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Putin’s Disaster: Sanctions Are Smashing Russia’s Economy (Or Not?)

Russia Sanctions
Russian military drilling with artillery. Image Credit: Creative Commons.

Putin vs. Sanctions – Russian Central Bank Slashes Interest Rates:  Russia’s central bank slashed its interest rates this week and indicated that borrowing costs could drop even further. The news comes as Western economic sanctions continue to wreak havoc on the Russian economy and supply chains, and the country’s leading economists work to stabilize economic conditions. 

Elvira Nabiullina, the head of the Central Bank of Russia, announced the decision on Friday and took questions for the first time since the Russian invasion of Ukraine began.

“We are in a zone of colossal uncertainty,” she said. 

“We will make decisions on monetary policy taking into account the need to adapt the economy to a radically changing environment,” Nabiullina also explained, adding that maintaining price stability remains the bank’s main priority. 

The decision to slash its key interest rate to 14% was unexpected, and economists say that the rate could be dropped even lower in the coming months as Russia tries to control skyrocketing consumer prices. 

In April, interest rates dropped to 17%, after initially being raised to 20% only days after Russia announced the “special military operation” in Ukraine. 

“Today, we see room for a key rate reduction before the end of the year,” Nabiullina told journalists on Friday. 

We will make our further decisions on monetary policy considering that the economy needs to adjust to the dramatically changing conditions. Price stability is always the top priority for us as it is critical for steady economic growth,” she added.

Sanctions Update: Why Russia Raised Then Slashed Rates

When the Russian central bank initially raised interest rates from 9.5% to 20% in February, the move was designed to stop Russian citizens from withdrawing their cash from the nation’s financial institutions. 

In an effort to save the ruble, the central bank incentivized Russians to keep their savings in domestic banks and ordered domestic businesses to sell 80% of all their U.S. dollar assets.

The latest move would, theoretically, make it easier for Russians to make larger purchases and increase demand for consumer and household goods. However, with continued economic uncertainty, and major supply chain problems for most industries in Russia, it’s unclear just how much of a positive effect these recent changes will have.

Fergus Hodgson, director of the financial consultancy firm Econ Americas, said the decision was an act of desperation is likely an attempt to “catalyze spending and borrowing for business activity.”

“It is a short-term Keynesian ploy that might have a marginal effect,” Hodgson said. 

“However, it glosses over the deeper problems for the Russian economy. There are many: limited trade, low foreign investment, low regime certainty, low productivity, and a lack of the rule of law. Fiddling with interest rates does nothing to resolve the fundamental shortcomings.”

While the central bank’s latest decision may have some temporary or marginal positive impact on the economy, supply chain issues for several key industries remain unsolved. 

Jack Buckby is a British author, counter-extremism researcher, and journalist based in New York. Reporting on the U.K., Europe, and the U.S., he works to analyze and understand left-wing and right-wing radicalization, and reports on Western governments’ approaches to the pressing issues of today. His books and research papers explore these themes and propose pragmatic solutions to our increasingly polarized society.

Written By

Jack Buckby is 19FortyFive's Breaking News Editor. He is a British author, counter-extremism researcher, and journalist based in New York. Reporting on the U.K., Europe, and the U.S., he works to analyze and understand left-wing and right-wing radicalization, and reports on Western governments’ approaches to the pressing issues of today. His books and research papers explore these themes and propose pragmatic solutions to our increasingly polarized society.

6 Comments

6 Comments

  1. Alex

    May 1, 2022 at 7:05 am

    I was in Russia a week ago. I say it like it is: the peoples of Russia don’t care about sanctions, they don’t even talk about such topics, because they live well. On these sunny days they walk and rejoice. When I came back home to Europe, I met a lot of gloomy people – they have big economic problems. It’s like the 90s in Russia on the contrary: in Russia everything is fine, in the West it’s just a disaster.

    And now, not stupid propaganda from pseudo-journalists and squealing Bandera bastards, but real facts. Let’s see how Russia “lost”:

    In total, since the beginning of the special military operation, Russia has destroyed 143 aircraft, 112 helicopters, 660 unmanned aerial vehicles, 279 anti-aircraft missile systems, 2,678 tanks and other armored combat vehicles, 308 multiple rocket launchers, 1,196 field artillery pieces and mortars, as well as 2,503 units of special military vehicles. Destroyed 43.814 Bandera Nazis and soldiers of the Armed Forces of Ukraine. 3,540 soldiers surrendered.

    Utilization of US and NATO equipment is proceeding according to plan:
    High-precision missiles “Onyx” in the Odessa region at a military airfield destroyed a hangar with weapons and ammunition received from the United States and European countries, and also destroyed the runway.

