Assessments of the state of the Russian economy have tended to one of two polar positions: Russia is paying terrible costs, losing “talent” and access to former Western partners and markets, or Russia has shown remarkable resilience, took a surprisingly small GDP hit for 2022, and consumers are carrying on more or less as usual, save for a few expected trouble areas like car parts where conditions are improving.
On my travels, I had a brief chat with a Russian in his 30s, who works for a major supplier to hospitals of consumables like gloves and catheters.1 He’s in the buying/sourcing area and is fluent in an impressive number of languages. Half of his family is in Ukraine, half is in Russia, and he blames the war on Putin.
He contends that the war mobilization is having an impact on the structure of the economy. He claims funding for health care has been cut, as shown by hospitals greatly extending payables to his company and other vendors. He also said spending on education had been cut, but we didn’t speak for long enough for me to get him to provide supporting factoids.
I have no reason to doubt his statement that his company is suffering from a slowdown in payments from hospitals. It’s an admission against interest. And back in my consulting days when I was doing competitor research, when insiders made remarks like that, they were reporting what was common knowledge in their field but hadn’t yet leaked out to the wider world.
This Russian businessman added that this diversion of resources to military would set Russia back in the longer term. He felt the country was still playing catchup (I didn’t have the opportunity to get him to unpack that; I assume he was referring to the long recovery from the disastrous 1990s).
It makes sense that the shift to a war footing would wind up diverting resources away from some sectors, particularly since Putin had drunken a bit of neoliberal Kool Aid is fiscally orthodox. So comparing this account to that of Gilbert Doctorow, iEarlGrey and the Alexes of The Duran, who have contacts in Russia, one can also infer that the Russian government has made some effort to preserve normalcy in the consumer sector and has engineered cuts in some “wholesale” sectors.
Any informed reader input very much appreciated.
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1 This was a completely happenstance encounter. I had gone to a mall with a huge grocery store as port of my “seeing how the locals live” process. A friend here had airily said I could get a cab back to my hotel.
I stumble out of the mall and of course, even though the street is busy, there are hardly any cabs. I cross the street in the hope pickings might be better on the other side but they aren’t.
Some young-ish men are standing by parked motorbikes. I accost one and ask where can I get a cab. He said they are generally already carrying rides and I should use the app Bolt to call one. I said I wasn’t set up to do that.
I step away and study the traffic to see if I might have some unusual luck. After a couple of more minutes, I pull out my phone and start dialing the hotel to see if they can get a cab for me.
The man I had quizzed speaks up: “I’d offer you a ride on my scooter but you don’t seem the type.”
I say “You’re right, I broke my cheekbone in a bike fall.”
He then says, “I’ll call a cab for you.” It was ten minutes for it to arrive and I chatted him up in the meantime.