Russia’s economy has proven remarkably resilient, despite years of sanctions and economic statecraft. But that doesn’t mean there aren’t deep cracks in Russia’s unstable economic foundation, with only a thin veneer masking increasingly severe shortages — especially of workers.
Russia is in a desperate labor bind. The country has a shrinking, aging population — a fact it ignores as it sends its young men into the meatgrinder of the war in Ukraine. To generate military manpower, Russia has gotten creative, recruiting criminals out of prisons, North Koreans, and mental health patients. Regardless, the endless need for fresh troops on the front line has taken bodies away from industry just as Russia’s military-industrial needs are expanding rapidly.
Russia now desperately needs to fill jobs on assembly lines that make war materiel, but it has a plan: exploiting the Global South, including its so-called friends.
BRICS members India, Brazil, and South Africa have all been recruitment targets for what appears to be forced labor. Russia issues to their citizens a siren song against which many young women are unable to steel themselves, with devastating results.
For at least two years, Russian company Alabuga Special Economic Zone has been luring young women from developing countries with the promise of good jobs and educational opportunities. When they arrive, they are pressed into drone production. They are made to work with corrosive chemicals for long hours, with restricted communications and few or no rights. The women have faced sexual harassment and seen “deductions” taken from their already meager pay for things like rent.
[…]
Educational institutions in Uganda and Burkina Faso have hosted Alabuga recruitment drives; economy-focused civil society organizations in Zambia, Zimbabwe, Cameroon, and Madagascar have met with Alabuga officials; and diplomats from African and Latin American states have visited and some have promoted Alabuga sites.
Alabuga SEZ has targeted 84 countries, prioritizing recruitment in Africa and Latin America. Although some countries have called out Russian labor fraud, it has been too little, too late. South Africa’s warning and investigation, which began in August, does little to help women already taken to these sweatshops.
[…]
See, the problem with all the “Russia will fall” rhetoric over the years is that the expectation is on a far too short time frame.
No, Russia will not fall tomorrow, or next month, or next year. And probably not even for the entire duration of this war. Hell, they might even get a chunk of Ukraine at the end of it.
But I doubt Russia will financially bounce back from this. Their “fall” is, in my eyes, going to be a slow and painful attempt to still have an economy as they realise winning isn’t really winning if you’ve spent everything on it.
Came here to say pretty much this.
Russia’s economy has proven remarkably resilient
That statement is not thought through. I mean, the same could be said about North Korea or any number of countries, even the USA.
I also would not want one of the biggest countries on the planet + 100 million people to fall into chaos and despair; I truly hope there’s a better way of dealing with it, though I don’t see how if the Kremlin doesn’t participate.
Historically Russia has always tried to prop up its own failing economy by exploiting neighboring countries, even integrating them into their own. Expansionism, Imperialism. A bad choice, long term. For that to work they would need to go (even further) back to feudalism (an almost infinite number of warm bodies to use), and the countries around them would have to stay weak.
Yes. As Natalia Zubarevich, professor of the Department of Economic And Social Geography of Russia of the Moscow State University, predicted in June 2023 about the Russian economy: ‘There Will Be no Collapses, but Rather a Viscous, Slow Sinking into Backwardness’
I liked her statements back then and have been remembering them whenever I read reports like this one on the Russian economy. The interview is more than 2 years old, and with hindsight we now must say that Professor Zubarevich seems to have foreseen everything. I never heard of her before but she must be a very good economist.
Well, I don’t think that Russia would have a chunk of Ukraine, as this will encourage the Kremlin to go for the next country. Another question is what happens with Russia after Putin?
To the next country… With what resources? They’re spending all their resources just to gain a few metres of territory over the course of an entire year.
All those young, able bodied working people dying to a drone attack after just two weeks of training.
Russia shouldn’t get a chunk of Ukraine as that will encourage them to invade other countries… If they’d have anything left to invade with.
Realistically Russia has put itself into an economic situation where it cannot pull out of the war unless they gain control over economic resources that allow it to transition from a war time economy.
There’s a reason most countries do everything they can to avoid having to go into a wartime economy. The immediate benefits are great, but it quickly becomes a sunk cost fallacy due to the guns vs butter model of opportunity detriment.
Military spending just has terrible opportunity cost ratios, and can only really be recouped as an investment if you are actively conquering new territory rich in resources. Even then, the cost eventually becomes greater than the opportunity it affords, eventually no matter how much you spend you aren’t able to control what you take over.
The only way the US was able to transition from the war time economy from WW2 without imploding was because it became the new banking capital of the world, and it got to keep it’s production capacity while their allies did not. This is almost a direct inverse of Russia’s current scenario.
In short, Russia will most likely have to extend its war against Ukraine, or start a new conflict as soon as it makes peace with Ukraine just in the hopes that they can maintain their current economic situation.
It became the new banking capital of the world because Europe was utterly devastated, needed to rebuild, but none of the currencies were worth shit.
It’s literally that which caused the United States to enter this wonderful golden age of capitalism.
I really hate it when American politician talk about this era as if America did something so right all by themselves. No, Europe was just destroyed. It made them money. You’re welcome.
Russia has some massive advantages ones they have peace. One is the assets they have in the West. We are talking billions and they could be sold to help out the local economy. The other one is lifting of sanctions. They sell a lot less gas and oil under market prices. So having those lifted would help the economy a lot.
It then is a matter of giving everybody who looses their jobs in the military sector a new one. That can be done with infrastructure spending or something similar.
Infrastructure spending? This is Russia we are talking about. From every ruble spent by the government, at least 75% disappears if not more. The systemic corruption in Russia will obliterate any supposed advantage they have by ending the war.
And those foreign assets are only partially government assets. These include investment accounts of normal Russians, payment to companies that have been held back, etc… We are talking billions but Russia is bleeding billions every month now, and the release of those assets will only partially mitigate the unfolding souffle like collapse of the Russian economy. It’s not a sudden crash, just a general return to poverty.
A return of fossil fuel sales to prewar income would help, but I don’t see that happening as long as they occupy the Donbas and Crimea. Some sanctions will be lifted in case of a peace agreement but not even regime change will roll back all of the sanctions.
We are talking about $200B of Russian government assets in the EU. That is enough to pay the soldiers and workers in the military industry for some time until the economy can recover. Even if a lot is lost and lets be real that is happening with military spending as well.
Right now Russia has massive fuel shortages all over the country, the coal industry is collapsing, there are rolling black outs in some regions and high inflation. The base for recovery is pretty low. Add fossil fuel exports to the West at global higher prices and it goes a long way. Nothing some good propaganda can not handle.
I think you vastly underestimate the catch-22 Putin has steered Russia in. They’re not recovering from this economic disaster this century. They’re damned if they do (continue the war) and damned if they don’t. That’s also why NATO considers Russia a significant threat to regional stability even if the war were to end where they get everything they wanted. It’s a lose-lose situation for Russia, but continued aggression to keep the war economy going is currently the path of least resistance.
You mean the assets the EU has seized and has started selling off?
Really, the only thing Russia has to rely on is China. They’ll get themselves so in-debt trying to rebuild their economy and China will have them by the balls (like they have with so many countries already).
But selling and loaning is only a temporary thing. None of that means a damned thing if it doesn’t result in something physical and real-world. But a lot of the population needed to make that possible is now lying face-down in Ukraine.
lol russia.
