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Vladimir Putin has crippled Russia's economy to fund the war in Ukraine, experts tell Insider.
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Experts say the official data from Moscow suggests it's faring far better than it actually is.
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The ruble has is crashing, the labor force has seen an exodus, and civil war remains possible.
The West has imposed sweeping sanctions on Moscow since it launched its war on Ukraine last February, but much of Russia's economic troubles can be chalked up to suspect and counterproductive leadership by Vladimir Putin.
Before the "special military operation" began, Russia was the 11th largest economy in the world, accounting for almost 40% of Europe Union's natural gas imports and a quarter of its crude oil. A year and a half later, Putin's turned Moscow into a pariah state, isolated from the global financial system, barred from its most lucrative trade routes, and in the midst of a worker brain drain. Experts say the damage has been largely self-inflicted.
Speaking with Insider on Monday, Yale researchers Jeffrey Sonnenfeld and Steven Tian said that Putin has lost the economic battle to a profound degree, and now he's scrambling to maintain a status quo that's quickly dissolving beneath his feet.
"He's devouring core bedrock industries," Sonnenfeld said. "The lion's share of the economy is controlled by the state, the energy and financial sectors, and Putin is taking from the seed capital of those businesses to use as a cookie jar for his war chest."
Trade will never be the same
Russia is barely breaking even on its energy trade, and most of its other top commodities like wheat, lumber, and metals sell cheaper today than before the invasion. The lack of trade income pushed Putin to levy draconian windfall taxes on businesses and individuals, which the Yale academics see as part of his "cannibalization" of the economy.
"Laying on onerous taxes is doing nothing for the economic health of the country, but they allow him to pay bills," Sonnenfeld said.
Putin's policy missteps became inevitable after he made the initial call to invade Ukraine, Tian said, adding that Russia's trade status may never be the same. It's become increasingly clear that other countries can get by just fine without Russia as a trading partner.
"He's destroying the historical underpinnings of the Russian economy," Tian said. "Its main exports have always been commodities, but now nobody needs to buy Russian commodities anymore."
Yale data shared with Insider showed that Russia's natural gas market in particular has been permanently lost.