Western sanctions and that will be a big blow. Energy sales account for about 60 percent of Russia’s exports and 36 percent of its budget revenues.
  9. The deeper and wider the sanctions the West imposes on Russia, the more likely ordinary Russians will be to pay a steep price.
  10. The consequences of sanctions will be severe, both for Russian economic growth and for modernization efforts. The people of Russia will suffer damage and a deterioration in the quality of life in the short and medium term, perhaps even in the long term.
  11. In the medium term, economic sanctions by Western countries affects several of the largest Russian banks (including VTB, Sberbank, Alfa and Gazprombank. Their clients’ settlements in foreign currency will now be difficult or impossible. This is a serious blow. In total, Russian financial institutions carry out transactions in foreign currencies for almost $ 50 billion daily. A significant part of them will have to now be abandoned. Bank clients will not be able to use dollar settlements on their plastic cards; accordingly, a blow will be dealt to cross-border Internet commerce and payment for services (for example, air tickets). Sanctions have also been imposed on large state-owned companies in the energy sector, for which foreign borrowing is prohibited.
  12. Bans on the import of many types of electronics, as well as aviation equipment and cars, will come into force and some companies will refuse to work with Russia on their own. .
  13. A serious blow is being dealt to international air travel: there are already reports of restrictions, and prohibition of deliveries of new aircrafts.
  14. There will be the closure of air space for the flights of Russian airlines.
  15. There will be a significant limitation of imports of high-tech goods to Russia. The main consequence will be a decrease in investment, a reduction in the pace of the credit boom, a drop in demand and prices for real estate and other investment goods — and, as a result, a reduction in growth rates by 0.5−1.5% per year.
  16. The rubble exchange rate will decrease by 15−20% and by 20−25% for the purposes of import calculations, which will increase inflation by 2−2.5% in annual terms
  17. The desire to get out of ruble assets will keep the need for a further increase in the key rate of the Bank of Russia, which has just announced a raise of its interest rate to 20%.  Inflation, rate hikes and entrepreneurs’ uncertainty all these factors will lead to a decrease in growth rates by the end of the current year to zero, and a drop in real incomes will be 2−4%. This will be the immediate cost of the conflict, but in the future, the isolation of the Russian economy from the world economy will create additional difficulties.
  18. All financial investments will turn out to be much riskier, and the prices of Russian assets will be significantly adjusted.
  19. The domestic market will become even more isolated from the world market.
  20. Some Western brands will disappear from it.
  21. International air carriers will leave.
  22. The range of electronics offered will be reduced.
  23. Payments for foreign trips and transactions on the Internet will become more complicated.
  24. High interest rates will seriously reduce the activity of buyers in the real estate market.
  25. When buying cars and other durable goods; inflation in 2022−2024 will significantly exceed 10% per annum, the economy will stop growing, real incomes will decrease, and even if they remain at the same level, it will only be due to an increase in the share of benefits and one-time payments in the overall income structure.

 

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PUTIN’S WAR WILL BE A CALAMITY FOR RUSSIA

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