Russian Economy and Society Three Years into the Invasion of Ukraine: Growth Without Development?
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Speakers
- Vladislav Inozemtsev - Russian economist and director and founder of the Center for Post-Industrial Studies in Moscow. He has taught at various universities, including MGU (Moscow State University), MGIMO (the University of International Relations) and at the Higher School of Economics in Moscow. Dr. Inozemtsev is the author of over 600 printed works, including 15 monographs. He has produced research for various think tanks, including the French Institute for International Relations (IFRI), the German Council on Foreign Relations (DGAP) and the Center for Strategic and International Studies (CSIS). Since 2024, he is one of the co-founders of the Center of Analysis and Strategy in Europe (CASE).
- Dmitry Nekrasov - Russian public and political figure, former executive secretary of the Opposition Coordination Council and candidate of economic sciences. In 2006–2008, he was the head of the Moscow regional branch of the Civil Power party. In the period from 2007 to 2009, he was chairman of the commission of the Public Chamber of the Moscow Region on economic policy and development of small and medium-sized businesses. In 2009, he worked in the expert department of the Administration of the President of the Russian Federation. In the period from 2010 to 2012, he was deputy head of the analytical department of the Federal Tax Service, responsible for international cooperation of the Federal Tax Service and the fight against offshore companies. Since 2024, he is one of the co-founders of the Center of Analysis and Strategy in Europe (CASE).
- Dmitry Gudkov - Russian opposition politician and public figure. He was an independent member of the State Duma from 2011 to 2016. In 2012, he was elected as a member of the Coordinating Council of the Russian opposition. Mr. Gudkov was one of the leaders of the protest movement after the 2011 Duma elections. He authored several bills aimed at promoting democratic values and protecting civil rights. Mr. Gudkov advocates for a European path of development for Russia and the restoration of Russian relations with Western countries. In 2021, amid increasing pressure from Russian authorities on opposition leaders, he was forced to leave Russia. He is a co-founder and member of the Russian Anti-War Committee. Since 2024, he is one of the co-founders of the Center of Analysis and Strategy in Europe (CASE).
The discussion will be moderated by
- Dmitry D. Volkov - PhD student in socio-economics at the Europes-Eurasia Research Centre (CREE, Inalco) specializing in state-business relations in the Russian IT sector.
Scientific event summary
On February 24, 2022, Russia launched a full-scale invasion of Ukraine, marking the return of large-scale conventional warfare to the European continent. The international community, particularly the European Union and the United States, responded swiftly with a series of sanctions aimed at depriving the Kremlin of the financial and material means to continue its military actions. These sanctions targeted key sectors, including finance, energy, and technology. Introduced in December 2022, the oil price cap was designed to limit Russia’s revenues from oil exports. Finally, numerous foreign companies also exited the country, amplifying the effect of sanctions.
After enduring the initial shock, the Russian state’s monetary interventions and fiscal stimulus measures prevented further macroeconomic destabilization. However, the effectiveness of sanctions progressively diminished due to weak international enforcement. Russian private actors ensured the supply of sanctioned goods and services through parallel importation schemes, albeit at higher prices and lower quality. The exit of foreign companies from the Russian market provided opportunities for local market players to expand their operations, while Chinese exporters filled the void in certain consumer market segments. Importantly, much of Russia’s oil exports were reoriented to third countries, such as China and India. Despite efforts to reduce Russia’s oil export revenues, many EU countries continued to buy Russian oil through the ‘refining loophole’, making India the largest exporter of oil products to the EU.
Russia’s initial negative growth of 2.1% of GDP in 2022 was reversed by two years of growth, with estimates approaching 4% of GDP in 2023 and 2024. Building on the aforementioned factors, the state engaged in extensive spending, much of which was concentrated in the military sector, driving up industrial production and wages in military-related industries. Alongside the rise in internal demand in civil sectors such as tourism, IT, finance, insurance, trade, and real estate, these have become the main drivers of economic growth for Russia. However, signs of economic overheating are becoming apparent, as the Central Bank of Russia has consistently raised its key rate since the summer of 2023, peaking at 21% in autumn 2024. Observers have described this model as ‘growth without development’, highlighting its repercussions on Russia’s human capital. How sustainable is this model in the medium to long term?
Organizer
- Dmitry Volkov (CREE, Inalco)