The state of the Russian economy is dire, with former economic minister Andrey Nechayev stating that it is currently “in the sh*t” and suggesting that President Vladimir Putin has chosen to settle in this chaotic situation.
Nechayev’s criticism, a rarity at such a high level, attributes Russia’s economic decline to the Western sanctions imposed over the Ukrainian conflict. He further predicts that the situation will worsen in the coming year.
Interestingly, Nechayev points out that while food franchises like McDonald’s can be substituted with Russian pancakes known as “blini,” replacing high-tech products is a far more complex challenge. Attendees at the Ekaterinburg financial forum, though cautiously amused, applauded Nechayev’s comments.
In Russia under Putin’s leadership, those who dare to voice dissent against the Kremlin’s official narrative are often labeled as “foreign agents” and subjected to arrest and imprisonment. Numerous outspoken critics have suffered arrest, torture, and even poisoning for daring to speak out against Putin.
Additionally, several prominent oligarchs have met mysterious ends in various “accidents” after crossing paths with the Russian leader.
Nechayev served as the economic minister from 1992 to 1993, following the disintegration of the Soviet Union. During his address at the forum, he highlighted Russia’s exceeding of its budget deficit plan in the initial four months of 2023 as a factor contributing to the impending crisis.
He noted that although the country has sufficient reserves to finance the deficit for a year, it will eventually have to resort to borrowing funds. Nechayev also emphasized that mass emigration, capital outflows, and dwindling oil and gas revenues will continue to wreak havoc on the Russian economy.
Economists have expressed surprise at the resilience of the Russian economy, which has proven to be more robust in the face of Western sanctions than anticipated. Food remains readily available, GDP has only experienced minimal impact, and wages are still being paid regularly. Unemployment is also at its lowest rate in three decades, with Western products being substituted by local alternatives or imported through Turkey and Central Asia.
However, analysts caution against relying solely on these numbers, as they fail to capture the full extent of Russia’s impending collapse. The apparent low unemployment rate is partially a result of thousands of Russians fleeing the country, being conscripted into the military, or losing their lives in Ukraine.
Moreover, over a million workers are technically employed but on unpaid leave, leading Russian opposition leader Vladimir Milov to assert that approximately 25% of the manufacturing sector is grappling with a form of “hidden unemployment.”
Certain Russian industries heavily dependent on Western technology, such as airlines, have been severely affected by the sanctions. Viktor Basargi, the head of Russia’s transportation watchdog, revealed that in 2022 alone, over 2,000 flights in the country utilized planes with expired parts, as replacements could not be procured due to the sanctions. Basargi stated that importing certain products has become “simply impossible.”
These recent comments from Nechayev are not the first time he has employed scatological language to critique the Russian economy. Back in April 2022, he expressed his decision to remain in Russia as long as his personal freedom was not directly threatened.
This declaration came during a period when many individuals were fleeing, apprehensive of an increasingly oppressive Kremlin regime and the possibility of being called up to serve in reserves.
Nechayev’s statement from that time echoes his sentiment at the forum, encapsulating the essence of Russia’s predicament. He remarked, “I have come up with a wonderful formula for everything that is happening in Russia right now. The problem is not that we’re in the sh*t, it’s that we’ve decided to live in it.”
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