    Every day, the flags of the people’s militia of Donbass, Russia and Chechnya are raised over a new liberated settlement. Everything can be seen on the map of hostilities.

    A French journalist released another film about the atrocities of Bandera Nazi bastards. The photo and video evidence is simply amazing – these bastards of Bandera Nazis only need to be exterminated, finally and completely.

    The point is that no matter how hard the pseudo-journalists try to lie, the truth inevitably comes to the surface.

    By the way, Russian special forces seized important documents from one of the American biological laboratories in Ukraine. The announcement is this: the experiments that the Americans conducted on people, on Ukrainians, amaze the imagination with their cruelty.

    I will say this: “Hello, new Third Reich, you will also be destroyed.” History is cyclical. Again the West is trying to defeat Russia and will be defeated again.

  2. CK

    May 1, 2022 at 9:44 am

    Hey Alex, look at this! You’re in the news!

    https://www.theguardian.com/world/2022/may/01/troll-factory-spreading-russian-pro-war-lies-online-says-uk

    “Russian internet trolls based in an old arms factory in St Petersburg are targeting world leaders online and spreading support for Vladimir Putin’s invasion of Ukraine, the British government has said, citing research.”

    “The headquarters is allegedly located in rented space in St Petersburg’s Arsenal Machine-building Factory, a company that manufactures military equipment and technology.”

    “The study details how the Russian president’s regime is trying to manipulate public opinion on social media, as well as in the comments sections of major media outlets.”

    “The analysis suggests one main activity is “brigading”, to steer attention of discussion on social media and in comments sections of newspapers towards favoured opinions. Manipulation of polls in western media was also observed, including to skew the results of a survey on whether sanctions against Russia were supported.”

    Does this look like anyone we know? Also, sucks that they are making you work on a Saturday man! Is it that bad over there you guys can’t make ends meet?

    Does Sveta not have enough clients? Reach out man, we want to help!

    Here’s a reminder:

    If someone wanted to know the truth about anything in Ukraine Alex, the last person they would go to is you.

    Paragraphs and paragraphs of bollocks, dubious claims about “independent journalists”, random documentarians, conspiracy theorists, deluded claims that of course, have no backup, lie after lie after lie.

    Classical Kremlin troll approach. Just flood the internet, the comments, the media, with tosh, doesn’t matter what it is, just make sure you write some old nonsense. Make sure to say the claim is supported by some dude in Germany, France, the states. If it’s a “documentary” (usually from youtube) then the better.

    Anything that victimises Russia, always the victim, always the bullied, never the problem. It’s always the Nazis. It’s always some pseudo-historical point.

    Anyone that has had the misfortune to study your “tactics” sees the forest for the trees, the pattern of lies, disinformation, blanketing of random claims, deflection, obfuscation, and other words beyond your vocabulary.

    It’s hopeless Alex. Your lies are as short as your intellect. What a pathetic job, to sit in your government shed, spreading your pathetic, government lies.

    A pathetic job for a truly pathetic man. A better match could not be made in heaven.

  3. Alex

    May 2, 2022 at 8:09 am

    In the meantime, the Bandera Nazi from the Ukrainian troll factory lost his voice from screeching and choked on bile, let’s talk about how the day went:

    Politico reported thousands of foreigners fighting on the side of Ukraine
    Combat-trained Americans, along with thousands of other foreigners, are participating in the military operations in Ukraine on the side of Kyiv. Such an assessment is given in an article published in the American edition of Politico. The publication refers to retired military and employees of American PMCs, who are currently on the territory of Ukraine.

    The material notes that in Ukraine, in particular, the Task Force Yankee group, headed by the American Harrison Yosefovitz, operates. He previously worked as a police officer in Chicago, Illinois, and also served in the US Army (ground forces).

    On April 29, CNN, citing the family of an American citizen and PMC mercenary Willie Joseph, reported his death in Ukraine. According to the mother of the mercenary, he went to Poland on March 12 and crossed the border into Ukraine on March 12-13. The woman noted that in the group of mercenaries, in which her son was, there were citizens of “a variety of countries.”

    The mercenaries come from the USA, Canada, Georgia, Great Britain, Poland and Romania.
    More than a thousand mercenaries have already been destroyed. About a thousand more refused to participate in hostilities and returned to their former extremist deployment sites.

    The remaining 4.8-5 thousand foreign mercenaries should return to their states, since, according to international law, they are deprived of legal protection and “at best” they will face long-term imprisonment. As we understand, most likely they will never return home. an easy walk to hunt people turned out to be a trap forever.

