Russians shocked by rising prices

Calmly the Russians are preparing for the consequences “flood” fines. “The Americans promised us this economic war. At the moment everything is fine. But we feel that a crisis is coming.”anticipates this close friend of one of the main Russian oligarchs.

Linked to the Kremlin, these billionaire outposts of Vladimir Putin’s system are being targeted by American and European measures. While the two most famous of them, Mikhail Fridman and Oleg Deripaska, have expressed doubts about the Russian advance into Ukraine, many have not spoken out publicly. But they don’t think less.

→ ANALYSIS. War in Ukraine: For Russian oligarchs, Putin is no longer infallible

“I don’t know if the upheavals that await us will have precedents in history. It won’t be 1991. It will be closer to 1917…”predicted by the same source. Reference to the collapse of the USSR, which plunged the country into crisis throughout the 1990s, and reference to the economic bankruptcy that, with its share of unemployment, inflation, and supply problems, accompanied the atmosphere of anarchy that led to the Bolshevik revolution.

“There will be no revolution in 2022, because our government managed to prepare for sanctions”continues this well-informed close oligarch. “But the shock promises to be of unprecedented proportions! »

The free fall of the ruble, which has lost 30% of its value in two weeks, is already making imports more expensive and thus revitalizing inflation. It is close to 10%, which is a record since 2016. We are far from the Kremlin’s promise to reduce it to 4%. “This is just the beginning…”Sophia, who works for a private group, warns.

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The Central Bank was indeed forced to very sharply raise the key rate by 9.5 points to 20%. In turn, this measure will raise interest rates on all borrowings and slow down investment in Russia a little more. “We will not immediately feel the harmful effects of sanctions. He will hit us in three, six, nine months…”Sofia is afraid.

Prices for baby diapers have tripled.

In a country where over-indebtedness was already a problem, raising rates will be difficult for families who have already felt the effects of higher prices. “Suddenly everything is more expensive, from groceries to the tennis racket I had to buy for my son.”Yana, her mother is in Moscow, is worried. “The official inflation figure is one thing. The reality in stores is different.she testified, citing as an example the price of imported baby diapers, which suddenly tripled.

“A 20-30% increase on most consumer products! To learn more “Andrey says the same. The father of the family, he shows the pots bought for his child. “They grew from 800 to 1500 rubles a year”he explains (from 6 euros to 11 euros today), recalling that inflation was rising even before the Ukrainian crisis.

“However, the perception of sanctions will be completely different than in Moscow”warns Mikhail, an auto industry official who already sees the inflationary effects of imported parts in his sector. His daily life is also affected by the partial exclusion of Russian banks from the Swift international exchange system and restrictions on the withdrawal of foreign currency from bank accounts.

→ EXPLANATION. Ukrainian crisis: economic weapon called “Swift” against Russia

Last week, Mikhail stood in line at his bank for hours, trying to withdraw as much cash as possible. “But this does not affect life in the provinces, where Russians do not have Visa and MasterCard cards, or euro accounts…”he jokes. “Kremlin’s soothing speeches about the limited influence of Western measures will look good and even boost Putin’s popularity! »

“The main thing is that we taught Kiev a good lesson…”

In Moscow itself, Kremlin supporters display similar bravado in the face of Western sanctions that nonetheless continue to affect daily life. Pharmacies are complaining about the lack of insulin and other drugs for the treatment of diabetes produced abroad.

The list of Western brands and firms that are withdrawn or temporarily closed continues to grow. Last after Zara, H&M, Ikea stores: Starbucks and McDonald’s. “We will get along very well without them… And, as in 2014, and in the first wave of sanctions, this will eventually allow the Russian economy to reorient itself and strengthen itself”says Mikhail, a pro-Kremlin journalist. “The main thing is that we gave a good lesson to Kiev and the West! »

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So far, according to official polls, Vladimir Putin’s popularity is only growing: during the week of the war, his trust rating rose from 60 to 71%. “The harmful effects of this new economic crisis on the political stability of the regime are still unclear”recognizes the European columnist in Moscow. “Russia will survive”Kremlin spokesman Dmitry Peskov replied. But he had to admit it: the economy is suffering “serious blow”.

Planes risk being on the ground

Vladimir Putin constantly says that economic revenge is an opportunity for Russia to produce its own goods. While progress has been made in agri-food or textile production, so far there has been minimal progress in technology.

The authorities and public media do not dwell much on the tough sanctions against civil aviation. By banning the export of aviation equipment and spare parts, the US and the European Union deal a very strong blow to airlines. If you do not risk safety, this is tantamount to preventing the proper maintenance of the fleet and, therefore, its use. A real problem in the largest country in the world, where the plane is the only way to move quickly.

“We will live in a real blockade…”, Dimitri sighs, in line in front of his bank in Moscow. This father, a 40-year-old private company executive, had just withdrawn his savings and renegotiated his loans after the interest rate hike. “Essentially, Western sanctions and Russian countermeasures mean that we are surrounded by punitive measures. In the end, all this risks making us poorer. »

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Main sanctions against Russia

Since the beginning of Russia’s invasion of Ukraine, the EU, US, UK, Japan and Canada have imposed a large number of sanctions:

Ban on access to European capital markets for Russian financial institutions.

Blocking of assets of the Central Bank of the Russian Federation located outside of Russia.

Closing access to Swift interbank messaging for several large Russian banks.

Denying access to your airspace for Russian companies.

Ban on export to Russia electronic components, spare parts for aircraft or automobiles.

The US and Canada have also stopped importing Russian oil.

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For our readers

After suspending his activities for several days, our correspondent in Moscow, Benjamin Quesnel, resumes cooperation with our newspaper. However, he is forced to work in accordance with the new Russian law, which severely punishes journalists who disseminate information aimed at “discredit” Russian armed forces.

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