Russian people face 'catastrophe' as ruble crashes and sanctions bite

Everyone expected the Russian attack would be devastating for Ukrainian lives and businesses, but Canadians who study Russia and its economy say they have been startled by the invasion's catastrophic impact on Russians thanks to sanctions imposed by Western nations.

A plunging currency, a doubling of interest rates, empty shelves, a closed stock market, lineups at banks that are in danger of going broke — Canadian Russia-watchers say the repercussions of the invasion on Ukraine are affecting Russians at every level and are only now being understood.

One question everyone is asking is whether this will weaken President Vladimir Putin's grip on power.

"I think it's a catastrophe all around, but I think it is a catastrophe in particular for the common people, for, you know, the regular folks," said Norman Pereira, whose family escaped through China from the St Petersburg area in 1919 during the Russian Revolution.

The 80-year-old professor emeritus of Russian studies and history at Halifax's Dalhousie University still has family in Russia whom he keeps in touch with and is married to a Russian. Pereira, whose name is of Sephardic Portuguese origin, says the crash in the ruble and other economic impacts are already beginning to plague every aspect of life — and that's apart from battlefield casualties.

Like others I spoke to, Pereira was surprised by the brutality of the invasion, the weight of Western sanctions against Russia and the widespread consequences for the Russian economy.

"I misread the situation, I didn't think Putin would act so rashly. It's a disaster, a tragic mistake," he said in a phone conversation on Monday. "That may be putting it too kindly."

Pereira says that in a country where more than half of the population live on $6,000 US or less a year, it is the poorest who always suffer the most. But he says the growing middle class, especially in St. Petersburg and Moscow, has also been hit hard by the sanctions.

"The sanctions may not affect the people at the top very much, but it's going to affect the middle class, and it'll affect the people in the countryside. They're always the ones who take the brunt of it anyway."

In a country whose leader has become increasingly dictatorial, it is hard to see how a revolt by the middle class could make Putin relinquish his hold on power. Despite that, many — including Russian chess grandmaster and human rights activist Garry Kasparov — have proposed that the only real solution to the current crisis is the fall of the Putin regime.

One theory, sometimes called the J-curve hypothesis, is that rebellions don't arise when people are subjected to continuous grinding poverty but when living standards fall sharply after a period of economic improvement, "when expectations are not fulfilled," said Joan DeBardeleben, who studies relations between Russia and Europe at Carleton University in Ottawa. "I think that makes a lot of sense in this case."

She added, "Of course this is a question of where the anger gets directed." Steered by government propaganda, Russian nationalists may blame damage to their economy caused by things like the sale of shares by Western oil companies and bank runs on the forces Putin claims he is fighting in Ukraine.

"So it's not a foregone conclusion that the anger that might result from these kinds of impacts would necessarily be directed at the state authorities or towards Mr. Putin himself," DeBardeleben said.

Economist Dane Rowlands, a professor at Carleton University's Norman Paterson School of International Affairs, was also surprised by the power and effect of Western sanctions on Russia.