    Representatives of the military-civilian administration of Kherson raised the Russian flag on the building of the local executive committee in the Russian-controlled village of Chernobaevka, where the Kherson international airport is located.
    Russian security forces also removed Ukrainian signs from the building of the local administration.
    According to the residents of Chernobaevka, the former head of the village administration, Igor Dudar, fled to the territory controlled by Ukraine. During his reign, the Eternal Flame was extinguished at the monument to the fallen heroes of the Great Patriotic War, and photographs of veterans were taken from the village Board of Honor. Now, as assured in the military-civilian administration, all this will be corrected.

    Over the past day, from 8:00 am on May 1 to 8:00 am on May 2, 159 people, including 29 children, were evacuated from Mariupol to Bezymennoe, Novoazovsky District. Then people flee to Russia. Do you need more evidence of who is the aggressor and the killer, and to whom they run for help? Yes, propagandists and liars cannot change this.

    During the day, Russian air defense systems destroyed 10 Ukrainian unmanned aerial vehicles in the areas of the settlements of Vesele, Borshchevo and Balakleya in the Kharkiv region, Kisylivka in the Kherson region, Mayak in the Zaporozhye region, Dokuchaev, Korsun and Khanzhinkovo ​​of the Donetsk People’s Republic, as well as in the area of ​​the city of Lugansk. Western drones turned out to be just targets for Russia and Donbass.

    High-precision air-launched missiles hit 38 Ukrainian military facilities in a day. Among them are four command posts, 30 strongholds, areas of concentration of manpower and Ukrainian military equipment, and three warehouses of missile and artillery weapons in the areas of Pervomayskoye and Ilyichevka settlements.

    The Osa AKM air defense system and a battery of multiple launch rocket systems in the Arkhangelovka area were also destroyed. Aviation of the Russian Aerospace Forces hit 27 strongholds, areas of concentration of manpower and military equipment of the Armed Forces of Ukraine, as well as a depot of rocket and artillery weapons and ammunition in the area of ​​​​the village of Chervonoe, Zaporozhye region. Up to 160 personnel and 26 units of Ukrainian armored vehicles were destroyed.

    During the day, the missile forces hit nine strongholds and areas of concentration of manpower and equipment, as well as the BM-21 Grad and an artillery battery in firing positions. Artillery subunits hit 26 command and control posts, 78 strongholds, 359 manpower and equipment concentration areas, and 67 artillery firing positions. Six ammunition depots, up to 280 personnel and 43 units of weapons and military equipment of the Armed Forces of Ukraine were destroyed.

    In total, since the beginning of the special military operation, Russia has destroyed 146 aircraft, 112 helicopters, 683 unmanned aerial vehicles, 281 anti-aircraft missile systems, 2,756 tanks and other armored combat vehicles, 316 multiple rocket launchers, 1,234 field artillery and mortar guns, as well as 2,563 units of special military vehicles. All this is confirmed and documented. Now tell us about 200,000 dead Russians and 5,000 destroyed Russian tanks, clowns.

    The Ukrainian authorities are seeking the evacuation of all those at the Azovstal plant in Mariupol to the territory controlled by Kyiv in order to hide the presence among the military countries.

    Among those at the plant there are a large number of characters who will confirm the presence of mercenaries, and perhaps acting officers of the Western armies on the side of the Ukrainian radicals.

    Does the elimination of the influence of a few dozen (even thousands) of Nazis deserve to put a country of forty million at risk? This is not a completely correct question. This is a question that concerns the fundamental security interests of the Russian Federation.

    We all remember the beginning of Nazism in Ukraine:
    persecution of the Russian Orthodox Church, the Russian language and the Russian media was carried out, sales of all printed materials in Russian were stopped, laws were adopted to promote Nazi theory and practice.

    The whole world understood that Ukraine is not worth starting a nuclear war, for which all the peoples of Russia are ready, but the peoples of the West are not ready. However, if crazy politicians want to try, it will be as President Putin said: “… we will all go to heaven, and you all will just die …”. Most importantly, the majority of Russians supported his words. Are you ready for war with Russia? Then go ahead and try it.

  4. CK

    May 2, 2022 at 9:15 am

    You can smell the panic when the story changes day by day.

    Day 1: We will take Kiev in 3 days! (Alex put’s on clown shoes)

    Day 2: All Bandera-Nazis will be crushed! (Alex puts own striped clown trousers, with suspenders)

    Day 3: Retreat is all part of the master plan! The Moskva suffered a fire! We remain master strategists! (Alex puts on clown shirt, with a water squirtie flower in his pocket)

    Day 4: Don’t look at Ukraine! Look at Biden, Afghanistan, Iraq, BLM, MAGA, Trump, Hunter Biden, look at the birds, Elon Musk, anywhere but what we are doing in Ukraine! (Alex puts on his clown makeup)

    Day 5: Look at all these fake documentaries, all these fake independent reporters, these pseudo-histocal facts, all this nonsense! (Alex puts on his bright green clown wig)

    Day 6: Donbas Militia will crush everyone in East! Battle of encirclement is imminent! Victory shall be ours, we swear bro, plz believe bruh! (Alex puts on his clown gloves)

    Day 7: No! We are not losing, it’s just because now there are thousands of Americans and Irishmen and Scots and god knows who else fighting with the Americans! We’d totes be winning if it weren’t for those pesky kids! (Alex grabs his clown equipment)

    Day 8+: Alex is revealed for the clown he is.

