The first week of fighting in Ukraine has been unprecedented as determined Ukrainian resistance ratchets up Russian losses. The economic consequences of Vladimir Putin's unprovoked assault in Eastern Europe are beginning to spiral out of control as sanctions and condemnation drive many multinational corporations out of Russia.
What Has Happened So Far in Ukraine?
The war isn't going well for the Russian Armed Forces; current estimates have the Russians at over 5,800 personnel, with long convoys reportedly bringing wounded into Belarus from Kyiv. Countless tanks and other armored vehicles have been razed by Ukrainian counterattacks or abandoned by demoralized Russian troops. Morale is low among Russian troops, with many reports of surrender to Ukrainian soldiers and civilians.
While Ukraine's resistance has been stalwart, assaults by Russian troops continue to cause increasing civilian casualties.
Russia's efforts are likely to intensify in the coming weeks as the invasion falters, which could see greater use of artillery and missile strikes. The escalation costs will be even steeper than Russia may have allotted for, though, as western sanctions kneecap the Russian economy.
How Has Business Become "Untenable" in Russia?
The west's mostly unified political/economic response has left the Ruble worth less than one cent while depository receipts for Russian firms imploded on foreign markets. A unified U.S.-E.U. move to disconnect many Russian banks from SWIFT, cutting much of Russia off from international banking. Additionally, Russian stock markets remain closed, temporarily holding back what might be a looming war-driven selloff.
International economic sanctions are only getting heavier as many multinational corporations look to scale down operations in Russia or exit entirely. Many firms are already feeling the effects of sanctions; increasing capital controls by the Russian government and the ongoing closure of Russia's stock markets make business only that much more unsavory.
Producers of consumer goods such as Apple
However, what might hurt Russia considerably worse is the departure of companies with more intimate ties to the country's economy. Aeronautics giants Boeing
What Will Happen Next?
As I mentioned last week, Ukraine is ready and willing to stand its ground. With the potential for Russia to attempt any number of new strategies to cope with its mounting losses, any escalation will inevitably be catastrophic and costly.
While Putin and average Russians are already feeling the sting, Russia's economic isolation has only just begun. Sanctioning to this scale is an entirely novel form of economic warfare, making it extremely difficult to predict the outcome. However, funding a war amid such unprecedented disruption is equally as tricky.
With hundreds of millions of dollars of lethal aid flowing in Ukraine, the risks faced by Russian troops rise, as do the costs of Putin's invasion. It goes without saying that Russia's economic prognosis is much grimmer.
