Staunton, April 8 – Even if sanctions were lifted now, Russia would not be able to get out of its current crisis anytime soon, Natalya Zubarevich says; and if they are continued, not only will ever more parts of the economy be hit but by next year Russia won’t have enough seeds for its typical potato crop given that it currently imports a large share of them.
Most Russians and Russian officials understand what the short-term consequences of sanctions are, the regional geographer at Moscow State University says; but neither yet understand fully how underlying problems with the Russian economy will be exacerbated over the longer haul (rosbalt.ru/moscow/2022/04/08/1952603.html).
Already, sanctions have led to shortages of some goods, inflation more generally, and inflation in small to mid-sized firms which can’t keep people on the books as larger firms do because the government provides subsidies even when the demand for their products or services falls dramatically, Zubarevich says.
Over time, ever more sectors of the economy will be hit if not directly than indirectly by declines in those hit directly by sanctions. That will also be true of the government itself: if production falls, so too will tax revenues; and when they decline, the powers that be won’t be able to offer subsidies except by printing money and boosting inflation.
Among the longer-term consequences that Russians can expect if the war and the sanctions against it continue is one few expect: Russia may not be able to produce enough potatoes next year because it currently imports most of the seed it uses; and domestically produced seed is both less productive and less available.
Both exports and imports will fall, she continues; and that will hit port cities and the transportation network. And the notion that either China or import substitution will make up for these problems are illusory. China can’t make up for this lost demand, and in many sectors, a far larger segment is import-dependent than can easily be made up anytime soon.
What all this means, Zubarevich concludes, is that the Russian economy faces “degradation, the stoppage of part of production, and the transition back to the technological situation of the Soviet period,” if not even earlier because Russia now lacks the ability to produce the equipment it needs to keep production even at that level.