Inside Russia: Economists describe impact of Western sanctions and Ukraine war

Economists Radhika Desai and Alan Freeman of the Geopolitical Economy Research Group traveled to Russia to participate in several conferences and investigate the impact of Western sanctions and the Ukraine war.

They spoke with Geopolitical Economy Report about the economic situation in the ground, the country’s deepening integration with Asia, and Russian economists’ gradual move away from neoliberalism.

Russian “economists have always been looking to the East; what is interesting is what’s going on in the leadership now”, Freeman said.

He noted that Moscow is trying to implement a program of import substitution industrialization, to replace Western products.

Desai said there has been a lot of capital flight in Russia, and “some [Western] businesses have left, but not all”.

“What’s remarkable about Russia is how relatively low the economic pain has been, and that Russia’s economy has in fact been quite resilient”, she said.

“So you know in Spring last year, the IMF had predicted that Russia’s economic growth would be lowered, that there would be -12% degrowth essentially in Russia, and in fact, Russia has escaped with a relatively minor lower adjustment of %2 degrowth”, she added.

“It definitely doesn’t look like there’s a war economy”, Desai continued. “[There’s] maybe a certain amount of hardships. Certainly we saw some boarded up shops, you know, shops which had fading signs of the old brand names, Western brand names that have left. But you know, a lot of these brand names are still here. I have taken some pictures. Subway is here. Burger King is here. Citibank is here. Benetton is here. I mean there are so many Western Brands which are still operating their shops here”.

In Russia, Freeman explained, “the atmosphere amongst economists … is very different to that that you find in the West”.

“Here the economists themselves are radicalizing”, he said. “And every time I come here, they get more and more shirty about the things that they think should be done in the Russian economy”, and “the internal domestic structural challenges that Russia faces”.

Desai recalled her experience in the conferences in Russia: “Your regular neoliberals were there, but they were only a handful, whereas the overwhelming majority of the economists who were there were taking a distinctly anti-neoliberal position, recalling that actually state controls, state direction, and state-organized redistribution are the keys to Russia’s economic survival in the face of sanctions”.

“So the overwhelming majority of economists were distinctly to the left, far to the left, of what you hear of course in Western countries”, Desai added.