The war that Vladimir Putin started against Ukraine was supposed to end in 3 days, but it will soon be 3 years since the full-scale invasion. Against this background, oil thefts in Russia are an indicator of the country's economic condition, writes the German newspaper Der Tagesspiegel.
As Russia increases its defense spending for the war in Ukraine to record levels, other industries suffer from an extreme labor shortage. The numerous oil factories in the federation are particularly affected. This seemingly ordinary product has become a luxury item and is increasingly popular with thieves.
Surveillance cameras at a grocery store in Yekaterinburg record two masked men breaking into – one heads to the cash register with cash, while the other heads to the oil shelf. They leave with 20 kilograms of oil. This scene, which is not an isolated incident and is on the verge of becoming a trend, illustrates the problems of the Russian military economy. Inflation is extremely high, there is no labor force, and the Kremlin's narratives about the "growth of the Russian economy" are total nonsense, because the production of tanks and missiles does not have a positive impact on the basket of the average citizen.
In many stores, oils are now stored under locks. Oil has risen in price by 26 percent compared to the previous year. The massive increase in defense spending is also to blame. Russia plans to spend the equivalent of about 130 billion euros next year, a record amount. Employment is high in the arms factories, but this is directly reflected in other sectors that lack workers.
Putin's spending policy for his invasion of Ukraine is fueling high inflation in the country. Experts point out that you can't fight inflation and wage war at the same time.
Putin's wartime economy is actually only making life even worse for ordinary Russians. Hundreds of thousands of working-age men have fled Russia to avoid being drafted into the army, and Putin's humiliation has reached the point where he is importing oil from the United Arab Emirates and Turkey to temporarily calm rising prices. And against this background, pro-Kremlin media are lying to Russian citizens about how people in the West are starving and experiencing financial difficulties.
The Moscow Times points out another paradox - while Putin's regime continues to publicly disapprove of the supply of Turkish weapons to Ukraine, it has no objection to supplying oil from the same Turkey. “The butter Armageddon is escalating. We wouldn't be surprised if butter repeats last year's situation with eggs“, economists warn. In 2023, the price of eggs soared so much that the authorities were forced to import this commodity from abroad.
Butter robberies continue in Russia.
— Anton Gerashchenko (@Gerashchenko_en) November 5, 2024
A store called “Milky Place” in Yekaterinburg was targeted – the assailants took all the butter, a few chocolate milkshakes and some cash from the register. https://t.co/rVoy71gqoN pic.twitter.com/a4aZrngW8G
Although butter has become the latest symbol of Russia's inflationary woes, it is not the fastest-growing food product. Potato prices have jumped nearly 70% since the start of 2024.
Russia is now spending more on defense than at any time since the Cold War. The Russian Central Bank (RCB) announced late last month that it was raising its key interest rate from 19 percent to 21 percent — the highest level since 2003 — in an effort to rein in high inflation.
The price spike is creating headaches for Putin, who is trying to balance the Kremlin’s military ambitions with a desire for domestic stability.
In the city of Kirov, the situation is worse than national statistics suggest, Fortune reported, citing locals. Basic products such as milk, butter, eggs and bread are at least twice as expensive as last year, she said. Russian prosecutors have launched an investigation into price hikes by dairy producers and have promised to respond. Prime Minister Mikhail Mishustin has ordered the Agriculture Ministry to ensure that there are enough fruits and vegetables, and Deputy Prime Minister Dmitry Patrushev has called for daily monitoring of the food market and measures to stabilize the situation. All this noise is being made so that the population can associate food problems with the actions of producers and traders, rather than with the consequences of the ongoing war with Ukraine.
The weakening ruble and the disruption of traditional supply chains due to war-related sanctions are further straining the Russian economy. While the war in Ukraine has drawn workers from every industry to serve in the military, agriculture has been among the hardest hit. The Agriculture Ministry has estimated a labor shortage of 200,000 (the actual numbers may be much higher). Limited opportunities to expand domestic production due to staff shortages and outdated technology have made Russia more dependent on imports. The country has started importing butter from Turkey and the United Arab Emirates, while Azerbaijan has helped address egg shortages.
The Agriculture Ministry, the Ministry of Industry and Trade, and the Federal Antimonopoly Service of Russia have recommended that food producers and retail chains reduce prices on certain types of goods. “The main instrument of power is force. "The authorities have a lot of experience in forcing manufacturers and retail chains to adapt and adjust," said Tatyana Stanovaya, an analyst at the Carnegie Endowment for Eurasia. But coercive pressure is not very effective and is only temporary.
Putin, unlike many previous occasions at the Valdai Discussion Club, did not give details about the Russian economy. He did not even mention inflation in the country. One could try to explain this omission by saying that Valdai is a forum for security and foreign policy, not economics. However, Putin talks a lot about how bad the European economy is and what economic course the new US administration should take. That is, The real reason Putin avoids talking about the Russian economy is that it is not doing too well. The Russian Central Bank has raised its key interest rate to 21 percent, and the bank's governor, Nabiullina, has noted a rapid rise in consumer inflation of over 20 percent. These developments undermine Putin's basic social contract with the people: I give you stability and prosperity, and you obey my orders. Glorious patriotism is being used as a cover or sugarcoating of the bitter reality.
Against this backdrop, the European Parliament has called on the EU to deal with Russia's "shadow fleet". In a resolution adopted on Thursday, the European Parliament calls for more targeted measures against these vessels in the next EU sanctions packages, naming all individual vessels as well as their owners, operators, managers, accountants, banks and insurance companies.
Members of the European Parliament are urging the EU and its member states to ban all imports of Russian fossil fuels, including liquefied natural gas. Pointing to the need for much stricter enforcement of current EU sanctions, the text also says that the EU should seriously review its bilateral cooperation with third countries that help Russia circumvent existing EU restrictive measures if diplomatic efforts fail.