Middle-class Muscovites have found solutions and can now buy Western brands online with little difficulty.
Russia is already in the constellation of presidential elections in March, and the campaign to re-elect the Russian president needs good news for voters whose lives are affected by the consequences of the intervention of Russian forces in Ukraine.
The Russian economy has not collapsed under the unprecedented sanctions of 2022, as some predicted. Oil and gas sales to the West have plummeted, but higher energy prices have reduced costs and Moscow has found new buyers in Asia.
The ruble depreciated sharply in 2023, but has stabilized since then. Massive public spending on the war created jobs in the meantime.
Inflation remains stubborn and is expected to slow in 2024 as the central bank keeps interest rates high to combat it, but Putin was able to boast last year, not improbably, that the economy had grown by more than 3%.
Russia still has to import many products, which a weakened ruble makes more expensive. But the non-poor seem able to absorb the price increases, at least for now.
And of course, the consequences are not the same for everyone. The parties in the Russian capital continue for those who would normally be skiing in the French resort of Courchevel this season.
"They know they won't be allowed back in the French Alps for 25 years," notes a WSJ reporter, but "until then they can go to Dubai or party here."
Products and stores
Although there was a supply shock at first when Russian banks were first cut off from international transfer systems, middle-class Muscovites have found solutions and can now buy Western brands online with little difficulty.
USmall, an online marketplace, lists iPhones and Ralph Lauren children's clothing in rubles, which can be purchased from third-party vendors with Russian bank cards.
Moscow stores are well stocked with branded products. Most Western luxury brands stopped shipping to Russian stores in 2022, but in stores like TSUM, the Russian equivalent of Harrods, just before Christmas, a salesperson proudly showed customers the latest bags from Gucci, Chanel and Louis Vuitton.
Bought in Europe and arriving in Russia, probably in the luggage of individual buyers, there were not too many of them on the shelves. But they were enough to justify the inscription "Collection 2023-24".
Some of the items on display were used. There's even an app the store has developed to make it easier for Russian customers to resell unwanted luxury goods.
Even a second-hand Gucci bag isn't exactly cheap, but because it's priced in rubles, fluctuations in exchange rates can make it, by Muscovites' jaded logic, a bargain in euros.
Beyond the flowing champagne and expensive goods for the middle and upper financial classes there are signs that the invasion of Ukraine may have disrupted the Russian economy more severely than the image of department stores in Moscow suggests.
Salad Olivier, a mayonnaise recipe made from root vegetables, sausage and hard-boiled eggs, is a staple on every table during the holidays. This winter the price of eggs suddenly skyrocketed (no one is sure why, but it may be because farms have been short of labor since so many workers have been drafted or left the country).
In some areas people cannot buy a box of six eggs and have to buy them individually. One retiree even put it to Putin during the president's annual year-end call with the public. Putin promised to look into it.
Towards the end of last year, the central bank released data that confirmed skeptics' suspicions: Russians were exchanging their rubles for hard-currency cash in a volume not seen since the first, panic-stricken months of the war in 2022.
This activity is not a sign of concern as anecdotal evidence suggests that some people want to convert their rubles into dollars so that they can “attack” assets when the ruble, the local currency, takes one of its short-term plunges. Still others also seem to want to keep their savings in euros or dollars.
Savings in Armenia and Kazakhstan
On the face of it, this is a risky thing: Russians are theoretically cut off from the Western banking system, and a stash under the mattress is vulnerable to theft.
But there is also something else. Russians have begun transferring hard currency savings to new bank accounts in Armenia and Kazakhstan.
Some Western websites block access to Russian browsers, but middle-class professionals in Moscow can use a virtual private network (VPN) to hide their identity and move dollars freely online.
Since the start of the war, Russian authorities have blocked many foreign websites such as Facebook and Instagram. VPNs have become a lifeline for Russians who want to consume information outside the officially sanctioned narrative.
Authorities have clamped down on VPN providers, making these connections increasingly unstable. There are also quite a few middle class Russians who have bought their own server space in Western Europe to keep their internet traffic safe.
If they use a VPN to hide their identity, middle-class professionals in Moscow can now use and trade dollars freely online.
Through such elaborate maneuvers, Moscow's elites managed to keep their lives reasonably comfortable.
Source: ot.gr