‘Living on borrowed time’: Russia manipulating data to make its economy look better
Moscow is systematically manipulating data to fool Ukraine’s Western allies into believing its economy has withstood the strain of four years of war and targeted sanctions, according to Sweden’s military intelligence chief.
Vladimir Putin has admitted that Russia’s economy is performing below his expectations, noting last week that the country’s GDP had contracted 1.8% in January and February.
But Thomas Nilsson, head of Sweden’s Military Intelligence and Security Service, told the Financial Times that the real situation was even worse and that the Russian central bank was underestimating inflation, which he believed was closer to 15% than the official 5.86%.
Nilsson said Stockholm agreed with the BND, Germany’s foreign intelligence agency, that Russia was also understating its budget deficit by $30 billion, and had noticed some financial indicators that could point to a future banking crisis.
Russia is “living on borrowed time,” he said.
“The Russian economy can only enter one of two scenarios: long-term decline or shock. Either way, they will continue on a downslope to a financial disaster.”
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The Swedish intelligence chief assessed that Russia’s ailing economy had failed to recover despite the jump in oil revenue from the Middle East war, which could amount to up to an extra $150 million daily.
He told the FT that Moscow would need prices for Urals crude, its main blend of oil, to remain above $100 a barrel for a year to close its budget deficit, and for significantly longer than that to smooth over its other economic problems.
“They still have a systemic problem,” Nilsson said, adding: “It’s not a sustainable growth model to produce material for the war that is then destroyed on the battlefield.”
Russia’s defense sector has accounted for most of the country’s growth as the civilian sector struggles. Moscow has diverted funding to areas where the nature of the war is changing, particularly unmanned systems and long-range weapons.
But Nilsson said that outside the drone industry, Russia’s military-industrial complex was lossmaking, rife with corruption and embezzlement, and dependent on lending from state-run banks.
Exploiting Russia’s weaknesses
Nilsson called on European allies to pass the bloc’s stalled 20th sanctions package and step up their support for Ukraine to exploit Russia’s weaknesses further.
His call was echoed by Sweden’s foreign minister, Maria Malmer Stenergard, who told the FT that “Europe is not yet doing everything it can to harm the Russian economy.”
It was “extremely frustrating” that not all EU countries had been willing to change their energy model, she added, in reference to countries such as Slovakia and Hungary, which are still dependent on Russian oil imports.
The last attempt to approve the latest set of sanctions was hampered by a Hungarian veto.
Although Viktor Orbán, the country’s pro-Russian prime minister, has since been defeated at the ballot box, Slovakia has vowed to block any further sanctions until Ukraine has restored the damaged Druzhba oil pipeline, which brings Russian crude into central Europe.