All Putin's Lies About the Russian Economic Crisis, Ever More "Soviet"

All Putin’s Lies About the Russian Economic Crisis, Ever More “Soviet”

Vladimir Putin is “spreading lies” about the strength of the Russian economy, whose health is in doubt, according to a group of finance ministers from eight EU member states. Harsh sanctions imposed by the Western bloc (primarily the United States and the European Union) after the invasion of Ukraine are, in their view, deteriorating Moscow’s economic blockade. Government officials say there are signs that the Russian economy is becoming “Sovietized,” meaning that it has many of the hallmarks of the former Soviet Union, including the expropriation of private assets to finance public spending.

The ministers denounced a “total disregard for the social and economic well-being of the population.” The basis of this gradual transformation would be the reorientation of the economy, determined by the need to finance the war in Ukraine. “If Putin continues on this path, the long-term damage to the Russian economy will be significant,” they wrote in a joint article published in the British newspaper Guardian.

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The article was written by the finance ministers of Sweden, Denmark, Estonia, Finland, Lithuania, the Netherlands and Poland. Together, they argued that it is imperative for EU states to monitor the Russian situation. The main fear is that, following a ceasefire in Ukraine, Russia could subsequently reorganize its struggling economy for a second attack on Europe. They therefore call not to pull the plug on sanctions, but to tighten them. “By re-Sovietizing the Russian economy, Putin has put it on the path to its decline. Now it is time for the West to further increase the pressure,” the letter reads. “Supporting Ukraine and weakening Russia’s ability to wage war at every turn should be the top priority of every democratic country,” they wrote jointly.

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They accuse Russian President Vladimir Putin of “peddling the false narrative that the Russian economy is strong and its war machine is immune to Western sanctions.” They say: “This is a lie that must be refuted.” The ministers have claimed that sanctions and other measures are effective in weakening the Russian economy, but they call for persistence. “We must continue to increase pressure against the Putin regime and support Ukraine.” Polish Prime Minister Donald Tusk recently said that Europe is in a “pre-war era” similar to 1938, before the outbreak of World War II.

Sanctions circumvented

The eight countries’ central concern is evading sanctions, a practice the Kremlin is partly succeeding at. The ministers therefore urged allies in Europe and the United States to be more vigilant about their enforcement. They also called for support for a “rapid … operationalization” of a June G7 deal to raise up to 50 billion euros in loans to Ukraine using windfall profits from Russia’s frozen assets. The Kremlin said on July 23 it would take legal action over what it called the “theft” of its cash reserves, frozen after the invasion of Ukraine in February 2022. The finance ministers also called for tightening sanctions on energy, financial and technology products entering Russia.

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Both the technology’s “border and source countries,” including many in the European Union and the US, must “continue to work to close loopholes,” the letter’s authors insisted. This week, for example, the UK pledged to help crack down on “ghost fleets” of tankers that take oil from Russia and resell it at a price above the $60 price cap imposed by energy sanctions. This system only further fuels Moscow’s war machine.