The Washington Post
Today's WorldView
Adam Taylor
By Adam Taylor
with Sammy Westfall
Russian President Vladimir Putin, from the Novo-Ogaryovo state residence outside Moscow, chairs a virtual meeting on economic issues on Tuesday. (Mikhail Klimentyev/Sputnik/Kremlin/Reuters)
As the global glitterati schmoozes in Davos, Switzerland, there is one country whose absence is notable, if not a surprise. Russian officials are effectively persona non grata at the World Economic Forum in the Swiss mountain town, while Ukrainian figures like first lady Olena Zelenska speak to packed houses.
The symbolism is clear. Russia’s invasion of Ukraine almost 11 months ago made President Vladimir Putin and his allies toxic to this global elite. Russia has been showered with sanctions and export controls that seek to cut them off from the global economy, using a kind of systematic might to hinder the Kremlin’s war efforts and punish Putin’s allies.
But in the real world, has it actually worked? Far away from the parties in Davos, Putin on Tuesday used new government data to paint a surprisingly rosy picture of Russia’s economy. “The actual dynamics of the economy turned out to be better than many expert forecasts,” he said, staring at the screen during a virtual meeting on the economy.
Citing data from the Ministry of Economic Development, Putin said that the gross domestic product of Russia had declined between January and November 2022 — but only by 2.1 percent. He noted that “some of our experts, not to mention foreign experts, predicted a decline of 10 percent, 15 percent and even 20 percent.”
Initial calculations suggested that Russia’s economy had shrunk by 2.5 percent over the entire 2022, the Russian president said — significantly better than the 33 percent contraction in Ukraine’s economy last year. “Our task is to support and consolidate this positive trend,” Putin added.
For many outside of Russia, these numbers are confounding. The scale of economic firepower directed at Russia since Feb. 24 has been unprecedented for a large country, with the country’s banks banned from the Belgium-based SWIFT messaging system used in international transactions and sanctions on its central bank.
But Russian data does seem to suggest that the scale of the impact was less severe than many expected. Though Putin may not be at Davos, Russia is not completely cut off from the world either. The country’s current account balance — effectively a record of its trade with the rest of the world — surged over the past year in a way that would have implied a boom year in any normal time.
It’s possible that Russian data is faulty, of course. But many living in Russia or visiting have pointed out that life has continued roughly as normal, even if the departed McDonald’s has been replaced with a local burger chain (“Tasty — and that’s it”) and Western luxury goods purchases require a network of foreign buyers.
“If this is a crisis for Russia — which it is — it’s nothing like the turmoil of the early 1990s when the state, society and economy were all collapsing at the same time,” Alexander Titov, a Russian emigre and lecturer at Queen’s University Belfast, wrote for the Conversation after a recent return home.
There was disruption, Titov wrote, but it was mild even compared to what was seen early in the pandemic. “There’s no shortages, even of western goods such as whisky – the supermarket shelves are fully stocked,” he wrote.
Does this mean that sanctions haven’t worked? The short answer is no — but it’s more complicated than that.
Most importantly, remember that Western sanctions and export controls aren’t primarily designed to keep bottles of Johnnie Walker off a St. Petersburg shelf (though perhaps that might be a welcome secondary effect): They are designed to hinder Russia’s war effort in Ukraine.
As The Post’s Catherine Belton and Robyn Dixon reported late last year, scratch the surface of Russia’s economy and you’ll find that sanctions and other measures were hitting Russia where it hurt, “exacerbating equipment shortages for its army and hampering its ability to launch any new ground offensive or build new missiles, economists and Russian business executives said.”
It’s true much of the brunt of sanctions has been cushioned by Russia’s still-enormous energy exports, hence the positive accounts balance. But as Putin tried to use these exports to pressure and punish Europe, their power has been blunted. A new price cap that will soon go into effect looks set to hinder Russian exports further.
“Russia is still an energy power but its role has dramatically changed,” Vladimir Milov, former Russian deputy energy minister now living abroad, recently told the Wall Street Journal. “Russia will have a smaller market share in oil and gas, it will make less profit and it has lost some of its geopolitical leverage as well.”
That means less income for the Russian state going forward, even as its expenditure surges due to the invasion of Ukraine. Moscow posted a budget deficit of roughly $47.3 billion in 2022, according to official announcements — at roughly 2.3 percent of GDP, that’s one of the worst financial years in the country’s history.
Yes, that’s a lower deficit than the United States. But Russia doesn’t have a globally sought currency like the U.S. dollar, so it can’t just print more money without consequences. As its own sanctions on U.S. citizens have shown, Russia doesn’t have a ton of leverage in the worldwide economy — other than the diminishing power afforded by oil and gas.
In the long view, things don’t look rosy for Russia’s economy. Putin is correct that many predicted things would be far worse in 2022 — some economists told Today’s WorldView in March that they feared Russia’s economy could collapse, causing misery to ordinary civilians far outside Kremlin walls and unknown global consequences.
But Putin is wrong if he assumes a “positive trend” can easily be continued in the year ahead. The trajectory is more likely headed the other way. It’s very possible that sanctions will bite harder, revenue from oil and gas will decline further, the deficit will go deeper, and Russia’s battlefield resources will be stretched to breaking point.
How quickly that happens will depend on persistence in the West, where lax enforcement and deliberate evasion have helped Russia over the past year. That’s perhaps why Ukrainian officials and their supporters are at the World Economic Forum in Davos, where they are pushing against fatigue and apathy among allies. The Russian economy’s fate may not be decided in Putin’s embattled Moscow, nor even on the battlefield in Donbas, but over canapés and cocktails in Davos.
