The Revitalization of Russia’s Rust Belt

Note: This article is not a tacit endorsement of Russia, President Vladimir Putin, or the war in Ukraine, but rather an analysis of some surprising effects of the war. 

As the war in Ukraine rages on, one can only imagine that Russia has got the short end of the stick. While they have gained land, both from their 2014 invasion of Crimea as well as the 2022 invasion of Donbas, Luhansk, and other regions, Russia has faced serious repercussions. On an international level, they have been levied sanctions that have crippled its economy. Inflation induced by the war has caused prices to rise over 70% in just two years, forcing the Russian Central Bank’s hand, which has recently increased interest rates to 18.0% per year. In addition, hundreds of billions of dollars in assets held in Western banks have been frozen, further torpefying the already struggling economy. Russia has effectively become a global pariah— a shadow of what it once was in terms of political and economic power. Western countries no longer rely on Russia for energy, which has resulted in its fossil fuel export revenues nearly halving. 

But amidst all this chaos, the average Russian worker is fine— even happy with the outcome of the war. This isn’t due to Russia’s performance, which polls show only 39% of respondents offer unwavering support to, but rather a byproduct of the fierce war Putin has waged. While many sectors of the economy have suffered, manufacturing remains firm—if not stronger than it was before. As Moscow geared up for a grueling war, the government filled massive orders for weapons, fuel, clothing, and other goods, suddenly injecting billions of dollars into their dying manufacturing industry. Since then, business has been booming, with factory output up in 60% of regions and local increases in production as high as 27%. The benefits spill over to Russia’s overall economy as well, with GDP growth projected at 3% this year, outpacing the US and other western economies. The influx in demand has resulted in wages rising as much as 300% for the average worker, making them richer than before, even after adjusting for inflation. The rise in PPP for the average worker, coupled with the psychological effect of their rapid wage growth, has made many optimistic about the future, and prospects of the war. In fact, rewards have been so lucrative that 60 and 70 year old retirees are returning to the workforce, and being recruited at breakneck pace due to their experience. The manufacturing boom has spilled over to other parts of the economy, with Russia’s economic outlook looking its best since the war began, both from the perspective of experts, who , and the citizenry, where nearly 40% of Russians feel optimistic or excited about the country’s economic prospects compared to 18% in the United States. 

The surprising results of the war have far greater implications, especially on a global scale. First of all, Russia’s economic recovery has increased its self-sufficiency, severely undermining sweeping Western sanctions that ranged from freezing financial assets to food. Russia’s ability to weather these sanctions and come out relatively smoothly signals the failure of Western leaders’ approach to the issue, as sanctions have failed their purpose. Russia’s handling of this situation reflects positively on their future capabilities to remain functional despite heavy international pressure, especially since Russia is becoming increasingly cozy with North Korea and Iran: two powers that have not been on the best terms with the West recently. But more importantly, this is bad news for the West, where lawmakers are becoming increasingly hesitant to provide more aid for Ukraine. In the United States, politicians remain bitterly divided along ideological lines, with “America First” conservatives overwhelmingly against more funding. But skepticism over aid isn’t limited to Ukraine’s largest donor as of now, as Germany, the third largest donor to Ukraine, projected to halve its support as per the latest budget proposals for 2025. Absent American and German aid, Ukraine’s defense is anticipated to fall flat. 

The implications of a Russian victory in Ukraine can be devastating. A turnaround Russian victory could put Putin in a position of strength and emboldenment to invade Georgia, Moldova, and the Baltics, while also starting mass proxy wars, killing millions in the process. While this scenario is extremely unlike, it is very legitimate that Putin is emboldened by the continued resilience Russia has shown. Given his 85% approval rating, which has increased almost 15 percentage points since the initial invasion, Putin is likely to think that his actions are what the Russian people want. This will only further motivate him to consolidate his grip on power and continue his dictatorial rule. Since his major political opponents are either dead (Alexei Navalny, Yevgeny Prigozhin), exiled (Mikhail Khodorkovsky, Boris Berezovsky), or loyally by his side (Roman Abramovich, Oleg Deripaska), Putin has little pushback to continue his increasingly jingoistic approach to foreign policy. But more importantly, it could spell danger for post-Soviet states, regardless of their current alignment with Putin. Putin, eager to return Russia to its glory days, has openly expressed his desire to restore Russia’s empire that it has lost over time, alluding to his ambitions to annex other European countries in the future. While the Western world will certainly be ready to rally against Putin’s encroachments, the prospect of his emboldenment can push the world closer to global conflict, and potential nuclear annhialation. 

The surprising resurgence of Russia's manufacturing sector in the face of Western sanctions poses a significant challenge to the global order. While the Russo-Ukrainian war has not played out as the West expected, Russia's ability to weather the economic storm and even experience growth in key industries like manufacturing underscores its resilience and self-sufficiency. This development not only undermines the effectiveness of Western sanctions, but also emboldens Putin and increases the risk of further Russian aggression against its neighbors. The implications could be devastating, potentially leading to the expansion of Russia's sphere of influence and even the outbreak of wider global conflict. The world must remain vigilant and prepared to respond firmly to any further Russian provocations, as the stakes have rarely been higher in the post-Soviet era. The stability and security of Europe, and indeed the entire global system, may hinge on how this situation unfolds in the coming years.