Hans van Koningsbrugge, professor of Russian History and Politics at the University of Groningen, gives his commentary on the war in Ukraine every Wednesday in this newspaper. Today episode 43.
The Russian ruble is stronger on paper than it was before the start of the war, after a sharp fall in the price. This is because trading in the currency is highly regulated by the central bank. It is also important that the Russian import has collapsed. For example, trade with Germany has been cut by almost half. So there is much less demand for western currencies. This makes the ruble stronger.
Conversely, Russian exports are becoming more expensive. We notice this here in the exploded gas and oil prices. Industrial production in Russia has also fallen. The Russian steel industry produces 40 percent less. Car sales have also fallen. The Russians will certainly feel the consequences.
‘The consequences of the sanctions are gradually unfolding’
Russia’s state revenues are currently 39 percent higher than a year ago. We had not expected that at the start of the war, but the Western sanctions – until the now announced EU oil boycott – were of a completely different caliber. These mainly concern companies, products and parts. The consequences of this do not take place in one fell swoop, but gradually.
The Russian face seems much nicer than it is. The supermarkets are still full and the restaurants in Moscow are also doing good business. Due to the previous sanctions, Russian agriculture has matured well. But industrial products with modern, western technology are much more difficult to obtain.
‘The Russian population notices that there are increasing shortages’
Russian television pays no attention to all of this. There are triumphant shouts that the Russian ruble is so strong. Putin has even said that the ruble is currently the strongest currency in the world.
This does not alter the fact that the population is aware that there are increasing shortages. In addition, real income has fallen by 7 percent and inflation is skyrocketing.
I expect the Russian acid to come in September. Then the stocks are used up and the illusion is over. Then they will feel the pain even more than now.”