Eugene Schumilkin will return to work on Sunday. To prepare, he pulled the familiar “M” out of his McDonald’s shirt and covered the “M” on his McDonald’s coat with a Russian flag patch.
“This will be the bread,” promised Mr. Shomilkin, who owns the equipment at a restaurant in Moscow. “Just another name.”
McDonald’s restaurants in Russia reopen this weekend, but without the Golden Arch. After the American fast food giant This spring was pulled out In protest of Vladimir’s attack. Russian President Putin bought Ukraine 840 Russian stores from a Siberian oil giant. According to him, since almost all the raw materials came from inside the country, the restaurants could continue to serve the same food.
This gambit may just work – it shows the amazing flexibility of the Russian economy in the face of one of the toughest barrage of sanctions ever imposed by the West. Three and a half months after the war, it became clear that sanctions – and The flood of Western companies Russia’s Voluntary Leaving – They have not been able to completely destroy the economy or provoke a popular backlash against Mr. Putin.
Russia has spent much of Mr Putin’s 22 years in power integrating into the global economy. It does not seem easy to open very large and intertwined business connections.
Certainly, the impact of sanctions will be profound and far-reaching, and the consequences will be new. Economists and businessmen say living standards in Russia are currently declining, and the situation is likely to worsen as import reserves dwindle and more companies are laid off.
Some of Russia’s efforts may go beyond Western standards. When the first post-embargo Lada Granta – a Russian sedan produced by Renault before the French automaker left this spring – derailed on Wednesday near the Volga plant, it lacked airbags and modern pollution controls. Or anti-lock brake
But the economic downturn is not as severe as some experts expected after the February 24 invasion. Inflation is still high, about 17 percent year-on-year, but has fallen since a 20-year high in April. Accurate measurement of factory activity, S&P Global Purchasing Managers Index, shows That Russian production expanded in May for the first time since the start of the war.
Behind the positive news is a combination of factors that favor Mr. Putin. Most importantly: the high energy prices that allow the Kremlin to continue financing the war while raising pensions and wages to appease ordinary Russians. The country’s oil revenues Are high 50% this year
Furthermore, Skillful work by the central bank It prevented panic in the financial markets after the invasion and helped the ruble recover from its initial collapse. Store shelves are often stockpiled because of the large inventories and alternative import routes created through countries such as Turkey and Kazakhstan – and the fact that Russian consumers buy less.
Even the new Lada Granta is less difficult than expected by observers: despite the lack of external components, it still comes with power steering and power windows.
“Everything is not as bad as expected,” says a Russian car website. Announced.
The survival of the Russian economy plays into Mr. Putin’s favor by reinforcing his view that Russia will stand up to the West’s determination to destroy it. He met with young entrepreneurs on Thursday in a Hall-style event, his latest attempt to show that he is eager to keep the economy afloat and foreign trade even when he was at war. He insisted that even if the West did not trade with Russia, the rest of the world would.
“We do not have a closed economy,” Putin told a woman asking about the impact of sanctions. “If someone wants to limit us to something, he limits himself.”
For the wealthy, luxury goods and iPhones are still widely available, but more expensive, being shipped to Russia from the Middle East and Central Asia. The poor are affected by rising prices, but will benefit from a 10 percent increase in pensions and the minimum wage that Mr. Putin announced last month.
Those most affected by economic change are in the urban middle class. Access to foreign goods and services is now more difficult, Western employers are stepping down, and traveling abroad is becoming more difficult and expensive.
But Natalia V. Zubarovich, an expert in social and political geography at Moscow State University, notes that many middle-class Russians have no choice but to meet lower living standards: at least half of Russia’s middle class, he estimates, works. For the government or for state-owned companies.
“Sanctions do not stop the war,” Zubarovic said in a telephone interview. “The Russian people will tolerate it and adapt, because they know they have no way of influencing the government.”