1,000 Words
Security forces protesters confronted each other in the hamlet of Lützerath, in western Germany, which authorities have razed to clear the way to expand a gaping open pit coal mine. There, Swedish climate activist Greta Thunberg was detained by police for a second time, according to climate justice group Alle Dörfer Bleiben.
The village became an emblem of Germany’s fallback on fossil fuels as the war in Ukraine signaled an end to cheap natural gas supplies from Russia, reports Berlin bureau chief Loveday Morris. (Federico Gambarini/dpa via AP)
Talking Points
• For the first time since a devastating Mao-era famine six decades ago, China’s population shrank. The population declined by 850,000 people, resulting in a total population of 1.4118 billion. It’s a sign, The Post’s Christian Shepherd writes, that the country is facing a looming demographic crisis worsened by decades of coercive policy that limited most families to a single child.
And, here’s how other countries have handled falling birthrates.
• Around 100 Ukrainian forces have arrived in Oklahoma to begin training focused on the Patriot air defense system, the Pentagon said. Oklahoma state Sen. Nathan Dahm (R) said last week that he filed a resolution to reject foreign soldiers on Oklahoma soil. On Tuesday, Dutch Prime Minister Mark Rutte also told President Biden that the Netherlands plans to “join what you are doing with Germany on the Patriot project.”
• A former commander in the Russian mercenary Wagner Group is seeking asylum in Norway, authorities there said. Reuters, citing the Russian human rights organization Gulagu Net, reported that Andrey Medvedev fled the Wagner Group after witnessing its capture and execution of members who deserted the group.
• A key suspect in a corruption case that rocked the European Parliament has cut a deal with Belgian authorities, agreeing to share details and name names from the alleged cash-for-influence scheme — and potentially exposing more European Union dirt — in return for a lesser sentence, report The Post’s Emily Rauhala and Beatriz Ríos.
•The Supreme Court faced weighty and seemingly novel questions as it considered whether the federal government can pursue criminal charges against Turkey’s state-owned bank, which is accused of helping to launder billions of dollars so Iran could evade U.S. economic sanctions.
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Divulging data
A covid patient at a hospital in Jinghong city, in Xishuangbanna Dai Autonomous Prefecture, in China’s south Yunnan province, on Jan. 9. (Noel Celis/AFP/Getty Images)
The World Health Organization’s new pressure campaign to get China to share covid data might be paying off. On Saturday, China’s National Health Commission (NHC) announced a significant revision of its data, raising the death toll in hospitals since severe coronavirus restrictions were lifted in December from 37 to nearly 60,000.
At the same time, Ma Xiaowei, director of the NHC, shared much of the same data with Tedros, according to a WHO readout of a call between them.
WHO officials are unsure why China released the data now — and in interviews were hesitant to take responsibility. The numbers appear to show an outbreak similar to the waves of omicron that washed over other countries a year ago. It also suggested that the new wave of infections had peaked — possibly reassuring news before the Lunar New Year, a period of intense holiday travel.
But there are also significant gaps, including in detailed regional data and information over time. The new data also lacks the detailed genome sequencing that the WHO has requested to track any new variants.
“It’s really sad to see the number of hospital-related deaths of 60,000 in the last month, but that should be considered the minimum,” said Maria Van Kerkhove, the WHO’s technical lead on covid-19. The data, she noted, does not appear to include deaths outside of hospitals.
Still, it is more information than China has typically provided. Before Saturday, Beijing had released little data on the outbreak, heightening concern that new variants could be spreading undetected.
Van Kerkhove said the release confirmed to the WHO one important thing: “It tells us that this data exists.”
The NHC stopped reporting daily case counts in December. From Nov. 1 to Jan. 13, the Chinese Center for Disease Control and Prevention reported fewer than 50 deaths, a figure analysts said was implausibly low.
J. Stephen Morrison, director of the Global Health Policy Center at the Center for Strategic and International Studies, called that data “ludicrous” and said it undermined China’s reputation. “No one believes it,” he said. “What’s the point?”
This winter, China lifted almost all of its harsh covid-19 restrictions, amid rare protests against them. Soon, authorities in many major cities, including Beijing, were reporting fast-spreading outbreaks. Satellite imagery of crematoriums suggests that China has suffered many more deaths than the government has acknowledged, The Post reported.
As reports drew an increasingly dire picture, the WHO increased pressure, publicly and privately.
It is a stark contrast with the WHO’s approach in early 2020, when its leader, Tedros Adhanom Ghebreyesus, praised China’s “transparency” on the new virus even as reports suggested that Beijing had deliberately undercounted cases and silenced whistleblowers.
Recently, Tedros repeatedly called on the Chinese government to report the number of hospital admissions and other information. The WHO urged China to share data on disease severity, the number of patients in intensive care and genomic sequencing. The WHO also held several private meetings with Chinese officials, in addition to their regular contact in Beijing, where the organization maintains an office.
The meetings have been professional, according to those involved, but the message is clear: Where is the data?
Van Kerkhove said the WHO and other officials know the quality of China’s health data, having seen it on visits in early 2020. “The scientific capacity in China is pretty incredible,” she said.
The WHO has no authority to compel China to release data — but it can keep asking. — Adam Taylor
Read more: China is finally divulging covid data. The WHO says there’s more to the story.
The Washington Post
January 17, 2023
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