December 03, 2023

Occupation Is Expensive


Occupation Is Expensive
Rubles. The Russian Life files

The Bell, an independent Russian news outlet that focuses on economics, has released a study reporting that Russia's actions in Ukraine since the Maidan protests have created an economic "lost decade."

According to the report, since anti-Russian protests erupted in Kyiv in November 2013 (which would lead to Russia's annexation of Crimea, support for separatists, and eventual invasion), Russia has made policy decisions that have led to stunted economic growth.

These include a loan of R15 billion ($166 million) to the now-ousted Russia-friendly Ukrainian president, that is unlikely to be paid back; another $3 billion loan in Eurobond loans; and as much as R200 billion ($2.2 billion) in annual subsidies for occupied territories like Crimea. And this doesn't include an estimated R483 billion ($5.3 billion) annually for territories occupied since the most recent invasion began in February 2022.

And there is no indication these subsidies will end anytime soon.

Then there are the Western sanctions imposed in the wake of Russia's 2014 annexation of Crimea, followed by Russia's "counter-sanctions" – leading to a ban on Western food imports that nearly doubled food prices between 2014 and 2016, even as domestic production rose. Large Russian companies suffered as well, as they were unable to attract foreign investment, which slowed growth throughout the economy.

The combined economic effects of all of this are widespread. For instance, while other countries in Eurasia saw strong GDP growth over the period, ten years of slow growth in Russia has created a gap between Russia and the West five times larger than it was ten years ago, on top of higher prices for consumers.

The end result? Sluggish isolation for Russia.

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