According to two academics from UC Berkeley, Russia’s perceived victory in the war against Ukraine is questionable due to self-inflicted economic damage caused by Moscow’s actions. In an op-ed for Project Syndicate, Professors Anatassia Fedyk and Yuriy Gorodnichenko expressed skepticism about Russia’s military and economic success.
Economic Strain on Moscow
While Ukraine’s prospects of winning the war are brightening, Russia’s economy is under significant strain. The value of the Russian currency has declined against the dollar, and interest rates have surged to approximately 16% in an attempt to stabilize the currency amidst soaring inflation. In February, prices in Russia rose by 7.4% year-on-year, nearly double the central bank’s target of 4%.
Declining Revenues and Demographic Challenges
Despite President Putin’s defiance against Western sanctions, Russia’s oil and gas revenues plummeted by approximately 24% in 2023, resulting in nearly $100 billion in lost revenue. Additionally, Russia faces a demographic crisis, with significant loss of life on the battlefield and a substantial exodus of citizens since the war began. Estimates suggest that the nation experienced a shortfall of around 5 million workers in 2023, further exacerbating economic challenges.
Economic Consequences of Mismanagement
Economists caution that Russia’s economy has contracted by 5% compared to pre-war estimates from 2022. In contrast, Ukraine’s economy shows signs of recovery, with the International Monetary Fund revising its 2023 growth estimate from 2% to 4.5%. Furthermore, inflation in Ukraine is expected to decrease to approximately 5% this year, a significant improvement from the 26% recorded at the beginning of 2023.
Conclusion: Ukraine’s Path to Victory
Fedyk and Gorodnichenko assert that Russia’s economic losses are primarily due to mismanagement and Western sanctions. They argue that Ukraine, with robust foreign assistance, holds the advantage in the war of attrition. The professors emphasize the importance of continued military support and financial aid from the US and European countries for Ukraine’s defense. They also advocate for sustained sanctions on Russia by the West to bolster Ukraine’s position in the conflict.
Jade Simon
