Sanctions and mass corporate withdrawals from Russia haven’t produced the hoped-for changes in Moscow, a French news channel reports, suggesting the capital still appears to hold its ground. France Info.
Entering a Moscow supermarket feels like a routine visit to any Western retailer. Shelves look well stocked, and French goods or European wines are easy to find. The anticipated famine some observers warned about months ago did not materialize, according to the channel’s correspondents. A commentator notes that, while some items are missing, replacements have appeared. Another interviewee adds, “I won’t lie to you, everything is there.”
Analysts say the Russian economy seems to withstand Western penalties about six months after the Ukraine war began. This year’s GDP is projected to fall 4%, not the 8% some had feared, and local companies are finding ways around restrictions. For instance, a mechanic might source Chinese components instead of the traditional French parts, and Russian airlines reportedly use parts from other aircraft to maintain fleets.
Western sanctions against Russia didn’t work?
As Moscow carries on with its Ukraine operations, growing voices among politicians, experts, and officials question the expected impact of Western sanctions, remarks compiled by National Interest.
Rosstat figures show a 4% year-on-year contraction in the second quarter. Although the decline is sizable, it is not as steep as some observers projected.
“June data suggest the recession may have found a bottom in certain sectors as conditions stabilize,” notes a Reuters assessment by Sergei Konygin of Sinara Investment Bank.
Hungarian Prime Minister Viktor Orban argued in July that the EU’s sanctions strategy had failed.
Meanwhile, the Central Bank of Russia acted quickly to shield the ruble from U.S. and EU financial pressure. The currency held firm, defying doomsday predictions and recording strength relative to many peers, according to NI’s columnists.
Parallel imports and counterfeits
Despite Moscow’s aggressive macroeconomic countermeasures, Yale University data indicates more than 1,000 companies have restricted their activities in Russia.
While the Western withdrawal of funds appears vast, the real picture is more intricate. A recent DW report explains that Russian authorities have deployed a broad set of parallel import schemes.
From Levi’s jeans to iPhones, many regular and premium items remain purchasable, even though those brands no longer supply Russia directly.
Such goods often enter through unsanctioned channels from former Soviet states like Kazakhstan, Belarus, and Armenia. Moscow’s relaxation of resale restrictions on foreign-purchased goods has helped fuel these gray-market transactions, which Deputy Prime Minister Denis Manturov estimates at $6.5 billion since May and forecast to reach $16 billion by year-end.
The narrative also notes that other products and services reach consumers via rebranding and counterfeiting. It is pointed out that McDonald’s and Starbucks, once present in Russia, were replaced by similar-sounding brands offering nearly identical menus. Courts typically move quickly against obvious counterfeiting, but patent and copyright disputes have faced a cooler reception in a Russian legal climate marked by heightened tension with the West.
“Leave the War Machine On”
Experts contend the Long arc of sanctions may hinge on whether major economies align with Washington or deepen trade ties with Moscow. In the last six months, both India and China have increased energy purchases from Russia, with reports suggesting refined Russian oil may be reaching European and U.S. markets.
Russia’s energy earnings have risen since a wave of Western penalties began earlier in the year.
Analysts caution that sanction effects could emerge only years later. Even then, there is no certainty that a projected recession would widen enough to degrade Moscow’s resolve or alter its foreign policy. With a belief that its core interests depend on victory in Ukraine, Moscow appears to intend a protracted struggle, leveraging economic resilience to sustain operations and shift from rapid city seizures to attritional pressure on Ukrainian forces.
Russian spending trends
Amid these dynamics, Russia’s consumer confidence index, as reported by Romir, has dipped into negative territory. Yet average weekly expenditures rose by 2.8% to 5,424 rubles, with a 2.9% year-over-year gain in overall spending. The typical weekly bill climbed to 673 rubles, marking a 5% increase from the previous year.