Resilient economy Putin’s key selling point in elections

MOSCOW

Russians are finding a few imported staples, like fruit, coffee and olive oil, have shot way up in price. Most global brands have disappeared — or been reincarnated as Russian equivalents under new, Kremlin-friendly ownership.

A lot more Chinese cars are zipping around the streets. Those who want a particular luxury cosmetic may be out of luck.

Other than that, not much has changed economically for most people in President Vladimir Putin’s Russia, more than two years after he sent troops into Ukraine.

That’s despite the sweeping sanctions that have cut off much of Russia’s trade with Europe, the U.S. and their allies.

That sense of stability is a key asset for Putin as he orchestrates his foreordained victory in the March 15-17 presidential election for a fifth, six-year term.

Inflation is higher than most people would like, at over 7 percent. But unemployment is low, and the economy is expected to grow 2.6 percent this year. That's far above the 0.9 percent expansion predicted for Europe.

Massive Russian spending for military equipment and hefty payments to volunteer soldiers are giving a strong boost to the economy.

Russia became more self-sufficient in producing its own food after 2014, when it took over Ukraine's Crimea Peninsula and the resulting Western sanctions led the government to ban a broad range of food imports from Europe.

So-called parallel imports via third countries such as Georgia, Kazakhstan or Uzbekistan have allowed Russians with money to keep buying Western products.

Not that there aren’t strains on the economy. Companies face labor shortages after hundreds of thousands of men left the country after the start of the fighting in Ukraine to avoid mobilization, and hundreds of thousands of others signed military contracts.

Meanwhile, Russia’s oil exports shifted from Europe to China and India due to boycotts by Ukraine’s allies.

To avoid sanctions and a price cap on oil shipments, Russia had to shell out billions to buy a shadow fleet of aging tankers that don’t use Western insurers who have to honor the price ceiling. Russia also lost its lucrative natural gas market in Europe after cutting off most of its pipeline supply.

“The economy plays a very important role in all of Putin’s elections,” said Janis Kluge, an expert on the Russian economy at the German Institute for International and Security Affairs. “For most Russians, who choose to ignore the war, the economy is really the biggest issue.”

Economic stability “is a signal that Putin can use vis-a-vis the other elites that he is still able to mobilize the masses. And for that, it has to be genuine and not just a manipulated number,” Kluge said.

“So it is still important that there is this genuine support, even though there is no chance at all for the voters to change who is in office,” he said.