I never tire of recalling what Joseph Schumpeter, one of the greatest economists and scholars in the world, wrote in his monumental tome: The nearer we are to an epoch the less we understand. Our own we understand the least.It is too early to make an assessment of Russia’s Ukraine war and its implications on the country’s polity and economy. But already some clues are visible.At this point of time, what is looking certain in the midst of all other imponderables is that Russia will win the military campaign eventually. But, like in the aftermath of the great war in Mahabharata, will Russia itself survive in its present form? That outcome will decide a lot for the future.This begets the question whether in the twenty-first century it is old-fashioned geo-politics and power play which are the final reckoner or geo-economics will finally overtake it.The raft of sanctions, which are the weapons of geo-economics of present day, are already biting on Russia and its elites and those who are the ultimate deciders.The cumulative impact of the sanctions seems to be having a three-fold implosion. First, these sanctions and restrictions are fundamentally destabilising Russia’s macro-economic balance and pushing the economy to the edge of a precipice.Secondly, personal sanctions on individuals are hitting them personally and their ability to conduct normal business and transactions. This will have eroded their loyalties and steadfastness to Russian president Putin who has so far been bankrolled by these hugely rich oligarchs.Thirdly, in view of the sanctions and out of disgust at the brutality of Putin’s totally uncalled for war against a far smaller country, big multinational corporations are suddenly withdrawing from Russia. This will have immediate consequences on employment and income creation. Thus, the withdrawal of corporations will have socio-economic impact.
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