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Russia’s economy becomes a war economy with billions in expenditure

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Russia’s economy becomes a war economy with billions in expenditure

According to experts, Russia risks losing the support of large parts of the population as a result of the economic slump.
Baz Ratner/Reuters

Russia moves to an all-out war economy while the invasion of Ukraine drags on and progress falters.

International relations expert Christoph Bluth pointed to the impact of military spending on Russia’s economy.

The effects of the war are now being felt by ordinary Russian citizens, he said.

We’re currently testing machine translations of articles by our US colleagues at Insider. This article has been automatically translated and checked by a real editor. We welcome feedback at the end of the article.

Russia moves to an all-out war economy as the invasion of Ukraine takes its toll on the economy.

According to Christoph Bluth, Professor of International Relations at the University of Bradford, they cost military spending the Kremlin about 83.5 billion euros per year. This is based on an estimate by German Society for Foreign Policy out. These costs correspond to about five percent of Russia’s gross domestic product (GDP). In addition, Russia is fighting Western sanctions.

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The country has stepped up efforts to produce even more military goods. In addition, the government and Russian banks offer the gun manufacturers extensive loans to, such as the “Economistreported.

Population feels the crisis of the Russian economy

But the effects of war are now also noticeable for the normal citizen, according to Bluth. Reason: Russia had to economically replace many goods that are normally supplied by Western countries. Half of the Russians surveyed by the research firm Romir complained about the quality of the substitute goods.

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“The The Kremlin performs a delicate balancing act, diverting significant resources to the military and related industries. At the same time he tries to minimize the break in the general economy. Because this carries the risk of losing the support of large parts of the population,” said Bluth in an article for “The Conversation” on Wednesday.

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“Common Russians – those who have not lost loved ones on the battlefield or in exile – remain relatively calm in everyday life. But a longer, more intense conflict that requires a shift to a total war economy in Russia is something else entirely,” he later added.

According to experts, pressure on Moscow’s financial situation has been increasing since Russia began its “special military operation” in Ukraine last year. The invasion has that The country’s budget deficit widened. At the same time, it has forced Russia to more dependent on other countries while attempting to circumvent western trade restrictions.

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Some experts predicted 2023 growth of the Russian economy in advance. But these estimates are based on “handpicked” figures from Russia’s central bank, Yale researchers said in April. They argued that unpublished statistics paint a far bleaker picture of Russia’s situation. This includes, for example, capital flows in and out of the country.

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