The way Russia is trying to prove itself, sanctions can survive

In the last few weeks, President Vladimir Putin has spent a lot of time trying to convince the Russian people that sanctions on Moscow would hurt the West more than Russia.

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Putin is preparing his country for the long journey.

“The West has no plans to withdraw from the policy of economic pressure on Russia. Therefore, a long-term plan is needed based on the internal opportunities of each sector of the Russian economy, “said the Russian president of aviation executives recently.

According to CNN, the policy of Putin to become self-reliant was already being speculated.

Moscow has been preparing for a strategy known as “Fortress Russia” to counter growing Western sanctions since its annexation of Crimea in 2014.

However, the Kremlin has been hit hard by the economic sanctions imposed by Western nations in response to the February 24 attack on Ukraine, as well as the large number of companies that have cut trade ties with Russia amid fears of future sanctions.

“None of those who were predicting Western sanctions thought so,” Russian Foreign Minister Sergei Lavrov said in March, referring to the seizure of half of Russia’s হাজার 60 billion reserves.

Russia has said it will challenge sanctions on its foreign reserves in court; They have also threatened to sue if they are found to be in default due to confiscated assets.

Here are some of the ways in which companies, industries and officials have approached Russia to survive in this new reality:

1. Ladder design changes

Russia’s own iconic Soviet-era Lada brand relies heavily on imported parts. Ladder maker Avtovaj is owned by French carmaker Reno.

In response to the news that Renault was leaving the Russian market, Avtovaj said on March 24 that they would soon change the design of several models so that they would be less dependent on imported parts.

Although they did not say which models of the car will be changed, they said that the car with the changed design will come to the market gradually in the coming months.

Evgeny Eskov, editor-in-chief of Russia’s automotive journal Auto Business Review, thinks the redesigned cars will have more features than the current ones.
2. Attracting Instagram users to Vikantakach

Even a few days ago, Instagram was the top social media in Russia in terms of monthly users. The Russian version of Facebook was second to Vikantakche.

Since Russia’s invasion of Ukraine, and especially since Russian regulators blocked access to Facebook and Instagram last month, there has been no way to entice content creators to Vikantakche to its platform.

They announced no dividends on content revenue until the end of April; From March 1, if a content creator comes to Vikantakche from another platform or activates his old account, they also promise free promotion.

The Russian social media has also published instructions on how to start a business step by step in Vikantakche.

These steps are also working for them. Their data shows that in March, their monthly users crossed 100 million and set a record.

On the other hand, according to Brand Analytics, between February 24 and April 6, Instagram lost half of its active Russian-speaking users on its platform.

Of course many Russians are still running Instagram with VPN, their business is also running there.

3. Own credit card

Russia was preparing to become economically isolated after several major Russian banks were banned from occupying Crimea.

In some cases, it even works. The development of Russia’s national payment card system and bank card system, known as ‘Mir’, has accelerated.

According to the data of the Central Bank of Russia, 11 crore 30 lakh ‘Mir’ cards have been issued in 2021, at the end of 2016 this number was only 16 lakh 60 thousand. A quarter of all card payments made in Russia last year were on Mir cards.

This means that when Visa and MasterCard announce the suspension of their activities and transactions in Russia in early March, Russia has an option.
However, Mir has not yet become a complete alternative. It operates only inside Russia and a few outside countries, mainly in the old Soviet states.

Russia has also stumbled in an attempt to create an alternative to Swift as it has not been able to reach the world. Their own version, known as SPFS, had 400 users last year, and Swift had 11,000.

4. Government jobs

According to Elena Rebekah, deputy chief economist at the Institute for International Finance in Washington, Russia has yet to see mass unemployment. One of the problems the Kremlin fears is this mass unemployment, as it has the potential to provoke discontent.

In the wake of the possible mass unemployment, Moscow’s city authorities have launched a program to retrain and recruit workers for Western companies whose business in Russia has been suspended or shut down due to operations in Ukraine.

Now up to 200,000 jobs are at risk, according to Moscow Mayor Sergei Sobyanin.

The solution, he says, is to “let the Westerners do the work they need” in a recent post on his blog.

Among the options he has written are: jobs in the administration of official documents such as passports, birth registration, working in city parks or temporary health centers that are being built. কোটি 41 million has also been set aside for the creation of such jobs and the retraining of workers.

And most of those who held senior positions in various foreign companies will eventually leave the country, says Rebekah.

What next?

Russia has so far handled the initial blows of Western sanctions well, their economic system has not collapsed. For this they can give credit to the central bank; Immediately after the ban, they raised interest rates to 20 percent and imposed strict controls on capital. Later, however, they reduced the interest rate to 16 percent.

However, this does not mean that Russia’s bad times are over. The International Monetary Fund (IMF) estimates that the country’s economy could shrink by 6.5 percent this year due to sanctions and the withdrawal of various companies. If Europe cuts off Russian oil imports, the damage could be even greater.

Inflation in Russia is now at 16.50 percent, which Putin himself admits is hurting Russian citizens.

Another risk for them is dependence on imported goods; Many of these products are now banned.

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