Two years of war and sanctions, but while the British economy struggles, tyrant Vladimir Putin's Russia grows
WHO would have thought when Vladimir Putin's invasion of Ukraine was derailed two years ago that Russia's economy today would be growing faster than any European economy?
Germany has gone from being the continent's powerhouse to a GDP – a country's gross domestic product, or whatever it is economy does – that is less than That of Russia through many measurements.
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Putin made the classic mistake of bad strategists by assuming everything would go according to plan with the invasion of Ukraine.
But then our leaders come in Washington, London And Brussels have committed their own blunder.
By imposing the toughest economic sanctions ever on the… Kremlin to add to our generous support for Ukraine, Joe Biden en Co assumed that the Russian economy would plummet, that Putin would no longer have money to pay for his army, and that the Russian people – and not least the spoiled super-rich oligarchs – would rise up against Putin because he had plunged them into poverty.
Putin was far too confident of a quick victory in February 2022, but the Kremlin had actually been preparing for Western sanctions for years.
He knew that Washington and its allies would want to punish even successful Russian aggression by, for example, blocking oil exports.
The Kremlin has worked out what Washington forgot.
Many countries out there NATO Ukraine doesn't care, especially if Russia offers them a discount on oil.
Driving up wages
Unmarked, even uninsured tankers would soon be shipping black gold India and other growing consumers of energy.
Germany has taken – and continues to take – a severe economic blow by phasing out Russian energy imports.
But outside Europe, buyers were queuing up.
Even within NATO, countries like Great Britain and the US still are buying some important raw materials from Russia.
Major exports from the West to Russia have managed to avoid our official sanctions.
Germany, for example, exports technology both goods and cars and parts via the poverty-stricken Central Asian state Kyrgyzstan.
If you can't find it on the map, don't worry; German exporters could not do that two years ago either.
Yet Kyrgyzstan's imports from Germany have increased by as much as 1,200 percent since Berlin banned such exports directly to Russia.
Our sanctions have so far had a counterproductive effect.
In fact, the Russian economy has grown faster than any economy in Western Europe.
Germany's has shrunk.
Unemployment in Russia has fallen sharply since the outbreak of war.
Of course, mass recruitment into the military partly explains this, but Putin has massively boosted the military industry, sucking in labor and driving up wages.
Now that he's up for re-election next month, Putin can boast that life for the average citizen is getting better — provided you're not one of his cannon fodder squadrons.
So far, most Russians have not been directly affected by war casualties.
Putin has been smart in recruiting men from remote areas Moscow.
The cynical tyrant knows that young men in Moscow will not demonstrate against the war because if you get arrested you get a one-way ticket to fight in Ukraine.
There is a deep history behind Putin's ability to survive the sanctions of the West and the defiant resistance of the Ukrainians.
Russia is not a welfare state.
But it has always been a war state.
Waging war and making weapons of war has been the country's most important industry for hundreds of years.
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Stalin didn't make the Russians rich, but he made their country a superpower, at enormous human cost.
Like his role model Stalin, Putin produces simple but effective weapons en masse.
Stalin produced the T34 tank by the thousands, Putin is producing hundreds of thousands drones.
Cheap but deadly technology.
Today, Putin is able to provide a measure of prosperity by hiring people to make new weapons – and there are a lot of them.
But if necessary, he will tighten his belt to preserve his own power and that of Russia.
Remember, Putin himself comes from Peter the Great's city, St. Petersburg, built to demonstrate that the Russian Empire could rival the West.
He grew up in what was then called Leningrad, battered and starved by the Nazis for three years – and still survived when Berlin fell to the Red Army in 1945.
Permanent crisis
Russians believe in a powerful myth: that their wars start badly but end triumphantly.
At least that is what Putin's media drums into the minds of his people.
In a sense, a permanent crisis suits Putin, as long as he is a money spinner.
So far, the lifting of sanctions has paid off.
Every now and then, Western sanctions manage to take a bite out of Putin's war chest.
This week for example a Chinese The bank withdrew from a transaction with Russia, fearing the US would sanction the country and block its valuable deals in the dollar.
But other Chinese companies engage in “swaps,” in which things like Russian oil magically become non-Russian and the value of that oil pays another Chinese company to sell computer chips or missile technology to Moscow.
But it's not all good news for Putin.
It is not just his regime that has mobilized to fight back.
This also applies to Ukraine.
The Ukrainians have also shown that they can learn quickly.
Kiev has developed its own long-range kamikaze drones that have attacked Putin's weapons factories and oil industry in Russia.
Striking at oil terminals on the Baltic coast 900 kilometers away has probably done more damage to Putin's money-consuming energy exports than Western sanctions.
The real threat to Ukraine's chances of survival is the West's growing fatigue with continuing to pay to support Ukrainians' resistance, while Kiev depends on the West to finance its embattled armed forces, while Putin is strangling its economy .
Unfortunately, Russia's militarized economy is now firing on all cylinders.
Is that despite our sanctions?
No, it's because Putin is bypassing them.
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Families pay the price
AS Vladimir Putin stands for re-election, he is rejoicing that his sanctions-hit country has the largest economy in Europe.
Moscow's pub and club scene is certainly lively, with Putin cracking down on naked revelers, while shopping centers still sell luxury goods.
However, measured by GDP, the Russian economy is slightly ahead of Italy, but lags behind Germany and Great Britain.
However, that doesn't mean it's lame.
A third of the budget goes to war efforts, and Putin has created 520,000 jobs in the defense sector.
“The regime is resilient because it is sitting on an oil rig,” economist Elina Ribakova told the FT.
But consumer prosperity threatens to explode inflation and unsustainable growth.
In the meantime, creaky hot water systems have broken down and local governments have cut budgets.
Food prices are rising, while the average weekly pension is just £38.49.
Airlines are short of parts, medicines for HIV, diabetes and cancer are running out due to sanctions, and gas giant Gazprom's production has reached a record low.
An opinion poll last week showed that two-thirds of Russians believe they are paying too high a price for Putin's brutal war.
We cannot misunderstand this
THE world must give Ukraine enough to win, not just survive.
Why? Because we either tell autocrats that they can invade their neighbors, and we will only provide military aid to our allies until our resolve grows weary.
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Or we deter future aggression and war crimes by making it clear that we will not allow countries to carve up neighboring states, commit mass murders, kidnap tens of thousands of children and rape their men, women and children.
War is not a movie.
The good guys don't win alone.
What we need now is for the US to agree on £50 billion in support for Ukraine and its leader Volodymyr Zelensky which is currently embroiled in domestic politics, and to seize the billions in frozen assets of the Russian Central Bank and use them to help Ukraine win now.
We need secondary sanctions against the countries and companies guilty of sanctions evasion, and we need to establish a special tribunal against Ukraine so that those responsible are brought to justice.
We cannot afford for this to go wrong.
- Alicia Kearns is chair of the Foreign Affairs Select Committee.