‘The damage is done’: Russians face economic tipping point | Russia

As markets opened in panic on Monday, many Russians rushed to local cash machines in Moscow to collect their savings before the damage worsened.

“He said they had dollars, so I came here immediately,” Alexei Presnyakov, 32, said, pointing to an app from Russian bank Tinkoff that said he could withdraw hard currency. Twenty people lined up. “Yesterday [the rate] was 80 years old [to the dollar]. Today it’s 100. Or 150.

“I just made a spontaneous decision today that I would ask [out of work] and go around until I got all my money out,” he said. “Before, it was worth zero.”

Within minutes, however, word spread through the queue: the dollars were gone.

Almost half the queue is gone. “Who needs rubles? a woman said sarcastically as she walked away.

From malls to boardrooms, Russians were trying to find their footing on Monday in what the Kremlin described as the “altered economic reality” the country now faced following sanctions on the Central Bank of Russia. Russia and other key financial institutions. There were signs that something extraordinary was happening: the Moscow Stock Exchange, Russia’s largest stock market, suspended trading until March 5.

With its reserves frozen, the Central Bank announced that it would more than double its main interest rates to 20%, the highest in this century, and force major exporting companies, including major energy producers like Gazprom and Rosneft, to sell 80% of their foreign currencies. income, effectively buying rubles to support the exchange rate.

But that did little to calm the frayed nerves at Moscow’s Metropolis Mall, where there were signs Russians were rushing to turn their cash into consumer goods before prices spiked. At a popular electronics store M.Video, an employee said the ruble prices for iPhones were “the same for now” but “they could change at any time.” “I would buy now,” he said.

While there was a shock in the streets, the mood within the business community was even more austere. Several mid-sized business owners said Russia’s invasion and subsequent isolation made their businesses unprofitable overnight.

One, owner of an advertising services company with 100 employees, said he was about to tell his employees this afternoon that he was leaving the country for Armenia with his wife and children. two sons.

“I will tell them that we are entering a crisis that we have never experienced before,” he said. “It’s like flying in an airplane without engines where the engines are on fire.”

His business, which handles contracts for international brands like Pepsi and automakers like Volkswagen, was booming in January 2022, a record month for them. Now many of these brands were withdrawing from the Russian market and his business was shrinking “tremendously”.

Another business owner with hundreds of employees in the food and drink and tourism industries felt he was completely in the dark about the future under Vladimir Putin.

“We have no fucking idea what he’s going to do next,” he said. “Nobody in the business world has a clue anymore. Everyone is so depressed. I’ve been through so many economic crises here, the pandemic being the latest.

“But there was always a reason to keep fighting for your business,” he said. “Now I no longer see the light at the end of the tunnel. Even if peace is achieved, the damage is done. How can we reverse it? »

There was a feeling on Monday that this crisis was crossing the point of no return, as Russian bombers began to fly over Ukraine and rocket artillery began firing into populated neighborhoods in Kharkiv, a Russian city more of one million inhabitants.

Even leading Russian businessmen, including powerful oligarchs, seemed disturbed by the instability caused by the invasion, as well as the extraordinary measures taken to support the ruble.

Billionaire businessman Oleg Deripaska called for peace “as soon as possible” in a Telegram post on Sunday. On Monday, he attacked the Central Bank’s decision to raise rates, targeting his longtime rival Elvira Nabiullina, head of the Central Bank.

“A high rate, the compulsory sale of foreign currency … this is the first test of who will really be responsible for this banquet,” Deripaska wrote. “I really want clarity and intelligible commentary on economic policy for the next three months.”

Come evening, the response was even more draconian measures, including strict limits on money transfers abroad. These were announced after a funeral meeting between economic officials and Vladimir Putin, who said the sanctions had been imposed by the Western “empire of lies”.

For many Russians, who felt European by the food they ate and their way of life, it is clear that Monday marked a time when war came.

“I think people are going to be afraid to spend money,” said the entrepreneur who owns restaurants and tourism businesses. “We left communism 30 years ago, we got used to having a lot of comforts that you also see in the West. All this progress can disappear. We are no longer a member of the international community.

About Meredith Campagna

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