Sanctions? What sanctions? Russians aren’t feeling the sting.

Russian President Vladimir Putin says that Western sanctions aiming to cause panic and shortages among Russians have failed abysmally. The scene at the suburban Europark shopping mall in Moscow seems to bear that out.

A few Western-owned stores, like The Body Shop and L’Occitane, have notices pasted on their doors that cite temporary closure, with no reason given. But many local franchises, selling luggage, curtains, appliances, perfumes, shoes, fashion clothing, and electronics, all seem to be working as usual.

Editor’s note: This article was edited in order to conform with Russian legislation criminalizing references to Russia’s current action in Ukraine as anything other than a “special military operation.”

The giant French-owned Auchan hypermarket downstairs has bursting shelves and full stocks of almost everything from toilet paper, to fresh meats and vegetables, citrus fruits and bananas, to a wide range of domestic cheeses and dairy products. Only if you were looking for a few specific products, such as Kellogg’s brand muesli or Finnish cream cheese, might you notice they are gone.

Two months into the “special military operation” against Ukraine, accompanied by the most comprehensive barrage of sanctions ever leveled against any country, Russian life, at least around Moscow, looks shockingly normal. Opinion surveys show that huge majorities of Russians don’t expect the sanctions to have any impact on their lives, and almost 10% say they didn’t even know about the situation.

“For the most part we are still living in our previous reality,” says Ivan Timofeev, a sanctions expert with the Russian International Affairs Council, which is affiliated with the Foreign Ministry. “But at some point we will begin transitioning to a new reality, and then it will be very hard to ignore the deep changes we shall have to make.”

“Things actually seem better”

If you happened to be at loose ends in Moscow this week and wanted to sit in an upscale coffee shop, sip a latte, and use the Wi-Fi, you’d be spoiled for choice. Restaurants, beauty salons, grocery stores, car repair services, indeed, the full range of consumer services are still operating almost normally. Thanks to the rebound of the ruble – which was trading at around 130 to the U.S. dollar barely a month ago but has climbed above its pre-February value, to around 80 – the price hikes, though very real, are not yet too worrisome.

Back at the Europark mall, clearly named in a more optimistic time, you need to squint hard to spot the emerging supply gaps.

At the food court upstairs, McDonald’s and KFC have been shuttered for weeks. But there is still a pizza stand, an Asian wok place, and a Vietnamese restaurant. Baskin-Robbins continues to dispense about a dozen flavors of ice cream. Teremok, a Russian fast-food outlet that serves up borscht, blini (pancakes), pelmeni (meat dumplings), and Russian salads (vegetables in mayonnaise), seems to be enjoying newfound popularity. Irina, eating some combination of that with her preteen son, Vova, insists the choices are probably healthier now.

“Things have been strange for quite a while,” she says. “Last year, during the pandemic, none of these shops were even open. Things actually seem better.”

If you were craving American-style fast food, nearby outlets of Burger King and Subway are doing a roaring business with their signature offerings. That can be explained by the franchise system, which really took off in Russia over the past decade or so. The head offices of those companies may have left Russia, but the individual outlets continue working.

The manager of a local Burger King, who didn’t want his name mentioned, says that he can source almost all the items on his old menu locally, and carry on indefinitely. He admits a few adjustments will have to be made, including new packaging and some substitute condiments and seasonings. It won’t look, or perhaps taste, exactly the same, but most people won’t even notice, he insists.

“I am pretty sure food isn’t going to be a problem no matter how serious the sanctions get,” says Mr. Timofeev. That’s a politically potent point, since major turning points in Russian history have often been driven by the curse of famine. “Russian agriculture is pretty self-sufficient today and whatever outside inputs, like seeds and equipment, can probably be replaced.”

And those foodstuffs that Russia does need to import can be acquired from countries that are not part of the West’s sanctions regime. Some of the biggest sources of citrus fruits are Turkey and former Soviet countries like Uzbekistan and Tajikistan. And Russia gets its sugar largely from Brazil, which has not signed on to sanctions.

Obviously Russia has no domestic energy shortages. Prices for home heating and electricity are stable and relatively low. No potential shocks there. The price of gasoline in Moscow was 53 rubles per liter [about $2.85 per gallon] last week, and hasn’t changed much in recent years.

Back to the ’90s?

When asked, many Russians say that whatever happens, they will find ways to cope. That perspective is probably informed by their past lives in the former Soviet Union, an economy that survived seven decades producing almost everything it consumed, from cabbages to paper clips to rocket ships. During the near-total economic implosion in the 1990s, Russians grew their own food, routinely used pirated versions of software and movies, and fell back on barter, family, and community networks to survive.

No one seems to believe the present crisis is going to get that bad. But experts warn that it’s early, and the real crunch in supply chains and crippled industrial capacities probably won’t arrive until at least next year.

There are serious worries about parts and servicing for the Japanese and European cars that millions of Russians drive. Most Western automotive giants are among the hundreds of foreign companies that have pulled out of Russia since February, shredding their warranties in the process. The cost of many spare parts has leapt by as much as 50% in recent weeks, according to an article in Gazeta.ru.

But new logistics chains are already being sourced to companies in China, the article says, a big manufacturer of car parts for the whole world.

Even brand-name Western products will keep arriving through “gray distribution” networks, much like those pioneered by other sanctioned countries like Iran, says Andrei Movchan, an independent economist. One of many examples of how that works is an ad for a Turkish company, which promises to purchase any goods the customer wants, and pass them on for payment in rubles to the Russian end user.

“It will be more difficult and expensive, but nobody will have to go without their gadgets and other comforts,” says Mr. Movchan. “In the longer term, Russian industry is capable of producing a lot of things, or it can be ramped up to do so. It’s just that it will be the technology of 20 years ago, worse quality, higher costs. That’s not good, but we can survive it.”

And then there’s outright piracy, a fixture of ’90s life in Russia, now set to make a comeback. For example, several Moscow cinemas are currently screening “The Batman” and other first-run Hollywood films, even though their licenses to do so have been revoked. That’s controversial, even in Russia, and there is a heated discussion about it in the entertainment press.

“I’m afraid we are headed back to the future,” says Alexey Raevsky, director of Zecurion, a Moscow cybersecurity firm. He says the departure of Western competitors has been a big boost to his business.

“When we are talking about software development, there is no issue of spare parts or physical facilities. It’s just a digital code,” he says. “As they say, nature abhors a vacuum. I talk to people in places like Iran and Syria, where they are strictly forbidden to buy Microsoft or Cisco software, but they say they always have the latest installed on their computers. I’ve never asked them how they do that, but I am sure we’ll find out.”