Russia’s economy is strained as Western nations enact harsher and broader sanctions following the Russian invasion of Ukraine, but average citizens’ savings may be at risk.
The ruble’s value against the US dollar dropped by 26% as a result of sanctions already placed on Russia. The Russian Central Bank (CBR) has increased the interest rate from 9.5% to 20% as a means to lessen the impact of the sanctions, but the CBR says that further interventions are impossible due to Western freezes of Russian assets. Russia has stockpiled a reserve of around £470 billion, but, as much of it is stored in Dollars, Sterling and Euros, is unable to access it.
Kremlin Spokesperson Dmitry Peskov said that Russia intends to ride out the sanctions:
“The Western sanctions on Russia are hard, but our country has the necessary potential to compensate for the damage.”
The “first barrage” of sanctions placed on Russia were targeted at billionaires and companies and banks affiliated with the Russian administration and its military. Since then, Western nations have broadened the sanctions significantly, including restricting most Russian banks from accessing the SWIFT payment system.
These sanctions are having an undeniable measurable effect on Russia’s economy, but some Russians have accused the West of performing “collective punishment” for the actions of Putin and his government.
Sanctions also resulted in the Moscow stock market remaining closed on Monday, aiming to insulate the country from further economic losses. There are also signs that a run on Russian banks may be coming, with citizens pulling their money out of ATMs over fears that banks could collapse and no longer guarantee citizens’ savings.
The greatest impacts of sanctions are almost always absorbed by the poorest in society. A report from the Center for Economic and Policy Research found that sanctions placed on Venezuela by the Trump administration may have led to around 40,000 deaths between 2017 and 2019.
Inna Pomorina, an economist working at Bath Spa University, told Al-Jazeera that:
“Banning Russia from SWIFT as part of sanctions will be a major blow to Russian banks, as completing financial transactions will no longer be as simple for Russian businesses and for the Russian government.”
“Sanctions will hurt ordinary people as well – they won’t be able to travel, prices will rise due to high inflation, many will lose their jobs, and international companies will stop operating in Russia”
Russia has already seen a rise of queues in supermarkets, and prices are expected to increase while Russian’s savings decrease in purchasing power.
There is also concern that anti-Russian xenophobia is on the rise as people project their opposition to the Russian military onto Russian civilians, despite a considerable number of anti-war protests occurring in Russia over the past week. A polling company, Levada, found that only 14 percent of Russians blamed Ukraine for the military stand-off leading up to the invasion.
Several countries, including the Czech Republic, Latvia, and Japan have announced that they will stop issuing visas to Russian citizens, and Belgian Immigration Minister, Sammy Mahdi, said that a similar visa ban should be considered by the EU. Meanwhile, US representative Eric Swalwell said that the US should consider deporting Russian students studying in the country.
Many European states have also enacted a no-fly zone for Russian aircraft, will almost all airspace between Russia and the global west now being a no-fly zone. This makes it practically impossible for Russian aircraft, include airline Aeroflot, from flying westwards.