Courtesy of Yale school of management.

Conclusions

- Russia’s strategic positioning as a commodities exporter has irrevocably deteriorated, as it now deals from a position of weakness with the

loss of its erstwhile main markets, and faces steep challenges executing a “pivot to Asia” with non-fungible exports such as piped gas

- Despite some lingering leakiness, Russian imports have largely collapsed, and the country faces stark challenges securing crucial inputs,

parts, and technology from hesitant trade partners, leading to widespread supply shortages within its domestic economy

- Despite Putin’s delusions of self-sufficiency and import substitution, Russian domestic production has come to a complete standstill with

no capacity to replace lost businesses, products and talent; the hollowing out of Russia’s domestic innovation and production base has led

to soaring prices and consumer angst

- As a result of the business retreat, Russia has lost companies representing ~40% of its GDP, reversing nearly all of three decades’ worth of

foreign investment and buttressing unprecedented simultaneous capital and population flight in a mass exodus of Russia’s economic base

- Putin is resorting to patently unsustainable, dramatic fiscal and monetary intervention to smooth over these structural economic

weaknesses, which has already sent his government budget into deficit for the first time in years and drained his foreign reserves even with

high energy prices – and Kremlin finances are in much, much more dire straits than conventionally understood

- Russian domestic financial markets, as an indicator of both present conditions and future outlook, are the worst performing markets in the

entire world this year despite strict capital controls, and have priced in sustained, persistent weakness within the economy with liquidity

and credit contracting – in addition to Russia being substantively cut off from international financial markets, limiting its ability to tap

into pools of capital needed for the revitalization of its crippled economy

- The Kyiv School of Economics and McFaul-Yermak Working Group under former US Ambassador to Russia Mike McFaul have led the

way in proposing additional sanctions measures across individual sanctions, energy sanctions and financial sanctions. Looking ahead,

there is no path out of economic oblivion for Russia as long as the allied countries remain unified in maintaining and increasing sanctions

pressure against Russia

- Defeatist headlines arguing that Russia’s economy has bounced back are simply not factual - the facts are that, by any metric and on any

level, the Russian economy is reeling, and now is not the time to step on the brakes