When Putin’s War in Ukraine Ends, Impact on Russia Could be Economically and Politically Explosive, Rybakova Says

Paul Goble

            Staunton, June 5 – Russian economists are now suggesting that if and when Putin’s war in Ukraine ends, the consequences for Russia both economically and politically could be explosive and that managing the transition from a wartime economy to a peacetime one will be difficult and last at least a year, Tatyana Rybakova says.

            Many of them fear, the economic observer for The Insider says, that the current money overhang in Russia could “flood the market, sparking hyperinflation” and that the Kremlin might respond by freezing deposits or carrying out mass privatization schemes “aimed at fueling savings into the stock market” (theins.ru/ekonomika/281573).

            That is not to say that there are not more optimistic forecasts being offered. Clearly, a reduction in military spending would have a positive impact on other sectors of the economy especially if some sanctions are lifted leading to an increase in imports which would hold prices down and ease pressure on the money supply.

            But Rybakova continues, there is widespread agreement that “returning the economy to a peacetime footing won’t be easy.” Reducing production in factories producing for the military will mean that “at least a third of their workforces will be out of a job” and they will join “hundreds of thousands” of veterans who will be returning home.

            It took the Kremlin “more than a year” to put Russia on a war footing, she says; and “the reverse process will likely take just as long.” In that process, “the biggest casualties” will be “men returning from the front with psychological trauma and recent experience wielding deadly weapons.”

            According to Rybakova, the Kremlin “clearly recognizes this threat which is why officials continually offer various incentives” to veterans. But “so far, these programs have been poorly executed; and observers are already noting friction between the veterans and their families, on one side, and the rest of the population, on the other.”

            The more the authorities try to appease those with combat experience, she concludes, the more they risk alienating the broader public;” and “given that both will compete over jobs and incomes, the situation could deteriorate into serious social unrest,” posing a new and larger challenge to the Putin regime.