Putin distorts facts about Russia's economy to conceal real problems – ISW

Russian leader Vladimir Putin is attempting to present the Russian economy as "stable" and growing, but the reality tells a different story. Rising inflation, high interest rates and weak economic forecasts are undermining his claims.

Source: Institute for the Study of War (ISW)

Details: Putin continues to portray the Russian economy as "strong and stable" despite mounting issues. While acknowledging that inflation has reached 9.2-9.3%, he shifted blame onto the Central Bank of Russia, accusing it of improperly managing interest rates. The current rate stands at 21%, with experts predicting a further increase to 23%.

Putin's attempts to shift responsibility to officials demonstrate his inability to recognise the impact of Western sanctions and economic pressure. His claim that Russia remains a leading food exporter is particularly telling.

Quote: "Putin claimed that Russia is able to ‘stand confidently on its own two feet’ in terms of its economy and noted that Russia remains one of the world's main food exporters, neglecting to mention Russia's continued illegal export of stolen grain from occupied Ukraine."

Details: ISW analysts believe that Putin's claims about the Russian economy are intended to divert attention from the country's real economic problems. Meanwhile, The Economist highlights that, despite the challenges of war, Ukraine is demonstrating a level of stability that remains out of reach for the Russian economy.

According to The Economist, the Ukrainian hryvnia exchange rate remains stable, with Ukraine's GDP expected to grow by 4% in 2024 and 4.3% in 2025. The country's interest rate is currently at a 30-month low of 13.5%, a stark contrast to the economic situation in Russia.

To quote the ISW’s Key Takeaways on 19 December:

• Russian President [sic] Vladimir Putin said that he should have violated the ceasefire he had imposed on Ukraine in 2014 by launching a full-scale invasion even earlier when asked to reflect on his 2022 decision to attack.
• Putin insisted that negotiations with Ukraine must be based on the same demands he made before the invasion and at the moment of Russia's greatest territorial gains, despite the fact that Ukraine has secured Kyiv and liberated much of the territory his forces held at that time.
• Putin's insistence on Ukraine's complete surrender reflects his belief that Russia is winning and will outlast Ukrainian and Western resolve. Putin will not likely accept a lesser settlement unless Ukrainian forces inflict other significant battlefield setbacks on Russia and demonstrate to him that he cannot win militarily.
• Putin reiterated the false narrative that Ukrainian President Volodymyr Zelenskyy's presidency is illegitimate, in part, to blame Ukraine for delaying negotiations and garner support for full Ukrainian capitulation among a Russian population that increasingly wants the war to end.
• Putin continues to justify his decision to prioritise Russian offensive operations in Donetsk Oblast over expelling Ukrainian forces from Kursk Oblast.
• Putin is apparently embarrassed to admit his need for North Korean forces to push Ukrainian forces out of Russian territory, despite his openness about the Russia-North Korea relationship.
• Putin continues to fixate on the Russian "Oreshnik" ballistic missile as part of his non-nuclear deterrent aimed at simultaneously forcing the West to make decisions favourable to Russia and providing Putin with an off-ramp from his failed nuclear sabre-rattling narrative.
• Putin's boasting about Russia's military capabilities ignores the reality of the serious and unsustainable losses that Russia has suffered to advance relatively more rapidly in Donetsk Oblast in recent months.
• Putin continues to falsely posture the Russian economy as strong and stable while deflecting blame for economic issues onto the Russian Central Bank.
• Russian forces recently advanced near Kupiansk, Toretsk, Kurakhove, Vuhledar, Velyka Novosilka, and Robotyne.
• Russian President [sic] Vladimir Putin continued efforts to evade blame for ongoing systemic payment issues impacting Russian service members fighting in Kursk Oblast caused by his decision to downplay Ukraine's incursion into the region as a "counterterrorism operation" by scapegoating the Russian Ministry of Defence.
• Russian President [sic] Vladimir Putin called on Mariupol occupation officials to redistribute illegally confiscated Ukrainian apartments during his annual Direct Line televised press conference on 19 December, signalling Russia's continued efforts to forcibly repopulate occupied areas of Ukraine with Russians to fundamentally alter Ukraine's demographics.

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