How Western sanctions are affecting the lives of Russians

The sanctions leveled against Russia by the U.S. and its allies are the harshest ever handed down, and their effects are being felt widely in Russia. Special correspondent Ryan Chilcote reports from Moscow on how the lives of Russians are being impacted.

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  • Judy Woodruff:

    The economic sanctions leveled against Russia by the U.S. and its allies are the harshest ever handed down, and their effects are being felt widely in Russia.

    Special correspondent Ryan Chilcote has been in Moscow for more than two weeks, and has been speaking to Russians about how their lives are being affected. He sent us this dispatch.

  • Ryan Chilcote:

    It's the eighth anniversary of Russia's annexation of Crimea and the Kremlin is throwing a party. It's also three weeks since Russia launched what it calls its special military operation.

    And as far as the Kremlin is concerned, there's a lot of celebrate. The concert is free, most of the 181,000 seats taken, the main act appearing in front of signs that read "For a World Without Nazism, "For Russia."

    Across town, there's little to celebrate. The mass corporate exodus that began on February the 24th is still under way, more than 400 of the world's biggest brands fleeing so quickly, they left the window dressing. This going out of business sale doesn't have many discounts. It doesn't need to.

  • Woman (through translator):

    Of course, people are losing their jobs, and that's bad. But I hope some other brands move into their niches.

  • Ryan Chilcote:

    Rive Gauche, meanwhile, is booming. Mastercard and Visa work. So does cash, and that's good news. This is a Russian chain, but the cosmetics come from abroad, but no one knows for how long.

  • Woman (through translator):

    Of course, we're a little nervous. All my favorite brands are from abroad, and they can disappear.

  • Ryan Chilcote:

    McDonald's is also disappearing. When this one first opened, 30,000 people lined up.

    In case you're wondering how popular McDonald's is, it's 11:15 at night, and all these people have been standing out here to get inside. It's so full inside.

    Tonight, it's last chance for a Happy Meal. This was the very first McDonald's to open in Russia. It was in 1990, and it was, in fact, still the Soviet Union. And it's just extraordinary to think that, after 32 years, they're all closing because of Ukraine.

    All 847 McDonald's will be shut, putting more than 60,000 jobs at risk, and, for some, a way of life.

  • Woman:

    We go to the cinema or to the theater and then, after that, we go to McDonald's and eat something, like some order fries.

  • Ryan Chilcote:


  • Woman:

    And I don't know what will happen next.

  • Ryan Chilcote:

    Some of what will happen next has happened before. In 1998, the ruble lost two-thirds of its value over a month, accelerating inflation to 80-plus percent, and Boris Yeltsin's resignation a year later.

    Then, after a decade of unprecedented economic growth, the ruble fell again in 2014 after Vladimir Putin sent troops to annex Crimea. According to official statistics, Russian prices rose by 2.1 percent last week, the kind of inflation central banks aim to see over a year. The official annual inflation rate is running above 12.5 percent.

    Auchan, a French chain with more than 300 supermarkets here, is well-stocked for now. One Russian economist says the country may be headed for Soviet-style inflation, where the prices don't rise, but goods disappear.

    Just like Americans, Russians are accustomed to an extraordinary range of groceries and assortment in their supermarkets, and yet, in this one, two days running, zero white sugar.

    Videos circulating on social media show elderly Russians, who remember Soviet shortages, swooping sugar. The price rose nearly 13 percent last week. The government says there's no shortage. Sugar exports are now banned.

    The opening salvo in the West's economic war didn't pierce the Bank of Russia's facade, but cutting off the Central Bank's access to more than $300 billion did deprive it of more than half of its reserves. Western sanctions have also taken aim at the Russian capital's monument to capitalism, its financial district called Moscow City, freezing its commercial banks out of the global financial system.

    Russia's financial system remains in shock. These Citibank customers are still trying to pull their money out, despite interest rates now at 20 percent. They have just been told this Moscow branch has run out of cash. Come back after lunch.

    The sanctions have also made flying difficult. Leaving Russia isn't easy. Aeroflot, Russia's national carrier, has suspended all international flights. Options with other international carriers are limited.

    You can still fly from Moscow to places like Israel, Turkey, the United Arab Emirates, and India. But U.S. and nearly all European airspace is close to Russian planes. And where it's open, there are still plenty of cancellations. Russia leases more than 500 of its some 800 planes from foreign companies. For fear they will be seized abroad, those planes have been rerouted to domestic destinations.

    In the next couple of years, Russia's entire fleet could be grounded. Sanctions have blocked parts deliveries from Boeing and Airbus.

    Andrey Movchan is a London-based economist. Movchan believes sanctions on imported technologies could bring up to 60 percent of the Russian industrial complex, the country's lifeblood, to a halt.

    Politically speaking, what do you think these sanctions will do?

  • Andrey Movchan, Economist:

    I don't think they will do much. We see the remarkable examples of Iran and Venezuela, for example. Both countries are under severe sanctions. Both countries lost much because of the sanctions. And the political situation didn't change.

    And, in a certain sense, it was strengthened because of the sanctions.

  • Ryan Chilcote:

    Dmitri Trenin is a Moscow-based political scientist. He thinks the sanctions are an opportunity for Russia to reform and build a more productive and equitable society.

  • Dmitri Trenin, Director, Carnegie Moscow Center:

    If you're able to do that, then Russia will emerge from this crisis materially poorer, but spiritually stronger and more coherent. If not, then you're in trouble.

  • Ryan Chilcote:

    And what's trouble look like?

  • Dmitri Trenin:

    In this country, you should be very careful with the bulk of your people. And they may be with you for a very long time. They may be very patient, more patient than maybe any other people in the world.

    But, at some point, this patience may snap, as it did in February 1917, as it did in the final years of the Soviet Union.

  • Ryan Chilcote:

    Neither analyst thinks the so-called oligarchs are capable of pulling off a Kremlin coup. The sanctions against them, while painful, they say, won't change anything.

    Most Russians are reluctant to share their views about the conflict and sanctions. And here's why. On the city square above an underground mall the day we visit, this protester unveils a sign that literally says "Two Words." Then, a woman who wants to voice her support for the Russian military is taken away.

    The subsequent chills seemed to permeate below. We have been here a while, and it is hard work getting people to talk to us in this mall. The reason? Well, one couple told us, the further you get away from this square, the more comfortable people are going to be talking.

  • Woman:

    Yes, I don't want to talk about politics.

  • Man (through translator):

    That's a good question to ask me in the arrival area in another country.

  • Ryan Chilcote:

    Back at the concert, the live broadcast of President Putin's speech abruptly cuts to a pre-recorded concert. The Kremlin blamed the snafu on a server problem, a reminder perhaps that the Kremlin's carefully choreographed P.R. campaign doesn't always go according to plan.

    For the "PBS NewsHour," I'm Ryan Chilcote in Moscow.

  • Judy Woodruff:

    Thank you, Ryan.

    And a reminder that "NewsHour"s coverage of Russia and Ukraine is supported in partnership with the Pulitzer Center.

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