While Russia is restricting access to Western news sites, many Russians are still using virtual private networks — known as VPNs – to get around the block. Demand for these services has been higher than usual since the start of the Ukraine invasion.
The cost of the bans goes beyond the loss of rosy GDP figures that ignore a diminished quality of life for ordinary Russians.
In the past year, Russia has faced a wave of Western sanctions that targeted banks and wealthy Russians. But despite those restrictions, the lives of ordinary Russians haven’t changed much. There isn’t a mass unemployment crisis, and there aren’t lines at failing banks. The assortment at supermarkets is mostly the same, with international brands still available and local substitutes for them. The exception is alcohol, which has been affected by sanctions. In many places, the label on a can of Budweiser or Leffe now says “brewed in Russia” instead of the West.
That’s because some goods skirt sanctions by entering Russia via third countries that don’t punish Russia. The online retailer Wildberries, for instance, lists an iPhone 14 for the same price as in Europe. And even though Nestle has stopped selling Nespresso capsules in Russia, knockoffs are readily available.
But in the long run, this type of import substitution will hurt the economy. It’s a “stop-gap measure that may make the formal growth of GDP look good, but it won’t plow fields or help people with education and medical treatment,” Guriev said.
A similar problem is that Russian factories can’t compete with Western technology, including advanced computer chips. The business case for producing such high-end goods in Russia just isn’t there anymore, Kluge said.
While the Kremlin can still rely on oil income, Russia will eventually need to raise taxes or cut military spending if it wants to avoid years of economic stagnation. And if the US imposes new sanctions on the country, it will be more difficult for Moscow to borrow money from abroad because many foreign companies won’t want to do business with it.
The Russian government’s decision to limit access to Western social media platforms has had a significant impact on the country’s economy. According to a study by VPN provider Top10VPN, the country suffered 113 million hours of internet shutdowns in 2023 alone, resulting in an economic loss of more than $4 billion. The shutdowns have been a result of Russia’s war against Ukraine, and its retaliatory actions against the West.
In addition to limiting access to social media sites, Russia has also banned the use of the Tor browser, which bounces users’ online searches through private relay connections, making it more difficult for governments to track their activity. These actions have caused the number of people leaving the country to increase, which has a direct effect on Russia’s economy.
Sanctions are among the most powerful tools that countries can use to pressure each other. They can be imposed quickly and have a wide range of targets, including weapons exports, natural resources, and trade finance. Russia is likely to face further restrictions in the future. The UK government, for example, has announced plans to ban the import of diamonds from Russia, which could reduce its annual income by more than $2 billion.
Despite the hefty losses to the country’s economy, the Kremlin remains unfazed. In fact, the president has made clear that he intends to escalate the conflict. As a result, the country has been building up its stockpiles of conventional and nuclear weapons, while continuing to expand its military budget in the coming years. The country has also increased spending on a range of other projects, including the Nord Stream 2 gas pipeline and new nuclear power plants.
TikTok
The Russian government’s crackdown on Western social media platforms following the invasion of Ukraine has cost Russia a staggering amount of money, according to a study by VPN review site Top10VPN. The study’s data suggests that 1,353 hours of internet shutdowns, affecting 113 million people in the country, shaved off more than $4 billion from the economy last year.
While the Kremlin is limiting access to foreign-based services, it is promoting its own platform, TikTok. The app, developed by ByteDance, is popular with Russians and is used by some of the nation’s most powerful oligarchs. Its success is partly explained by the fact that it offers users a way to express their personality and creativity.
In addition, it’s not easy for Russian authorities to manipulate content on the service. The company’s algorithms use a mix of factors to rank videos, including how much time they spend in the user’s feed and how often they are rewatched. The popularity of certain videos can also boost the rankings of related clips.
Moreover, TikTok allows users to make and share short videos that are often more personal than the official versions of government propaganda. This helps them circumvent censorship and reach a wide audience. The ministry’s new push to promote the service is likely to boost the platform’s already impressive revenue.
TikTok is fast monetising its attention, and it could eventually become more lucrative than Facebook, YouTube and Twitter combined. The service is currently the second most popular mobile application in the world after YouTube. Its revenues will hit $12bn this year and $23bn next, according to the market research firm eMarketer. This will put it on par with YouTube, which generates more than $20bn in ad revenue annually.
YouTube
The Kremlin’s revival of repression has been crucial in sustaining Putin’s popularity, but it is less effective at improving people’s quality of life. Rosy GDP figures are misleading during wartime, Guriev says: Ramped-up military production contributes to the formal GDP number but doesn’t help ordinary Russians get jobs or build homes or afford medical care. Moreover, increased spending on the war will require Russia to cut nonmilitary expenses and borrow, making economic growth more difficult to achieve.
A slew of unpopular policy changes since 2014 has contributed to the decline in Putin’s approval ratings. The raising of the retirement age, the poor handling of the COVID-19 pandemic, and the Kremlin’s ham-fisted approach to the conflict with Ukraine all eroded Russians’ sense of regime legitimacy.
In response, the authorities stepped up their efforts to control political discourse and expand existing legal restrictions on “undesirable” or “extremist” organizations. Moreover, new laws barring those associated with certain extremist organizations from running for office and punishing those who attempt to travel abroad for work or study undermine citizens’ freedom of movement.
Meanwhile, the multiparty system that the Kremlin established after 2022 local elections allows only superficial competition with the ruling United Russia party. A 2012 law liberalized party registration rules, but the new parties largely serve to divert voters from genuine opposition parties and siphon off votes that would otherwise go to them. Moreover, many of the country’s security agencies and powerful business magnates are tightly linked to the Kremlin, receiving government patronage in exchange for loyalty and services. All of these factors exacerbate public discontent and give Putin’s opponents an incentive to seek popular support and challenge the status quo.
Telegram
Telegram is a messaging app that allows users to communicate privately and in groups. It also features voice and video calls. It is encrypted and can be used over Wi-Fi or cellular data. It is a popular alternative to WhatsApp and is available for Android, iPhone, and Windows. It also has a feature that allows users to create bots that can perform certain tasks for them. It is available in dozens of languages and is accessible worldwide. Its privacy features make it a popular choice among users in places that have strict data collection laws. However, it is not as secure as WhatsApp. In the event that a government wants to access private user information, it must have proof that it is linked to terrorism. It is important to note that Telegram does not store your content on its servers and only stores encrypted data on remote servers that are spread across multiple jurisdictions.
It was developed by Pavel Durov, a Russian technologist dubbed the “Mark Zuckerberg of Russia.” In the early stages of the app’s growth, the Kremlin tried to pressure him to release data on certain individuals for political reasons, but he refused. As a result, the company was banned in Russia until it agreed to help investigators.
Although Putin has emphasized that the Russian economy is resilient in the face of Western sanctions, the country is still struggling. With oil prices well below their record highs, Moscow’s huge military budget is draining its economy and creating new inflationary pressures.
Despite the economic costs of internet shutdowns, many Russians are downplaying the impact. Some say that it’s not a big deal, while others point to the fact that they can find the same products at home. For instance, a Moscow resident named Dmitry said that he could still buy his favorite brand of clothing and had no problem finding Apple products at online retailer Wildberries.
