Staunton, Dec. 29 – Dramatic increases in military spending because of Putin’s war in Ukraine played the key role, alongside income from exports of oil and gas, in keeping the Russian economy from collapse, Aleksandr Shirokov says. That is obvious if one considers declines in other parts of the economy.
Production of consumer goods and export has fallen by ten percent or more, and the government has cut back spending on social needs like education and health care, the analyst says. If war spending continues at its current level or more in 2023, the situation will only get worse (novayagazeta.eu/articles/2022/12/29/voina-i-neft
On the one hand, the real economy and public welfare will continue to decline; but on the other, the Kremlin will still be able to claim that the economy is growing – but only by neglecting to explain how that is happening at a time when the Russian people and the Russian economy are in fact getting worse.
After detailing the way in which military spending has affected overall economic figures and government incomes, Shirokov says that all this puts Russia in a very different position from those of other advanced countries at peace. There growth depends on consumer demand but in Russia military spending is financed by the government budget.
“And there are already the first signs that Russia will not be able to support for a long time record high military spending.” When that happens, the entire house of cards will be at risk of collapsing, Shirokov suggests.