What does that Kremlin bank account look like?

Written by Javed Iqbal

The editor of one of Russia’s most respected independent economic journals reluctantly admits that Team Putin is riding the sanctions storm well.

“We’ve had some numbers released for the first half of 2022, and the overall sentiment is much more upbeat than it was in March or April,” Peter Mironenko of “The Bell” told Fox News.

“We see the numbers. They are not manipulated. On the one hand, we see Economic slowdown in the second quarter. GDP was down about 4% and in the third quarter we will have about 7%. This is recession. But the scale is much more modest than it was said to be three to four months ago.”

And less dramatic than it was in 2009, when the war was not underway; it is also less than Russia’s central bank’s initial prediction of an 8-10% GDP decline this year. And there is more. Household income has fallen only 0.8% according to Mironenko. Right now there is even deflation. Some people have simply been intimidated by the political situation into spending less and saving for an even rainier day.


There are fewer foreign things to buy, so some Russians write it off, but in fact, imported goods can still be bought – between brokers and the surprisingly strong ruble, Mironenko says an iPhone will cost you about the same as it did a year ago. He himself was shocked to discover it when he recently bought one for his father.

The government, he says, has wisely avoided price controls, even though everything else they do feels like going back to the USSR. Unemployment is at a historic low. Some of this is artificial. The government has increased pensions and wages since the war began because it can.

“The sanctions did not reduce the revenues of the Russian budget oil exportsso the government has money,” said Mironenko, who recently went into exile due to the enormous pressure on the press.

Olielagertanke står på RN-Tuapsinsky-raffinaderiet, der drives af Rosneft Oil Co., mens tankskibe sejler videre i Tuapse, Rusland, mandag den 23. marts 2020. Større olievalutaer er faldet meget mere denne måned efter dykket i Brent-råolie priserne til mindre end $30 pr. tønde, med russiske rubler faldet med 15%.  Fotograf: Andrey Rudakov/Bloomberg via Getty Images <span class="ophavsret">Photographer: Andrey Rudakov/Bloomberg via Getty Images</span>” data-src=”https://s.yimg.com/ny/api/res/1.2/X9nfJNXbfW6n1WJhZCCk.A–/YXBwaWQ9aGlnaGxhbmRlcjt3PTcwNTtoPTM5Nw–/https://s.yimg.com/uu/api/res/ 1.2/cw.2vy26VPEQCOtzEsGBVw–~B/aD03MjA7dz0xMjgwO2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/fox_news_text_979/68dc56014fbec97129e34b3ad0ca06a1″/><noscript><img alt=Photographer: Andrey Rudakov/Bloomberg via Getty Images” src=”https://s.yimg.com/ny/api/res/1.2/X9nfJNXbfW6n1WJhZCCk.A–/YXBwaWQ9aGlnaGxhbmRlcjt3PTcwNTtoPTM5Nw–/https://s.yimg.com/uu/api/res/1.2/ cw.2vy26VPEQCOtzEsGBVw–~B/aD03MjA7dz0xMjgwO2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/fox_news_text_979/68dc56014fbec97129e34b3ad0ca06a1″ class=”caas-img”/>

Oil storage tanks stand at the RN-Tuapsinsky refinery operated by Rosneft Oil Co. as tankers proceed in Tuapse, Russia, Monday, March 23, 2020. Major oil currencies have fallen much more this month after Brent crude oil prices plunged to less than $30 per barrel, with Russian rubles down 15%. Photographer: Andrey Rudakov/Bloomberg via Getty Images Photographer: Andrey Rudakov/Bloomberg via Getty Images

“It will (have money) in 2022 and in 2023, and as we know, historically Vladimir Putin’s government was also very good, very careful about people’s personal income. His whole ‘prosperity legend’ is based on the constant increase in people’s personal income. Since 2000, it has been very much associated with rising oil prices.”

But still, Mironenko adds, Putin has to keep that prosperity project going, and as long as Moscow has the funds, it will use them to keep Russians in the black.


How long will it be, I ask Mironenko? He admits that sanctions work in theory, but says: “It’s a long process. Historically, there aren’t many examples when even the heaviest sanctions do their job in a year. I don’t think we’ll see any effects – policy changes within three to five years.”

The energy dance is a tricky one, according to Mironenko, who explains that oil is more important than gas to Russia’s coffers, so in some ways a commodity to be played with.

Kremls Spasskaya Tower og St. Basil's Cathedral ses gennem kunstobjektet i Zaryadye-parken i Moskva, Rusland 15. marts 2022. (REUTERS/Evgenia Novozhenina/File Photo) <span class="ophavsret">(REUTERS/Evgenia Novozhenina/File photo)</span>” data-src=”https://s.yimg.com/ny/api/res/1.2/BxACLVpPFe5CDTS72GgY3A–/YXBwaWQ9aGlnaGxhbmRlcjt3PTcwNTtoPTM5Nw–/https://s.yimg.com/uu/api/res/1.2/ 0Pt_qkIESz0spXnNom2e4A–~B/aD03MjA7dz0xMjgwO2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/fox_news_text_979/34e0fa555cd1f2ccca2e7b0db886994e”/><noscript><img alt=(REUTERS/Evgenia Novozhenina/File photo)” src=”https://s.yimg.com/ny/api/res/1.2/BxACLVpPFe5CDTS72GgY3A–/YXBwaWQ9aGlnaGxhbmRlcjt3PTcwNTtoPTM5Nw–/https://s.yimg.com/uu/api/res/1.2/0Pt_qkIESz0spXnNom2e4A- -~B/aD03MjA7dz0xMjgwO2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/fox_news_text_979/34e0fa555cd1f2ccca2e7b0db886994e” class=”caas-img”/>

The Kremlin’s Spasskaya Tower and St. Basil’s Cathedral seen through the art object in Zaryadye Park in Moscow, Russia March 15, 2022. (REUTERS/Evgenia Novozhenina/File Photo) (REUTERS/Evgenia Novozhenina/File photo)

Vladimir Putin started a game to reduce the flow of gas to Europe, ostensibly to see if it will make Brussels nervous enough to loosen the sanctions. Pain, apparently worth enduring for now. But when European ban on Russian oil starting at the end of the year, there may be a real flare-up of distress in Russia, and Mironenko will follow that moment closely.

Meanwhile, when it comes to public opinion, it’s not just the propaganda-soaking crowd in Russia that blames the West for the suffering they’re experiencing, even though the economy is currently apparently – if perhaps artificially strong. It is more difficult to have a life connected to the outside world, and for many educated and democratically minded Russians it is essential.

Mironenko says there is a lot of anger building up among those who feel shut out from the West, and also a lot of debate about how and where, from a moral perspective, one should live one’s life. So while the economy may be quite solvent at the moment, soul-searching and anxiety are dragging many Russians down.

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Javed Iqbal

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