To Finance War in Ukraine, Moscow Set to Force Russians with Savings to Buy Government Bonds, Lipsits Says

Paul Goble

            Staunton, Dec. 31 – The Russian economy grew over the last year despite sanctions because of massive infusions of money into the defense sector and also because of enormous payments to those willing to go to fight in Putin’s war in Ukraine, HSE economist Igor Lipsits says.

            But these are not sustainable: the first has exacerbated the drying up of investment, the second is quickly spent with little to show for it, and neither is sustainable over the longer haul. As a result, Lipsits says, the finance ministry is “planning in a voluntary forced way to compel Russians to purchase state obligations” with savings (theins.ru/opinions/igor-lipsits/267986).

            That will buy the Putin regime a little more time before inflation accelerates to unacceptable levels, but it will also infuriate the 20 percent of the population which has savings because the chief burden of the war will fall on them rather than on the other 80 percent. And may lead ever more of these better off Russians to ask questions about the war itself.

            An indication that the government is moving in that direction has already appeared. As of January 1, Russians for the first time ever will have to pay taxes on their bank deposits, something that will likely lead more of them to pull their money out of banks and further complicate the economic situation (rbc.ru/finances/01/01/2024/658eea329a794764722a5997).