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London (CNN Business) --
Russian President Vladimir Putin has spent much time on the air in recent weeks assuring the Russian public that sanctions hurt the West more than Russia.
Putin is preparing his country for the long haul.
"The collective West is not going to back down from its policy of economic pressure on Russia," he recently told aviation executives.
Each sector of the Russian economy needs to "make a long-term plan based on internal opportunities."
Putin's policy of self-sufficiency was predictable.
Since Russia annexed Crimea from Ukraine in 2014, the country has been bracing for increased Western sanctions with a strategy dubbed "Fortress Russia."
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Yet the sheer scale of the economic counteroffensive waged by the West since the February 24 invasion of Ukraine, coupled with the growing tide of companies cutting off business with Russia to protect themselves from reputational risk or future sanctions, came as a shock.
"No one who predicted the kind of sanctions the West might impose could have thought this," Foreign Minister Sergei Lavrov admitted in March, referring to the freezing of half of Russia's $600 billion in reserves.
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Russia says it will challenge the sanctions on its foreign reserves in court and has also threatened to sue if it is deemed to have defaulted on its debt due to the asset freeze.
In the meantime, here are some of the ways businesses, industries and officials are struggling to live with Russia's new normal.
1. Lada restyling
The iconic Soviet-era domestic car brand relies heavily on imported parts.
Avtovaz, which makes the Lada, is owned by French automaker Renault, and according to Evgeny Eskov, editor-in-chief of the Russian auto industry magazine Auto Business Review, the companies share a common parts procurement system.
On March 24, in response to news that Renault was leaving the Russian market, Avtovaz revealed that it had to rapidly redesign several models to make them less reliant on imported components.
The company did not detail which models would be affected, but said they would be gradually available in the coming months.
Eskov said that the restyled models will be simpler versions of current cars, without additional features such as ABS.
"Just brutal cars from the past," he wrote in an email to CNN Business.
2. Attract instagramers to Vkontakte
Instagram was — until recently — the top social network in Russia based on monthly users, according to social media analytics company Brand Analytics.
Vkontakte, the Russian version of Facebook, was the second.
Since the invasion, and especially since the Russian communications regulator cut off access to Facebook and Instagram last month, Vkontakte has done everything it can to attract content creators to its platform.
The company waives its commission for any monetized content until the end of April and offers free promotion on the platform to any content creator who has moved from another platform or reactivated their page since March 1.
He has also posted a step-by-step guide to launching a business on Vkontakte.
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Vkontakte's own data shows that this could be working.
Monthly users reached a record of more than 100 million in March.
According to Brand Analytics, Instagram lost nearly half of its active Russian-language users between February 24 and April 6.
This is not the whole story, of course.
Many Russian Instagrammers are still active on the platform because they can bypass the ban by using a VPN.
Olga Levakova, who runs a business selling high-end tsarist Russian-style handmade fabrics, said that after the initial "shock" and "panic" when Instagram was banned, she continues to use the platform through a VPN to reach its customers, mostly foreigners.
Levakova considered closing it down after it was inundated with anti-war comments and messages in the first weeks after the invasion.
They have since settled down, but she has removed a line in her page description that mentioned Tsarist Russia.
She now she just says "historical fabric".
"I couldn't stand the onslaught of aggression," admits Levakova.
Orders keep coming in, but she says it's too early to tell if her business will be affected.
3. Homegrown credit cards
Russia has been bracing for financial isolation ever since some of its biggest banks were hit with sanctions following the annexation of Crimea.
In a way, it has paid off.
Russia's National Payment Card System and the bank card system built on it, known as "Mir", have grown exponentially.
According to the Russian central bank, more than 113 million Mir cards were issued in 2021, up from a total of 1.76 million at the end of 2016. Last year, around a quarter of all card payments in Russia were made made with Mir cards.
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This growth, experts say, was partly engineered by Russia.
"They didn't make it very attractive to ordinary Russians before the invasion," says Maria Shagina, a visiting scholar at the Finnish Institute of International Affairs.
Instead, the government imposed that public sector employees, pensioners and anyone receiving benefits had to use a Mir card.
That meant that when Visa and Mastercard announced in early March that they were suspending transactions and operations in Russia, there was already an alternative.
But Mir is not a direct substitute.
It only works in Russia and a handful of countries, mainly the former Soviet states.
This lack of global reach has also hampered Russia's attempt to create an alternative to SWIFT, the international payment system.
Its own version, known as SPFS, had 400 participants last year, compared to 11,000 for SWIFT.
"The network effect doesn't exist because foreign participants don't want to join it," Shagina said.
"If they don't trust Russia in other ways, why would they trust this system?"
4. Public works jobs
Mass unemployment, according to Elina Ribakova, deputy chief economist at the Institute of International Finance in Washington, has not yet appeared in Russia, but it is one of the things the Kremlin fears most because of its potential to fuel dissent.
"The more they suppress the demonstrations, the more I understand that they are worried about unemployment," he said.
More than 15,000 people were arrested in Russia in the first weeks of the conflict for taking part in anti-war protests, and the Kremlin has effectively silenced the independent media by criminalizing what it sees as "false information" about its so-called "military operation". special".
The city of Moscow is trying to get ahead of the potential unemployment problem with a program to retrain and hire people who used to work for Western companies, many of which have suspended or ceased business operations in Russia.
Moscow Mayor Sergey Sobyanin believes that up to 200,000 jobs are in danger.
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The solution, according to a recent blog post, is to give the remaining workers something "useful" to do.
Among the options he raises are the management of official documents such as passports and birth certificates, work in one of the city's parks or in the temporary health centers that the city has recently begun to create.
$41 million is being set aside to create these jobs and retrain workers.
For Russians who made careers at McKinsey or Goldman Sachs before the war, this would be a game changer.
But Ribakova says she probably won't come to that.
She believes most foreign business executives will leave the country, if they haven't already.
And now that?
So far, Russia has managed to withstand the initial force of Western sanctions without its financial system collapsing.
This is largely due to the central bank, which immediately raised interest rates to 20%—later lowered them to 17%—and imposed strict capital controls.
But this does not mean that Russia has passed the worst.
The economy could contract 8.5% this year, according to the IMF.
The collapse could be even bigger if Europe bans imports of Russian oil.
And inflation is running at 17.5%, something even Putin admits is hurting Russian citizens.
Another key risk, experts say, is Russia's reliance on imported goods, many of which are now subject to sanctions.
These may be more difficult for the Kremlin to counter than measures targeting the macroeconomy.
"There is a feeling, especially in the government, that they are going to turn the corner and then there will be a monster," says Ribakova.
"And they don't know when exactly that monster is going to eat them."
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