When Vladimir Putin announced the invasion of Ukraine, the war seemed far from Russian territory. Yet within days, the conflict came home – not with cruise missiles and mortars, but in the form of unprecedented and startlingly broad sanctions rounds by Western governments and economic sanctions by corporations.
Three months after the February 24 invasion, many ordinary Russians are reeling from these blows to their livelihoods and their emotions. Moscow’s sprawling malls have transformed into eerie expanses of closed storefronts once occupied by Western retailers.
McDonald’s – whose opening in Russia in 1990 was a cultural phenomenon, a shiny modern convenience coming to a drab country crushed by limited choices – pulled out of Russia entirely in response to its invasion of Ukraine. IKEA, the epitome of affordable modern comfort, suspended operations. Tens of thousands of once secure jobs are now suddenly in question in a very short time.
Major industrial players, including oil giants BP and Shell and carmaker Renault, pulled out, despite their huge investments in Russia. Shell estimated that it would lose around $5 billion trying to get rid of its Russian assets.
As the multinationals left, thousands of Russians who had the economic means to do so also fled, frightened by the brutal new government measures related to the war which they saw as a plunge into totalitarianism. Some young men may also have fled for fear that the Kremlin would impose compulsory conscription to fuel its war machine.
But fleeing had become much more difficult than before – all 27 European Union countries, as well as the United States and Canada had banned flights to and from Russia. The Estonian capital of Tallinn, once an easy long-weekend destination a 90-minute plane ride from Moscow, suddenly took at least 12 hours to reach on a road through Istanbul.
Even proxy travel via the internet and social media has shrunk for Russians. In March, Russia banned Facebook and Instagram – although this can be circumvented using VPNs – and shut down access to foreign media websites, including the government-funded Voice of America BBC. American and Radio Free Europe/Radio Liberty and the German broadcaster Deutsche Welle.
After the Russian authorities passed a law calling for up to 15 years in prison for reports containing “false information” about the war, many major independent media outlets closed or suspended their activities. Among them were the Ekho Moskvy radio station and Novaya Gazeta, the newspaper whose editor Dmitry Muratov shared the latest Nobel Peace Prize.
The psychological cost of repressions, restrictions and diminished opportunities could be high for ordinary Russians, though difficult to measure. Although some public opinion polls in Russia suggest that support for the war in Ukraine is strong, the results are likely skewed by respondents who remain silent, reluctant to voice their true opinions.
Andrei Kolesnikov of the Carnegie Moscow Center wrote in a commentary that Russian society is currently in the grip of “aggressive submission” and that the breakdown of social bonds could accelerate.
“The discussion is getting wider and wider. You can call your compatriot – a fellow citizen, but who has a different opinion – a “traitor” and consider him an inferior person. You can, like the highest officials of the state, speculate freely and quite calmly about the prospects of a nuclear war. (It is) something that was certainly never allowed in Soviet times during Pax Atomica, when both sides understood that the resulting damage was completely unthinkable,” he wrote.
“Now that understanding is diminishing, and it’s yet another sign of the anthropological disaster that Russia is facing,” he said.
The economic consequences have not yet fully manifested.
At the start of the war, the Russian ruble lost half of its value. But the government’s efforts to shore it up have actually raised its value above its pre-invasion level.
But in terms of economic activity, “it’s a completely different story,” said Chris Weafer, veteran Russian economics analyst at Macro-Advisory.
“We are now seeing a deterioration in the economy across a wide range of sectors. Companies are warning that they are running out of spare parts. Many companies are putting their workers on part-time and others are warning them that they have to close completely. So there is a real fear that unemployment will rise in the summer months, that there will be a sharp drop in consumption, retail sales and investment,” he told The Associated Press. .
The relatively strong rouble, encouraging as it may seem, also poses problems for the national budget, Weafer said.
“They actually receive their income in its foreign currency from the exporters and their payments are in rubles. So the stronger the ruble, the less money they have to spend,” he said. “(It) also makes Russian exporters less competitive, as they are more expensive on the world stage.”
If the war drags on, more companies may leave Russia. Weafer suggested that companies that have only suspended operations could resume them if a ceasefire and a peace agreement for Ukraine are reached, but he said the window for that could close.
“If you walk around the malls of Moscow, you can see that many fashion stores, Western business groups, have simply rolled down the shutters. Their shelves are always full, the lights are always on. They are not just not open. So they haven’t pulled out yet. They’re waiting to see what happens next,” he explained.
These companies will soon be in a rush to resolve the limbo their Russian businesses find themselves in, Weafer said.
“We are now getting to the stage where companies are starting to run out of time, or maybe run out of patience,” he said.
Follow all AP stories about the war in Ukraine at https://apnews.com/hub/russia-ukraine.