The region feels the weight of sanctions and military mobilization. In the “Caucasus”, companies have lost up to 90% of their turnover. Wages are consumed due to inflation. Income from the sale of energy resources is only enough for one year. It is difficult for the central government to make financial concessions to a peripheral area.
Moscow () – The entire Russian economy is suffering, and increasingly, the consequences of the war in Ukraine, but the regions of the Federation that suffer the most are the North Caucasus. Imports are virtually blocked, labor activity has declined across the board, local consumption and production have fallen sharply, middle-class people have emigrated en masse, and thousands of working-age men have died on the front lines. These are just some of the factors that are bringing the entire Russian and Caucasian way of life to its knees.
While in Russia as a whole the economic collapse has not yet fully affected the average standard of living of citizens, in the Caucasian republics of Chechnya, Ingushetia, Dagestan, Kalmykia, North Ossetia, Kabardino-Balkaria and southern Russia , the area known as “Chechnya”, the consequences are already being felt more intensely. In Dagestan alone, between January and August, companies lost almost 90% of their turnover. In the Stavropol region, wholesale trade fell by more than 91% (retail trade by 30%); in Ossetia it fell by 72%.
Throughout the region, the prices of products have risen terrifyingly (between 15% and 40%) and galloping inflation has consumed the income of the population, as confirmed by the statistical data of the Rosstat institute. The Caucasian republics are highly dependent on economic transfers from the Russian central government, as Professor Natalia Zubarevič, an economics specialist at MGU Moscow University, recalls: “Government funding has increased in all regions, in different ways. However, However, it does not manage to fill the holes created by the war context, and the mobilization of recent weeks will have increasingly catastrophic consequences for the income of local administrations, and of families in general”.
Another worrying fact is the growth of the public debt: in the Russian federal subjects, it is around 5% on average, while in Chechnya it exceeds 20%. The central state will be less and less able to help the regions, especially considering that a creeping Western embargo on oil and gas rules. Which is also a “self-embargo”, as observed by the political scientist Sergej Žavoronkov, from the “Mission Liberal” foundation, according to which “the means to maintain a sufficient level of collective welfare will suffice for a maximum of one year”.
As many experts point out, energy sanctions are not yet widely felt due to high resource prices, but this factor is set to change rapidly in the coming months. From December, Russia will only be able to sell to its partners in Asia and to the poorest countries, at much lower prices than today, and even lower than before. The economic effects of the mobilization are difficult to quantify at the moment, but the statistics will soon begin to calculate them. Perhaps only farm labor incomes will grow, thanks to high food prices and increased demand from falling imports.
Moscow will have no choice but to continue funding the Caucasus regions, to buy their loyalty and stave off increasingly widespread separatist sentiments. A task that will not be easy if the war evolves in an even more dramatic way, considering the possible use of atomic weapons and the international condemnation of Russia, labeled as a terrorist country, due to the massacres and the destruction of power plants to leave the Ukrainians at the mercy of cold and ice.
And it is precisely for this reason that Chechen President Kadyrov – who supports and fuels the war in Ukraine more than anyone else – blackmails Moscow in an increasingly brazen way. He shows all regional rulers the way to defend their own economy at the expense of the federal one, thus creating the conditions for an even more systematic collapse.
A possible increase in taxes – the only way to feed the budget – would also provoke a negative reaction in the sectors of the population that most support state policy. Russia could implode economically and end up fighting against itself instead of external enemies.
