Russia political/pandemic update: raising the stakes beyond the point of no return
September appeared to be another very peculiar month in Russia as after seven months, the country’s “military operation” in Ukraine abruptly turned into something very different when partial mobilization was announced and the country’s authorities recognized the Donbas region together with some neighboring areas as part of Russia. After the shock that the society and the economy experienced at the start of the “operation”, another shock came at the end of September. The effects of this shock are likely to be even stronger than the first one, even though the ongoing militarization of the country has become more or less routine and can only increase in the foreseeable future. The uncertainty in which Russia plunged this year is not going to ease as plans of the Kremlin remain unclear, especially as even the “friendly” or “neutral” countries, such as China, India, Serbia, Turkey, Kazakhstan, and quite possibly Belarus, won’t recognize the newly absorbed territories as part of Russia. Pressure on the latter will broaden and can only become stronger.
Recent decisions of the Russian authorities will also have quite a visible short-term economic effect as the consumption of 300K people, who are called for military service, will decline. It won't be surprising to see hundreds of thousands of people having fled the country by year-end, i.e., those who are at risk of being brought into the military, and their family members. The overall effect on household consumption may also be quite strong as the desire to spend and invest in real estate may fall dramatically.
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