When a Nation Decimates its Economy

Posted By Kyle Rose, Apr 20, 2015

Russia lost an estimated $120 billion due to international sanctions in 2014.[1] This is half of their budget.[2] Perhaps even worse with the oil crisis, Russia is effectively barred from international finance.[3] With these factors combined, Russia’s GDP will likely decrease by 10% in 2015.[4] Although Russia would have suffered from the oil prices regardless of its conduct in the Ukraine, the sanctions give great aggravation. Why would a state incur such cost for a quasi—war for little and uncertain gain?[5] 

In the ninth century of the Common Era, Swedish Vikings settled in modern Ukraine.[6] They were called the Rus.[7] Their leader was Rurik, the ancestor of the Tsars.[8] His great grandson, Vladimir the Great—President Putin’s namesake, Christianized the Rus in 1043.[9] Some of the Rus migrated north after the Mongols destroyed their capital, Kiev in 1240.[10] Moscow only gained prominence later as the Muscovite state shrewdly collaborated with the Mongols before betraying them, a process that consumed centuries.[11] Meanwhile, the Grand Duchy of Lithuania and then the Kingdom of Poland—Lithuania controlled much of Kievan Rus from the mid-1300s until Muscovy began to gradually conquer or recover modern Ukraine  starting in the mid-1600s.[12]

Russia’s relationship with the Ukraine has been compared to that of the United States and the United Kingdom.[13] After the collapse of the Soviet Union, Russia was in need of an identity to replace the Soviet ideology. Russian nationalism was an obvious choice.[14] The Russian Orthodox Church also experienced a revival perhaps best known through the recent “Pussy Riot” incident.[15] Although there are many factors and explanations for the Ukraine conflict, it was only natural that these forces would be expressed in relation to the homeland of the Rus and the Church. For most of their adherents, Russia began in the Ukraine.



[1] Laurence Norman, Eu Projects Impact of Sanctions on Russian Economy, The Wall Street Journal (Oct. 29, 2014), http://www.wsj.com/articles/eu-projects-impact-of-sanctions-on-russian-economy-1414583901.

[2] Tim Worstall, Russia has to Slash Military Spending To Balance the Budget, Forbes (Dec. 30, 2014), http://www.forbes.com/sites/timworstall/2014/12/30/russia-has-to-slash-military-spending-to-balance-the-budget/; XE Currency Converter, http://www.xe.com/currencyconverter/convert/?Amount=13.96&From=RUB&To=USD.

[3] Greg Satell, Here’s How Obama’s Russia Sanctions Will Destroy Vladimir Putin, Forbes (Apr. 28, 2014), http://www.forbes.com/sites/gregsatell/2014/04/28/heres-how-obamas-sanctions-will-destroy-vladimir-putin/.

[4] Priyanka Boghani, What’s Been the Effect of Western Sanctions on Russia, PBS (Jan. 13, 2015),  http://www.pbs.org/wgbh/pages/frontline/foreign-affairs-defense/putins-way/whats-been-the-effect-of-western-sanctions-on-russia/.

[5] Anders Aslund, Russia is in No Economic Shape to Fight a War, The Moscow Times (Apr. 22, 2014),  http://www.themoscowtimes.com/opinion/article/russia-is-in-no-economic-shape-to-fight-a-war/498728.html; Alexander Motyl, Could Russia Occupy Ukraine?, World Affairs Journal (Apr. 7, 2014),   http://www.worldaffairsjournal.org/blog/alexander-j-motyl/could-russia-occupy-ukraine

[6] Philip Parker, Visual Reference Guides World History 194 (2010).

[7] Thomas J. Craughwell, How the Barbarian Invasions Shaped the Modern World 236 (2008)

[8] Id.

[9] Igor, Encyclopedia Britannica (2015), http://www.britannica.com/EBchecked/topic/282383/Igor; Craughwell, supra note 7, at 236; Parker, supra note 6, at 194.

[10] This point has been contested for centuries as part of the debate over whether the Rus were more Germanic or Slavic—symbolic of Russia’s historic division between the Europhilic and Slavophilic factions. Serhii Plokhy, The Origins of the Slavic Nations: Premodern Identies in Russia, Ukraine, and Belarus 10 (2010); Kyivan Rus’, Internet Encyclopedia of Ukraine (2001), http://www.encyclopediaofukraine.com/display.asp?linkpath=pages\K\Y\KyivanRushDA.htm

[11] W. Bruce Lincoln, The Romanovs 6-7 (1981).

[12] Kiev, Encyclopedia Britannica (Apr. 8, 2013), http://www.britannica.com/EBchecked/topic/317542/Kiev/13910/The-first-Rus-capital; Andrew Jotischky & Caroline Hull, The Penguin Historical Atlas of the Medieval World 93 (2005). Patrick O’Brien, Atlas of World History 149 (2nd 2010).

[13] Krishnadev Calamur, Why Ukraine is Such a Big Deal for Russia, NPR (Feb. 21, 2014), http://www.npr.org/blogs/parallels/2014/02/21/280684831/why-ukraine-is-such-a-big-deal-for-russia

[14] Henry E. Hale, Russian Nationalism and the Logic of the Kremlin’s Actions on Ukraine, The Guardian (Aug. 29, 2014),  http://www.theguardian.com/world/2014/aug/29/russian-nationalism-kremlin-actions-ukraine;Marc Bennetts, Why Nothing will Dent Vladimir Putin’s Soaring Popularity at Home, The Guardian (Jul. 31, 2014),  http://www.theguardian.com/commentisfree/2014/jul/31/vladimir-putin-western-sanctions-russia-flight-mh17-state-propaganda.

[15] Mark Tooley, Understanding a More Religious and Assertive Russia, Patheos (Apr. 2, 2014), http://www.patheos.com/blogs/philosophicalfragments/2014/04/02/understanding-a-more-religious-and-assertive-russia/; Tom Esslemont, Russian Orthodox Church Defiant over Pussy Riot Trial, BBC (Aug. 10, 2012), http://www.bbc.com/news/world-europe-19207439.