With military expenditures by Russian war criminal Vladimir Putin eating up his oligarch economy and the bite of sanctions on his oil and gas industry taking hold, the Russian ruble has fallen substantially in value in the past year. Due to its aggression in Ukraine, Russia's economy has been put on a "command" basis, where goods necessary to wage war take precedence over consumer goods. The Associated Press has the story:
"The Russian ruble has reached its lowest value since the early weeks of the war in Ukraine as Moscow increases military spending and Western sanctions weigh on its energy exports.
On Monday, the Russian currency passed 101 rubles to the dollar, continuing a more than 25% decline in its value since the beginning of the year and hitting the lowest level in almost 17 months. [snip]
Analysts say the weakening of the ruble is being driven by increased defense spending — leading imports to rise — and falling exports, particularly in the oil and natural gas sector. Importing more and exporting less means a smaller trade surplus, which typically weighs on a country’s currency.
The Russian economy is now 'working on different types of state orders related to the war, such as textile enterprises, pharmaceuticals and the food industry,' said Alexandra Prokopenko, nonresident scholar at the Carnegie Russia Eurasia Center and a former Russian central bank official.
Pivoting the entire economy to a war footing not only drives up imports but also raises the prospect of worsening inflation, she said." (our emphasis)
Yet despite the sanctions -- which have been haltingly imposed in increments -- the Russian regime is finding ways around them as Iran has been attempting to do with sanctions against them, according to a report by the British Royal United Services Institute:
“Examples include the switching of ownership of companies and properties to family members or affiliates, the use of trading companies to source foreign exchange to avoid the sanctions imposed on the Central Bank of Russia, and import substitution. … Alongside these steps, Russia is now gravitating further towards other states that have faced similarly sweeping restrictive measures or that facilitate sanctions evasion, to learn best practices, secure necessary services and establish trade relationships.”
The U.S. and its allies are working on plugging these holes in the sanctions on Russia as fast as they open up, but it's very difficult when you have bad actors eager to exploit the situation. The good news is that Putin's regime is feeling the burden of war, and the Russian public also needs to.
