The current trajectory of the Russian ruling regime reveals a paradoxical evolution. Proclaiming a revival of imperial grandeur—a peculiar amalgamation of the Russian Empire and the Soviet Union—the leadership finds itself entangled in the economic and social pitfalls that plagued both historical formations. In an attempt to avoid revolutionary upheaval amidst mounting societal contradictions accumulated over three decades, the Kremlin has opted for what it considers evolutionary development. However, this evolution draws inspiration not from a vision of a brighter future but from a mythical “golden past.”
This backward-looking strategy stems partly from the gerontocratic nature of Russia’s leadership, which, due to its advanced age, struggles to envision itself beyond the next two decades. Moreover, this approach aligns with a segment of economists who, in their grim assessment of the nation’s realities, prioritize the prolonged survival of the elite. In their calculation, sustaining the ruling class necessitates an economy geared for war rather than development—a cynical yet calculated choice.
As Russia entrenches itself in a wartime economy, public discourse is stripped of crucial conversations about improving quality of life, modernizing infrastructure, increasing pensions, or providing access to high-quality healthcare and education. Instead, these are replaced with grand narratives of imperial might and restoring the trampled dignity of a “Great Nation.” Paradoxically, the elements of these myths often contradict one another—a dynamic that serves the regime’s interests. Such contradictions allow the authorities to identify and suppress dissenters—those who perceive and question the inconsistencies in Russia’s development trajectory. Through targeted repression, these individuals are gradually removed from the public sphere.
Yet, no propaganda, however sophisticated, can nullify the immutable laws of economics. Despite the veneer of restored greatness, the current governance model exacerbates the very issues it seeks to mask. Russia’s proclaimed renaissance combines the worst economic and social challenges of its imperial and Soviet pasts, manifesting as escalating corruption, growth in alcohol consumption, resource scarcity, and rising crime.
The Rise of Corruption and Business Insecurity
In recent years, corruption has reached unprecedented levels, eroding not only the economy but also the fabric of Russian society. The business environment, once fraught with challenges, has now increasingly resembles a lawless environment. Two recent cases exemplify this descent into chaos.
The conflict surrounding Wildberries, one of Russia’s largest online retailers, illustrates the deepening ties between organized crime and economic disputes. Analysis of the situation suggests that prominent political and security figures in the Russian government have become embroiled in this corporate conflict, highlighting the blurred lines between legitimate business and criminal activity. This incident is not an isolated case but part of a broader pattern where disputes are resolved not through legal channels but through intimidation and violence.
A parallel trend is evident in the plight of Russian importers. Entrepreneurs attempting to transport goods through Kazakhstan have increasingly fallen victim to what can only be described as modern-day racketeering. Extortion, delays, and theft have become commonplace, reminiscent of the “wild” 1990s—a period many hoped Russia had left behind. Importers now face exorbitant costs, not only from official tariffs but also from unofficial “fees” extracted by corrupt officials and criminal intermediaries.
The implications of these developments extend beyond the business sector. As corruption permeates every level of society, trust in institutions erodes, and economic growth stagnates. Investors, both domestic and international, are deterred by the unpredictability of Russia’s market, further isolating the country from the global economy.
The Return of Shortages: A Soviet Echo
Another pressing issue resurrected from Russia’s Soviet past is the re-emergence of shortages. Once a hallmark of the planned economy, scarcity has returned, this time as a consequence of mismanagement and sanctions. A striking example is the recent surge in thefts of basic goods such as butter, following a 20% price increase. Such incidents, once unimaginable in modern Russia, highlight the deteriorating living standards for ordinary citizens.
The resurgence of shortages stems from several factors. Sanctions imposed by Western countries have disrupted supply chains, limiting access to essential goods and raw materials. At the same time, the government’s focus on military spending has diverted resources away from the production and distribution of consumer goods. This prioritization of war over welfare reflects the regime’s broader strategy: maintaining power at all costs, even if it means sacrificing the well-being of its people.
The economic ramifications of these shortages are compounded by their social consequences. Rising prices and dwindling supplies disproportionately affect the most vulnerable segments of society, exacerbating inequality and fueling resentment. As public dissatisfaction grows, the government relies increasingly on propaganda to maintain control — a precarious balancing act that risks further destabilization.
A Society in Decline: Crime and Xenophobia
The social fabric of Russia is fraying under the weight of economic strain and government neglect. Simultaneously, xenophobia is gaining traction, fueled by state rhetoric that blames external enemies for Russia’s woes. Migrant workers, essential to many sectors of the economy, have become scapegoats for unemployment and economic decline. This growing intolerance not only undermines social cohesion but also threatens to alienate key trade and labor partners, further isolating Russia on the international stage.
Alcohol Consumption: A Growing Symptom of Russia’s Social Realities
One of the stark indicators of Russia’s current social landscape is the sharp rise in alcohol consumption. In the first half of 2024 alone, overall alcohol consumption (excluding beer) increased by 21%, while beer consumption surged by an astonishing 40%. This follows a trend seen in recent years, with a significant 7.3% spike in strong alcohol consumption in 2022, a 3.6% rise in 2023, and a further 4.5% increase so far in 2024. Notably, vodka sales rose by 0.7%, liqueurs and herbal infusions by 16.6%, and other spirits by 15.7%.
This trend is driven by three main factors. First, heightened “psychological tension,” exacerbated by the COVID-19 pandemic and the ongoing war in Ukraine, has led to increased reliance on alcohol as a coping mechanism. This has been compounded by the diminished impact of previous anti-alcohol measures. Second, sanctions have reduced imports of alcoholic beverages, enabling domestic producers to fill the gap with locally-made spirits such as gin, whiskey, and rum. While these products often fall short of the quality of their imported counterparts, their affordability makes them highly attractive to the average consumer, driving up sales. Lastly, the drop in outbound tourism caused by sanctions has spurred a rise in domestic tourism, which has, in turn, boosted alcohol sales across the country.
However, the official statistics likely understate the true scale of alcohol consumption. Unregistered alcohol—comprising counterfeit products, homemade brews, and surrogates—accounts for nearly a third of all alcohol consumed. This shadow market not only skews consumption figures but also exacerbates public health issues. Alcohol-related diseases, which were already a leading cause of poor health among Russia’s elderly population, have seen a further rise, contributing to higher mortality rates.
The growing prevalence of alcohol consumption underscores the broader social and economic challenges Russia faces. As traditional coping mechanisms falter under the weight of psychological and financial stress, alcohol fills the void—at significant cost to public health and societal stability.
The Illusion of Progress
Despite these challenges, the Kremlin continues to project an image of strength and stability. State-controlled media trumpet military achievements and infrastructure projects, while downplaying or outright ignoring the hardships faced by ordinary citizens. Yet, this façade cannot conceal the reality of a nation in decline.
The evolution of Russia’s governance is not a story of progress but of regression. Clinging to a mythical past, the regime has chosen an economy of war over development, sacrificing the welfare of its people to preserve its own power. As corruption, shortages, and social unrest continue to rise, the cracks in the Kremlin’s narrative become increasingly visible. The question is not whether this model is sustainable—it is not—but how long it can endure before the pressures of reality force a reckoning.
