After the Russian invasion of Ukraine, Moscow found itself immersed in a parallel conflict; More specifically, the competition for economic and political resilience against the West began. Russian President Vladimir Putin prepared Russia for sanctions such as those imposed by Russia after the annexation of Crimea in 2014. However, the austerity of Western measures far exceeded expectations. This destroyed the Russian economy and isolated citizens from traveling; It also suffered isolation from giants such as Apple and McDonald’s.
Both sides are now facing a test of their ability to maintain domestic support, the costs of which will be borne by regular citizens. More than a battle of willpower, it tests two opposing systems. Putin’s Russia, which united around nationalist extremism in 2014, relies on propaganda and repression. Western leaders increasingly turn to the liberal ideals of international norms and collective well-being that have been in global decline.
It is worth noting that the economic balance is highly conducive to the West. According to the study, a full-blown trade war would limit the gross domestic product of Western countries by 0.17 percent; However, Russia is devastating by 9.7 percent. Western leaders must maintain unity in more than 20 factional democracies. Also, to convince citizens from Canada to Bulgaria that the sharp rise in energy prices is worth the sacrifice.
Challenges and Risks
According to the director of research at the European Council on Foreign Relations, political cracks will inevitably open up in the West. At the same time, Putin must maintain control over both Russian society and the network of political power brokers who support him. If their tolerance for the rapidly growing war damage is lost before the West decides to do so, it could threaten the war and its power. It is impossible to predict the preliminary result; several economic indicators and political signals hint.
The secret weapon of Western countries is almost as important as their economic advantage, maybe the sudden desire of their citizens for concerted and united action. In polls, Europeans across the continent express a moral imperative to punish the Russian invasion. Russia now poses a direct threat to countries. In past controversies, European leaders often opposed the will of their constituents confronted Moscow, believing it was a grave necessity. Now such leaders see the number of Russian opponents growing.
Russia and Putin
Russian firms are in turmoil. It should hit Europe hard. Germany imports more than half of its gas from Russia, as does Austria. Some Eastern European countries rely on almost 100 percent Russian gas. Western Europe gets most of its gas elsewhere, from Norway and Algeria. Fossil fuels will become scarcer and therefore more expensive worldwide. Some German energy bills will already increase by two-thirds this year.
European governments are implementing energy subsidies worth 15.5 billion euros to alleviate the burden. If European countries do not radically recycle their gas import infrastructure; Or they may not get the fastest transition to renewable energy, they may run out of fuel next winter.
An economic shock can go beyond heating costs. Several European industries are already slowing production due to increased energy. Russia also exports a large portion of the world’s copper and other industrial materials.
Europe is already looking forward to a significant increase in refugee arrivals this summer. Western leaders are extremely sensitive to the anti-immigration response. According to experts, Putin belongs to a specific club of authoritarians, for whom popular support is a secondary concern. On the contrary, such leaders are gaining power through the support of political elites.
Polls conducted on Russian political elites in 2020 showed that the majority supported Mr. Putin for exactly the achievements that are now in jeopardy: stabilizing the country and gaining respect abroad. Sanctions could hurt Putin along with the elite, limiting his ability to distribute the booty they expect in exchange for support. There may be public unrest if it is aggravated enough.
The threat is not just anti-war protests, which are mainly associated with those segments of society that are already skeptical of Mr. Putin. The launch of the banks could lead to a sense of national crisis that will even overcome the Sanguine lie of the state media. According to experts, European disagreement is inevitable as taxes rise. Some believe Putin can overcome his hand-made crisis; However, some think that external pressures combined with domestic unrest could lead to Putin’s downfall in the long run.
Get the latest economy news, trading news, and Forex news on Finance Brokerage. Check out our comprehensive trading education and list of best Forex brokers list here. If you are interested in following the latest news on the topic, please follow Finance Brokerage on Google News.