As Vladimir Putin pushes his war in Ukraine into its second year, the deepening militarization of Russia’s economy is fueling fears among the country’s business elite that the squeeze on their companies is only just beginning.
The growing fears highlight how the invasion, which the Kremlin initially hoped would deliver a lightning victory, has become a campaign without end that’s transforming all aspects of Russian society irreversibly. The lifestyle that came to be known as ‘dividend aristocrats’ — tycoons who lived richly in recent years on huge profits from their companies — is gone forever, top executives said.
The budget deficit is already growing as spending on the war rises and sanctions and other limits squeeze revenues. “This is to a certain extent a mobilization budget,” Sofya Donets, economist at Renaissance Capital said. Even the current amendments to the plan “call for a further increase in the tax burden, thought it’s not clear yet when this will happen,” she said.
Among the most vulnerable are those perceived to be insufficiently loyal, according to people familiar with the tycoons’ thinking. “If a person doesn’t link his life with this country but just takes money out and keeps everything outside, then he values not the country he lives and earns money in but the good relations in the one where he keeps his property and accounts,” Putin told reporters on Dec. 22. “This kind of person poses a danger to us.”
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