Rising Discontent Among Russian Businesses as Sanctions Intensify Amidst Ukraine Conflict

Russian businesses are expressing mounting frustration towards President Vladimir Putin as sanctions imposed amid the conflict in Ukraine take a toll on the economy. According to a report from the UK's Ministry of Defence, there is a growing discontent regarding the elevated interest rates, which have been held steady at 21% by the Russian Central Bank (CBR) since December 20. This recent decision marks a departure from their previous strategy where interest rates were increased from 19% to 21% at their meeting in October 2024, representing the highest rates seen since the war began in 2022.

In November 2024, the ruble reached its lowest value against the US dollar since the onset of the invasion, trading at 114 rubles per dollar. This depreciation appears to have been influenced by the announcement of sanctions affecting Gazprombank and reports indicating ongoing issues with the overheating economy. In an effort to stabilize the currency, the CBR declared it would halt foreign currency purchases until 2025. Despite the ruble maintaining a value above 100 against the dollar until late December, there were widespread expectations that another rate hike would be forthcoming.

Experts warn that the CBR's choice to keep interest rates unchanged is likely to deepen existing economic disparities, exacerbated by inflation from the ruble’s decline, labor shortages, and increased government spending. Additionally, the situation is compounded by the military setbacks Russia faced at the start of 2025, where it reportedly lost close to 1,400 soldiers on January 1 alone, according to Ukrainian military officials. An accompanying social media post quoted science fiction author Arthur C. Clarke, emphasizing the concept of pushing beyond perceived limits.