A well-known American researcher on Russia warns that the Russian economy may collapse due to loans assigned to the military industry.
President of Russia Vladimir Putin finance its war of aggression with coercive measures against banks. Putin’s administration has ordered banks to grant low-cost loans to the military industry.
The forced loans were introduced right after Russia invaded Ukraine just under three years ago.
Well-known Russia researcher, former investment banker Craig Kennedy states in his recent report that forced loans threaten to collapse the entire Russian economy.
Among others, an American writes about the topic Newsweek magazine.
Bank of Finland Laura Solanko does not consider it likely that the Russian economy would collapse due to forced loans.
– Even if the banking sector’s lending would cause large credit losses and the banks would run into difficulties, it would not collapse the economy so that the country would be paralyzed, says Solanko, who works as a senior advisor at BOFIT, the Bank of Finland’s research institute for emerging economies.
Kennedy writes in his report that as a result of forced loans, Russia’s corporate loan stock has increased by 71 percent since the attack on Ukraine.
It means more than 405 billion euros. Up to 60 percent of the loans have been granted to the military industry, Kennedy estimates.
According to him, because of the arrangement, the Russian economy has appeared stronger than it actually is during the war of aggression.
Solanko of the Bank of Finland says that it is unclear how Kennedy arrived at the figures mentioned.
– I personally find it difficult to accurately estimate the numbers. They can be right or wrong.
Russia’s real war expenses are higher than based on the official budget, because the share of forced loans is not shown in the budget.
They are an important part of the financing of Russia’s war of aggression.
– They have played a significant role in the fact that the production of the military industry has been increased so quickly.
– However, I would be more careful in assessing which part of the growth of the entire loan portfolio is the kind that would directly belong to budget expenditures.
Solanko says that the Russian economy is quite stable so far.
– So far, it seems that the gross domestic product is growing because public spending has increased. However, the fragility of economic growth is becoming clearer all the time. It is more difficult for Russia to maintain growth.
– It does not seem that there will be big shocks in the Russian economy that would suddenly change the situation.
See in the video what Putin said about the Russian economy at the end of last year: