Vladimir Putin’s Fortress Russia is crumbling

FOLLOWING RUSSIA’SGDP invasion of Ukraine, an economic war has begun. The West has imposed unprecedented sanctions. Investors are dumping Russian assets as fast as they can. So far this year the rouble has lost one-third of its value. The government may soon default. Capital Economics, a consultancy, expects Russian inflation to hit 15% before long, with falling by 5% this year.The ructions in Russia’s markets have taken many by surprise. For years President Vladimir Putin had, apparently successfully, built up Russia’s economic defences, such that it would easily be able to resist whatever Western governments threw at it—what Timothy Ash of BlueBay Asset Management dubbed the “Fortress Russia” strategy. It turns out that the strategy has been a failure. “From Fortress Russia to Rubble Russia in a week,” says Mr Ash.