McDonalds is now called DonMak and Starbucks is now Starducks. The breakaway Ukrainian territories, of all places, could become the model for Russia’s future development: Instead of being driven to revolt by lost prosperity, the Russian population is only being driven further into the arms of Putin’s regime by the sanctions.
In 2014, not only Crimea but also Donetsk and Luhansk seceded from Ukraine and founded their own states, which no one but Russia wanted to recognize. But with Transnistria, South Ossetia and Abkhazia there have long been Russian de facto states in bondage to the Kremlin for decades. They exist practically only because of Moscow’s support and are cut off from the rest of the world. Similarly, Russia is now experiencing the most severe sanctions in history and is cut off from almost all Western goods. Not only official sanctions against politicians and banks, but also countless companies have left the Russian market. In addition to cars, chocolate and clothing, Russians have to do without many other consumer goods that they have come to love, or smuggle them expensively via friendly states such as Armenia or Kazakhstan.
DonMak branch in the separatist areas of Ukraine. (Source: own)
Ironically, isolation from the global world economy even led to a kind of democratization in some of these de facto states. To withstand outside pressure, the regimes were forced to include the opposition, which otherwise turned to foreign forces. They produced their own checks and balances and had to keep the population happy through co-option. Thus, in industrially strong Transnistria, Russians, Ukrainians and Moldovans live together in equal thirds – but the Russians must include the other two ethnic groups, which would otherwise turn to their pro-Western mother states. Together, the domestic economy found creative ways to sell its products to the rest of the world despite sanctions.
In the end, the brute sanctions could also have the ironic effect of binding the population even closer to the Putin regime: local businessmen take over the international chain stores, such as McDonalds, Starbucks or Ikea, at cheap prices. Despite poor quality and few incentives from the oligarchs to change this, they will be the only source of work, income and consumption. This is especially true for the young population, which is already bearing the brunt of the war.
But Putin is basing his power more on the generation that witnessed the catastrophe of the 1990s anyway. The hyperinflation and the near collapse of the state. These people pull their vegetables in their dachas, de-rust their reliable Ladas and lovingly maintain their communist-era apartments. In the end, the sanctions could even lead to a stabilization of the regime, because they value stability above all else – and hardly notice anything about sanctions.
The whole story in “Post-Soviet World – A socioeconomic analysis from the Fall of Communism to the Invasion of Ukraine“.
