Russian Resilience

By Shlomo Maital    

   It physically pains me to write anything positive about Russia, the nation spilling blood, killing civilians, starving people by withholding wheat, ripping off the world by spiking gas and oil prices, and lying daily.  But – truth is truth.

    Russians are resilient.  They suffered 20 million casualties in World War II and starvation.  When the USSR collapsed, there was privation, hunger, hyper-inflation…   Russians have learned to be resilient.

     The ruble was 67 to the dollar on Feb. 24, when Russia invaded Ukraine.  It spiked to nearly double that, 133 to the dollar – and today is 54 rubles per dollar, stronger than pre-war.     

     Kudos to Russian Central Bank’s governor, the brilliant Elvira Sakhipzadovna Nabiullina. 

      Russia’s inflation rate in May was 17%.  High, true – but the US has 8% inflation, and Europe is not far behind.

      McDonald’s closed all its 850 restaurants in Russia with the outbreak of war.  They are now re-opening, under a different name,  same stuff.

       Russia faced oil and gas embargos – but the higher price of oil gave Russia a windfall of $100 b. in oil sales since the outbreak of war, and it is finding customers in China and India. 

       This Ukraine war will be very long and protracted.  Russia’s economy is hurt by sanctions, but its people are resilient and have known privation before.  It is part of being Russian.

    So do not expect the sanctions to alter Russia’s course.  Do not expect the people of Russia to whine about how hard their lives have become. 

    Long-term, the energy sector in Russia is the most important, it contributes 20-25 percent of GDP, 65 percent of total exports and 30 percent of government budget revenue.  Western countries are shifting away from buying Russian energy.  And the economy is reliant on it.  Let us see how Russia deals with this in the long run.