Russia could turn on Putin as the nation's economic strength wanes and sanctions keep tightening, economists say
Russia could turn on Putin as the nation's economic strength wanes and sanctions keep tightening, economists say ·Business Insider
Jennifer Sor
4 min read
Russia's economic strength is likely to wane this year, economists say.
Putin could lose support if Western sanctions make life more difficult for ordinary Russians.
Sanctions are likely to tighten if Joe Biden wins reelection in November, economists told Business Insider.
Russia's economic resilience in the face of sanctions will be challenged this year, economists say, and they predict that Vladimir Putin could lose the support of the people if the West ramps up sanctions and makes life in the country more difficult.
Russia has so far weathered the impact of Western sanctions, but the nation could see a turning point at the November US presidential election, according to Jeffrey Sonnenfeld and Steven Tian, two Yale researchers who think the West is likely to keep providing support for Ukraine while tightening sanctions on Russia if President Joe Biden gets re-elected.
More economic pressure could make Russians more resistant to Putin's leadership, they said, after a long period of complacency as the president drags the nation into its third year of war.
"People are living regular lives for now, but it's a completely unsustainable strategy, and the fundamental growth drivers underpinning that economy are deteriorating in front of our eyes," Tian told Business Insider. "And if Trump's not elected, then all of that will rise to the surface ... The house of cards [will come] crashing down."
Sergei Guriev, a Russian economist and the incoming Dean of the London Business School, also thinks social unrest could be coming for Moscow. Russia's economy is mirroring its late Soviet Union days, he said, right before intense economic support from the government dropped off and sent some sectors, like manufacturing, spiraling into "deep recession" territory.
But polls and economics stats coming out of Russia are "beyond misleading," Sonnenfeld argued. Previously, he's made the case that Russia's growth figures are figments of "Putin's imagination," with the Kremlin cherry-picking favorable stats while keeping the more dire data points out of the public eye.
"There's no confidence in the objectivity or the security of Russian polling," he added. "It's fully propaganda."
"Putin doesn't believe that Russia is doing very well. Putin understands the deficiencies of the statistics, but he needs to convince Russians that everything is fine," he added. "This is his job as a dictator, to distribute this."
Biden's reelection and tighter sanctions could be the event that awakens Russian citizens to that reality, Sonnenfeld and Tian said. The West could deliver a potentially crippling blow to Russia's economy if it were to look beyond the oil trade and sanction Russian steel, copper, and other metal commodities, which account for around 20% of the nation's total revenue, they estimated.
"[There] would be massive unrest when people in Russia realize that Putin's promised path to victory is not going to materialize the way he's promising, when people realize that in terms of Ukraine, there is no pathway to victory."
Guriev doesn't believe Russia's economy will completely unravel, as central bankers will work hard to limit the damage. But inflation and constricted growth will be huge problems for Moscow, resulting in a painful economic restructuring.
"It's unlikely the Russian economy will spiral into a macroeconomic meltdown, and that the Russian political system will," he said. "The necessary condition for the end of this war is of course the change of the political regime and in particular the departure of Mr. Putin."
