The Russian invasion is about three weeks old at this point, and Ukraine is feeling the pain. Russian forces have bombed cities, killed civilians, and threatened nuclear war against both Ukraine and any country that helps the Ukrainians. Meanwhile, though, the Russian state has become a pariah on the international stage, with numerous countries implementing sanctions that have upended the Russian economy. Western governments are seizing Russian property, disallowing Russian airlines into their countries, and have disconnected the nation from SWIFT, the large global payments system – making transactions of materials more difficult and removing much of the ease of doing business in Russia.
In addition, the war has brought the Russian ruble to a low point against foreign currencies, causing the price of imports into Russia to shoot up and stoking fears of a financial collapse in the country, as well as the possibility of the government not meeting its external debt obligations, which would severely discourage foreign investment. Corporations, too, are taking a stand. Numerous Western companies have stopped doing business in Russia altogether – and what’s worse is that the government has threatened to nationalize foreign assets, a move sure to encourage companies never to invest in the country again.
So what can Russia do? At a time when most of the world stands in opposition to their invasion and supports sanctions, there are countries which Russia has hopes of greater reliance on, which currently maintain the guise of neutrality – namely, India and China. Russia has reportedly been in talks with India to export their oil at a discounted price, so long as India continues to exchange rupees with rubles. China would also be a destination for Russian exports that are not allowed to be shipped to many ports.
Needless to say, the invasion is, by far, a net negative on the Russian economy, and there’s a high chance the country could simply be unable to trade with most nations for the foreseeable future. The bigger question is whether this will lead to political change in the country, and this is far more uncertain. I think that the government, and especially the president, won’t back down from the invasion, and Russia will be a market that will simply be closed off, for now.