“Some of our previous assumptions were wrong,” said Chris Wafer, a longtime macroeconomic consultant focusing on Russia, who released a note to his clients last week. Inflation and shrinkage of the economy were lower than expected, the memo said. His company, Eurasia Macro-Strategic Strategic Consulting, revised its forecast to show a smaller decline in GDP this year – 5.8% instead of 7% – and also forecast a recession until next year. .
In a telephone interview, Mr Wafer described Russia’s economic future as “duller, weaker”, with lower incomes but still with basic goods and services available. For example, a large juice company, Warned Customers say the boxes will soon turn white due to a lack of imported paint.
“The economy is now almost on the verge of recession, which could prevent it from collapsing,” he said. “This is a more fundamental level of economic existence that Russia can maintain for a long time.”
On Friday, as inflation stabilized, Russia’s central bank cut its key interest rate to 9.5 percent – the level before the attack. On February 28, the bank raised it to 20 percent to prevent a financial crisis. The ruble, after falling sharply in the days after the attack, is now trading at its highest level in four years.
One of the reasons for the ruble’s unexpected strength is that global energy demand has increased since the epidemic. According to the Russian Ministry of Finance, in June alone, the Russian government expects windfall revenues of more than $ 6 billion due to higher-than-expected energy prices. said Last week
At the same time, Russian consumers are spending less – strengthening the ruble more and giving Russian companies time to create new import routes.
However, Russian officials acknowledge that the most difficult times for the economy may still be ahead. Central Bank Governor Elvira Nabiulina said on Friday that although “the effect of the sanctions has not been as severe as we initially feared,” it is “untimely to say that the full effect of the sanctions has been revealed.”
For example, it is not yet clear how Russian companies can acquire microchips used in a wide range of goods. In a meeting with entrepreneurs, Mr. Putin said one developer was “very concerned about our microelectronics.”
“So am I.” Honestly.”
The ties that bind Russia’s economy to the West and are now disappearing go back decades – sometimes more than a century. Aeroflot, the national airline, purchased a large number of new Boeing and Airbus aircraft and introduced itself as a transit transit airline for passengers between Europe and Asia. In the Ural Mountains, a factory partnered with Siemens, the German manufacturing giant, to produce modern trains to replace Soviet rusty warehouses.
Aeroflot, which has been banned from using European airspace, is now focusing on domestic routes and trying to switch to Russian aircraft – a process that has taken years. Siemens, which built telegraph lines throughout the Russian Empire in the 1850s and helped the country enter the industrial age, announced last month that it was leaving Russia.
“Sanctions are suffocating the economy, which does not happen all at once,” said Ivan Fdyakov, director of Infoline, a Russian market consulting firm that advises companies on how to survive under current restrictions. “We have only felt 10 to 15 percent of their impact.”
But in terms of food, at least, Russia is more prepared. When McDonald’s opened in the Soviet Union in 1990, Americans had to import everything. Soviet potatoes were too small to make fries, so they had to make their own fries. Soviet apples did not work for the pie, so the company imported them from Bulgaria.
But when McDonald’s went out of business this year, its Russian stores were receiving almost all of their supplies from Russian suppliers. So when McDonald’s, Which employed 62,000 workers in RussiaAnnouncing in March that it was suspending its operations because it could not “ignore the unnecessary human suffering that is unfolding in Ukraine,” one of its Siberian franchisee, Alexander Gover, was able to keep 25 of its restaurants open. Last month, he bought all of McDonald’s Russian business for an undisclosed fee.
On Sunday – Russia Day, a patriotic holiday – he will reopen 15 stores, including the former McDonald’s flagship, in Moscow’s Pushkin Square, where in 1990, Thousands of Soviets joined the ranks To taste the West, the chain will operate under a new brand that has not yet been revealed, although a new logo has been unveiled that is said to represent a hamburger and French fries.
According to the menu, the hash browns will be called Russian leaked No Big Mac will be offered to a Russian newspaper because it is a proprietary secret sauce.