    Every day a different story huh? No wonder you clowns can’t get shit done in Ukraine, you have no focus.

  5. Alex

    May 2, 2022 at 9:36 am

    I like your hysteria, Bandera Nazi. A beggar, vicious juvenile troll from the poorest country in Eurasia – Ukraine, who hid behind his mother’s skirt and does not fight with a machine gun in his hands, but squeals and hysteria here like a patient of the Lviv Regional Psychiatric Hospital. But we remember. what do you write from there. And here are two buts:
    1. Attributing other people’s words and fantasies to me will not work.
    2. All my data is easy to verify and is based on the state media of Western and Eastern countries, as well as independent journalists, whom you cannot accuse of lying, because they have an extremely high reputation in their field.
    Bottom line: which of us is a clown, you can see right away and it’s you. Tell your handlers you’re pathetic, unfit for the job, and you’re being paid 10 cents an hour for nothing.

  6. Alex

    May 3, 2022 at 6:14 am

    William Scott Ritter, Jr. is an American military analyst. Intelligence officer in the United States Marine Corps. He served in this position for about 12 years. He became the Marine Rapid Deployment Force’s lead analyst on the Soviet invasion of Afghanistan and the Iran-Iraq War. United Nations weapons inspector in Iraq.
    During Desert Storm, he served as an adviser to General Norman Schwarzkopf on ballistic missiles. Ritter later worked as a security and military consultant for the Fox News network. According to an interview he gave to Democracy Now! in 2003, he also had a long official relationship with the British foreign intelligence agency MI6.
    If the Bandera Nazis start squealing that he was bought by Putin, then let them shove their squeal up their ass.
    Here are Scott Ritter’s words:

    “Do you want to name the best students of military science today? These are Russian officers! And we treat them like children – “these are Russians.” And they are the most educated and trained officers of all who can be found. They understand everything better than us. They didn’t spend 20 years kicking down doors and slaughtering families in Iraq or crawling up hills in Afghanistan to kill a shepherd, that’s what we did, and the Russians think big.

    We think in small arrows. We watch a video of how a Russian column is destroyed or three tanks are knocked out. War is hell, people die there, and if you look at the little arrows, you will think that the Russians are defeated. But look at the big arrows! The Russians kept the 100,000-strong group of Ukraine in Kyiv. If they are not threatened, they will move forward for reinforcements.

    Therefore, you (Russians) send 40 thousand soldiers from Belarus and hold the enemy in place. You have 80,000 enemy forces in Odessa, you send 30,000 soldiers from Crimea – their (Security Council of Ukraine) group is stuck. You have 100,000 enemies in the Donbass, and you, the Russian troops, cannot let them go to Kyiv. You send the militia of Donetsk and Lugansk to the front line. The most difficult situation! But you clung to the enemy and hold him, don’t let him move!

    You are conducting a through attack to break through the corridor to the Crimea. And Mariupol is a key city on the way, we had to take it. The only city for which the Russians fought. Why? Because he was the only one that mattered. The rest played no role.

    You will not take 3 million Kyiv with a force of 40 thousand. It doesn’t happen! You will not take 1.6 million Kharkiv with a force of 50 thousand. But you will take Mariupol. They had to take it. This was a strategic necessity.

    This whole phase was the preparation of the battlefield. The Russians have destroyed fuel storage facilities in Ukraine. What is a tank without fuel? Coffin! And the truck? Another coffin. Warehouses of ammunition and food are blown up. A soldier who is hungry and thirsty will be killed.

    The Russians have rearranged everything for themselves in order to prepare for a massive pincer attack that will fall into the forces of the Ukrainians, who will have no food, no water, no fuel, no ammunition. Here’s what the second phase will look like.

    The Russians have moved away from Kyiv, they no longer need to hold that grouping, it will not be able to move without fuel anyway. They’re stuck! If they leave the city, Russian aircraft will destroy them. There will be no reinforcements, the enemy in Donbas cannot move. They are trapped.

    The Russians have closed the ring and will destroy everyone. Or they will capture a huge part of the Ukrainian army. And when that happens, there will be nothing left. And the Russians will be able to demand whatever they want. That’s why I say the Russians will win. Because I see the situation. I do not flatter myself with the illusions that “the Russians could not take Kyiv and Odessa.” THEY DIDN’T TRY!”

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