Struggling, economic backwaters of Russia have seen a resurgence with Putin's war in Ukraine. The British Telegraph had a long and interesting piece on why parts of Russia do not want an end to the war: Russia's new middle class simply cannot afford it.
Source: The Telegraph
When Russia invaded Ukraine in February 2022, many Western economists predicted it would face impending economic collapse in the face of the world’s harshest sanctions.
As the war approaches its fourth anniversary, the economy is under strain – but there has been no crisis. If anything, for some Russians life has improved.
The biggest benefactors are impoverished industrial areas that have suffered decades of decline, experiencing a fate similar to once-wealthy parts of the West.
Many towns and smaller cities across Russia that relied on a single industry such as defence or manufacturing never recovered after the fall of the Soviet Union in 1991.
“In the years after the dissolution of the Soviet Union, these areas went into decline, and people struggled to find jobs. But the facilities were still there,” says Tatiana Orlova, from Oxford Economics.
A safer world meant the need for ammunition, guns and other types of manufacturing had faded. That was, until Putin brought war to Europe.
Visiting Georgetown scholar Ekaterina Kurbangaleeva put it this way:
“These people live in underdeveloped regions. They work in once underperforming industries. They don’t have higher education. But now these assets and skills are in demand,” says Ekaterina Kurbangaleeva, a visiting scholar at the George Washington University in Washington DC.
“They are getting higher salaries. Their savings are growing. And they are also getting social respect.”
It is a good time to be a Russian factory worker. But the real money comes if you join the military.
“When a man in the family joins the army on a military contract, first of all he gets his bonus and he starts getting monthly wages. The wages are decent. It’s something like $2,000 a month. All that money started flowing mostly into the Russian regions because people are less keen to sign up for the contractual army in the big cities,” Orlova says.
Russian economist Vladislav Inozemtsev was even more blunt: social waste was being removed from society.
“I call this deathonomics,” says Russian economist Vladislav Inozemtsev. He co-founded the Cyprus-based Centre for Analysis and Strategies in Europe in 2023 alongside Dmitry Gudkov, one of the leaders of the Russian opposition in exile.
“This was actually a fascinating know-how on the part of Putin’s regime because he transformed the lives of – I’d say very impolitely – people [who were] kind of social waste, into a vehicle for economic development.
“These people were almost useless. Many of them had no work in the small towns and villages and were conducting a very anti-social way of life. Then all of a sudden, these people were taken out of the environment.”
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“In some cases, I would say their neighbours were absolutely happy they disappeared from their lives. Their relatives got a lot of money and became quite prosperous people in their local communities.“You take useless resources from the economy and you pour money instead of that. But of course, this all is only a temporary solution because the stock of these people is limited.”
A grim way to look at it, but not without some truth.
Russia's war effort is not sustainable, however. Printing money to produce weapons that are almost immediately disposed of doesn't help the larger economy at all. Eventually, the economy will crash, those weapons factories will close, and those people accustomed to a higher standard of living (and debt) will be worse off than they were. But for now, they'll ride Putin's war train as far as they can, for as long as they can, because they don't have any other options.
