After war broke out in Ukraine a year ago, amidst a slew of shop closures, sanctioned products and predictions about the ruble falling to rock bottom, there was a wave of panic buying in Russia. Many expected supply chains to fully collapse by the end of 2022 as internal stocks of this and that ran out.

Meanwhile pro-war Russians, or at least economic optimists, repeated the mantra that the world needed Russian oil and gas, and that Western companies could barely do without the vast Russian marketplace to sell their products in. Everything, they said, would return to normal. As of February 2023, we’re caught somewhere halfway between these two extremes.

Whatever sanctions the West is imposing, it would seem Russia is proving masterly in dodging them

As Andrey Nechayev, the former Russian Minister of Economic Development from 1992 to 1993, posted on Telegram recently, the Russian budget may well be cracking at the seams. The latest Ministry of Finance figures for January show that spending in Russia exceeded last year’s figure by 59 per cent, while profits fell by 35 per cent.

Yet things have certainly not played out as catastrophically as predicted a year ago, when GDP was forecast to plummet by at least 10 per cent in 2022 (some went as high in their estimations as to double that figure). As Putin crowed, Russian GDP has fallen by a mere 2.5 per cent; in 2023 it is projected to shrink by even less than that. Whatever sanctions the West is imposing, it would seem Russia is proving masterly in dodging them.

Despite the severe restrictions on trade, the Kremlin has developed a parallel import scheme, effectively circumventing any Western blockades. As early as March 2022, the government authorised retailers to import overseas products without the permission of manufacturers, enabling businesses to secure goods from middle men in ‘friendly’ third-party countries. Electronics and household appliances are now coming to Russia through countries such as Kazakhstan, while major Chinese computer manufacturers like Huawei and Lenovo have done nothing to stop parallel imports occurring.

Nor, in many cases, have the predicted ruinous price rises materialised: people are shopping less, many items are over-stocked, and there will even be discounts on certain items soon to help stimulate the market. Indeed, the average price of laptops has fallen by 30 per cent in 2022, due to overstocking.

Sometimes Russia has provided its own alternatives to Western products. The McDonald’s replacement Vkusno i Tochka, for example, brazenly offers its customers a Биг Мак (Big Mac) which looks very much like the original. Starbucks has been replaced by Stars Coffee, and there are now discussions about what to rename the German hardware chain OBI – possibilities include the charmingly Tolkienesque ‘OBBI’ and ‘HOBI’.

Yet these alternatives have been few and far between, with just one in seven departing Western brands substituted by a local one according to the Russian Association of Retailers. Half the shops in Russian shopping centers remain closed and, contrary to the hopes of many, Chinese companies are in no hurry at all to embrace the Russian market, fearing sanctions themselves. Nevertheless, there has been a number – albeit a very low one – of smaller companies dealing in goods such as spare parts for industrial equipment no longer supplied by the West which have been established to trade solely in Russia.

On the other hand, despite the fanfare of link-severing last February, not every Western company has departed Russia as expected. According to Vyacheslav Volodin, the Chairman of the Duma, up to 76 per cent of foreign companies have continued working in Russia. Having announced in March 2022 that it would suspend all further investing in Russia, Schlumberger, the biggest oil service company in the world, has not only remained in business there but has even grown: in the last quarter of 2022 it increased its dividends by 43 per cent. No doubt it will have also benefitted from the withdrawal of Baker Hughes and Halliburton, its two main rivals, scooping up some of their contracts in the process. All of this gives Russians the feeling that, despite the war, it is business as usual.

Despite the fall in GDP, unemployment in Russia hovers at 3.6 per cent. This very low rate, odd during a crisis, can be explained by various factors: mass emigrations from Russia following the outbreak of war last year, the ‘partial mobilisation’ of young men in September, and routine Russian issues such as ageing and population decline. According to the Central Bank, every second company in Russia has faced a staff deficit, the vast majority trying to maintain their number of employees by raising salaries.

Many Russians are state employees who, for the moment, don’t need to worry. Of Russia’s working-age population – about 70 million people – about a third receive their salary from the state budget. To this we can add the 43 million Russians claiming a pension. Therefore, almost half of all Russians are dependent on the state for their income, and thus see their future wellbeing as directly related to that of the state.

Civil servants and those working in any kind of law enforcement feel secure: the state needs them and will continue to. Yet things are much less rosy for those in the private sector. While big companies had a margin of error, smaller concerns have quickly withered: imports have dried up and advertising on social networks like Instagram has become impossible after being blocked and banned by the Kremlin. Many of these companies have relocated abroad; those who have stayed are trying to keep afloat with varying results.

This has all had an impact on people’s feelings about the war. State employees have no particular economic interest in seeing it end, as their situation seems unthreatened for the time being. You might expect private sector works to feel very differently but most don’t, with the belief that an end to the war in Ukraine will not see sanctions lifted immediately or companies returning at once to the Russian market.

Any hopes that hitting the economy could deter Putin or Russia from the path of war have proved false. Yes, sanctions, particularly involving high-tech components, have had an impact both on military production and civilian life: a shortfall in the right computer chips, for example, has seen biometric passports suspended from 2 February this year. Yet the high-tech rockets that Russia is now unable to produce are offset by the sloppier ones it can make in abundance.

Cutting oil and gas revenues has also hit Russia financially, yet there are numerous schemes set up to dodge the red tape and restrictions. The likeliest future is a race between the West and Russia to impose and evade sanctions respectively. While the window of opportunity for Russia is closing, it is doing so all too slowly.

As an anti-war Russian, I have mixed feelings about all this. A year ago I wrote about the experience of owning an apartment which had virtually halved in value. With the ruble now standing at about 88 to the pound (last year it was more like a neat 100), this is no longer the case.

On the other hand, one feels an almost gleeful,  masochistic delight at any sign of a downturn  – ‘the worse, the better’ as Lenin once said – hoping it might force an end to the war. But the path to that conclusion, if it ever comes, will be long and painful. As the father in one Russian legend replied when his kids asked hopefully whether the rising price of vodka meant he’d be drinking less:

‘No, dear children. It means you’ll be eating less.’