Despite Putin’s claims, Russia increasingly taking on traits of ‘failed state’ – Vlasiuk
Statements by Russian President Vladimir Putin about Russia’s economic resilience and the opportunities allegedly created by sanctions do not reflect the country’s actual economic situation, according to Ukraine’s Presidential Commissioner for Sanctions Policy, Vladyslav Vlasiuk.
Speaking to Ukrinform, Vlasiuk challenged Putin’s remarks at the St. Petersburg International Economic Forum.
“At SPIEF, Putin traditionally speaks about a ‘stable future,’ expanded opportunities created by sanctions, and new partnerships. But if we set aside the political slogans and look at the numbers, the picture is the opposite. Contrary to the optimistic rhetoric of Russia’s leadership, Russia is steadily acquiring the status of a ‘failed state.’ While the Kremlin talks about economic resilience, Russian budget revenues have fallen by 40% compared to last year, despite high oil prices. Meanwhile, the budget gap has already exceeded $80 billion,” Vlasiuk said.
He emphasized that while Putin criticizes Western countries for running budget deficits, 71 of Russia’s 85 regions ended last year with budget shortfalls, with their combined deficit surpassing $34 billion.
“Putin claims that sanctions have given Russia a ‘broader room for maneuver’ and created new partnerships. Yet the best indicator of confidence is investment. Today, the share of foreign capital in Russia stands at just 0.01%,” Vlasiuk noted.
According to him, this demonstrates that even potential partners are reluctant to invest in the Russian economy.
“Putin speaks of new opportunities for business, but more than 30% of Russian entrepreneurs are preparing to scale back their operations, while another 30% are considering moving into the shadow economy. The reasons are increasing tax pressure and widespread internet shutdowns,” he said.
The presidential adviser added that Russia’s business climate indicator has turned negative for the first time since 2022, while the share of non-performing loans has risen to 12%.
At the same time, Russians and businesses are increasingly switching to cash transactions, which he said reflects declining confidence in the financial system.
“Against this backdrop, the Central Bank of Russia is preparing to remove 11 regional banks from the market, as their financial problems can no longer be concealed,” Vlasiuk stated.
He also noted that Russia’s foreign trade surplus has nearly tripled downward since the start of the full-scale war, shrinking from $337 billion to $125 billion.
According to Vlasiuk, some of Russia’s largest exporters – Lukoil, Gazprom, Novatek, and Severstal – are seeing profits decline. He added that Rosatom is seeking an additional $7 billion to complete its flagship overseas project, the Akkuyu Nuclear Power Plant in Türkiye.
“The main contrast at this year’s SPIEF is that the more optimistic the statements from Russia’s leadership sound, the worse Russia’s economic indicators become,” he said.
“Despite years of Kremlin efforts to convince the world that sanctions do not work, sanctions pressure is increasingly restricting Russia’s access to investment, technology, financial resources, and traditional export markets. Falling budget revenues, declining foreign trade, the disappearance of foreign capital, and worsening business sentiment all indicate that sanctions have a cumulative effect and are gradually weakening the economic foundation of Russia’s war machine,” Vlasiuk added.
As previously reported by Ukrinform, Apple confirmed that the Russian messaging app Max had been removed from the App Store due to Western sanctions.