https://www.npr.org/2023/05/31/1176769042/russia-economy-brain-drain-oil-prices-flee-ukraine-invasion
Alexandra Prokopenko poses at a marathon event back in
Russia. She used to run in Moscow's Meshchersky Park all the time: It
was her favorite place in the city. But she's doubtful she will see it
again, at least for the near future. Shortly after Russia's invasion of
Ukraine, she left her country, along with hundreds of thousands of her
peers.
Alexandra Prokopenko
Alexandra Prokopenko grew up in Moscow. She was always fascinated by economics: money, business, the way economies worked. A few years ago, she landed a dream job as an adviser at Russia's central bank in Moscow. Prokopenko
loved Moscow. The city was vibrant and beautiful — full of restaurants,
music and culture. But by far, her favorite place was Meshchersky Park,
a giant forest in the city, where Prokopenko would go running. "It was my favorite place. I always felt really great in there," she recalls. But
Prokopenko's Meshchersky runs are a thing of the past. She left Moscow,
as well as her job at the central bank, shortly after Russia's invasion
of Ukraine. Prokopenko now works at the German Council on
Foreign Relations. Her focus is still the Russian economy — she
publishes new analyses and data every week. She says she's glad to be there, but it isn't home. "I'm missing Moscow a lot," she says. "I miss Moscow every day." Prokopenko is part of a massive wave of young Russians who have fled their country. Though hard numbers are hard to come by, hundreds of thousands are estimated to have left Russia since its invasion of Ukraine. That has contributed to a reduction in Russia's labor force. According to one estimate, more than 1.3 million Russians under age 35
left the Russian workforce just last year alone, though that number
could include other factors such as workers taking jobs not officially
captured in statistics.
Alexandra Prokopenko had a dream job at Russia's central bank in Moscow, a city she loved.
Especially among those who have fled the country are educated
workers with in-demand skills like engineering or computer programming.
This massive loss of talent looks to be one of the biggest economic
consequences of Russia's invasion of Ukraine. "I don't think Russian authorities will admit it, but we've seen a massive brain drain," says Prokopenko. Even
before the invasion, Russia was experiencing a labor shortage:
Businesses and factories complained that they couldn't find the workers
they needed. "Now it's a full-blown demographic crisis," says Oleg Itskhoki, an economist at the University of California, Los Angeles. Itskhoki
says this poses a huge problem for Russia's economy: Without workers,
many companies and businesses are having to scale back or even shut down
entirely. But the labor shortage is not the only problem facing the Russian economy. In
2022, Russia's economy held strong in spite of harsh sanctions, earning
the nickname "fortress Russia." A lot of this economic toughness came
from oil prices. The invasion of Ukraine caused a global panic that
pushed the price of oil way up. Russia was able to sell its oil to China and India, among others.
And a lot of the sanctions against selling oil and natural gas to Europe
didn't kick in until the end of last year. But
2023 is a very different year for the Russian economy. European
sanctions have kicked in, so oil revenues are way down and now the war
is costing Russia hundreds of millions of dollars a day. "2023 is the year of difficult choices for Russia," says Itskhoki. He
says right now Russia needs money, which means President Vladimir Putin
will have to either raise taxes (most likely on businesses) or force
people to buy war bonds — or both. That could erode support for the war, which Putin desperately needs.
The Russian economy managed to thrive in 2022, in spite
of sanctions, earning the nickname "fortress Russia," but 2023 has been a
very different year.
"The Kremlin obviously is paying attention to what's particularly
unpopular among the population," says Itskhoki. "They're trying to
navigate what's least unpopular." Fortress Russia is starting to feel the heat. 2023 has also started to reveal some cracks around Russia's production and manufacturing. The lion's share of resources and technology is being funneled to
weaponry. At the same time, sanctions mean Russia can't import goods
from many countries and manufacturers often can't get products or parts. "For
example, air bag technology is not available in Russia," says Itskhoki.
"And so the cars that are assembled in Russia are assembled without air
bags." Or anti-lock brakes. Many of the trains, planes and other high-tech goods that are made in Russia are using technology from decades ago. Russia
can still import a lot from places like China, but that takes business
away from Russian companies and it also risks creating an even greater
economic dependence on China, which Putin doesn't want. Still,
Itskhoki and Prokopenko stress that the biggest issue facing the
Russian economy isn't products or sanctions: It's people. A generation of skilled workers who are now fighting on the front or who have fled the country. Skilled
workers like Prokopenko herself, who says she still dreams of going on
long runs in the forests of Meshchersky Park but isn't convinced that
this will happen anytime soon. "I'd love to go back, but I don't feel it would be safe for me," she says. "People in Russia can become prisoners for nothing." Prokopenko
says she's in touch with many fellow Russians who have left, most of
them young skilled workers like herself. She says the consensus is that
as long as Putin is running the country, there's no going back. And that is a huge problem for Russia not just right now but also going forward. After
all, while sanctions and restrictions on manufacturing could affect
Russia's economy for years to come, losing a generation of its best and
brightest could damage the country's economy for generations.
Ukraine invasion — explained
Putin signs a tough new military draft law, banning conscripts from fleeing Russia
A "full-blown demographic crisis"
2023: the "year of difficult choices"
Russian manufacturing: back to the future
Politics
The G-7 is tightening up economic sanctions on Russia for its war on Ukraine
Russia's people problem
Ukraine invasion — explained
Russia has amassed a shadow fleet to ship its oil around sanctions
