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Russia’s largest state-owned energy company, Gazprom, has announced plans for its largest-ever layoffs as sanctions imposed on Russia due to their ongoing war in Ukraine continue to impact Russia’s economy.

Some shit you should know before you read: Russia’s economy has heavily relied on the sale of oil and gas, which historically accounted for a significant portion of its GDP and government revenues. As one of the world’s largest energy exporters, Russia used its dominance in the European energy market as both an economic engine and a geopolitical tool. However, following its full-scale invasion of Ukraine in 2022, sweeping international sanctions were imposed, including bans on Russian oil and gas imports by many Western nations. Key pipelines like Nord Stream were also sabotaged, leading European countries to rapidly diversify their energy supplies, significantly reducing their dependence on Russian exports. This dramatic decline in energy sales, coupled with frozen foreign reserves and restrictions on financial transactions, has led to severe economic challenges for Russia, including plummeting revenues, rising inflation, and growing pressure on its war-driven economy.

GAZPROM

What’s going on now: In an announcement, Gazprom disclosed plans to cut 1,600 jobs from its St. Petersburg headquarters, reducing the central office workforce by 40%, as the company struggles with declining revenues and mounting financial pressures. The state-owned energy giant, which has historically been a cornerstone of Russia’s economy, described the layoffs as a necessary step to “eliminate redundancies, shorten decision-making timelines, and enhance employee focus on results.” The decision comes after Gazprom posted a $6.9 billion loss in 2023, its first in decades, as European nations dramatically reduced their reliance on Russian gas following sanctions and the Ukraine war.

Russia’s economy, already bleeding from reduced access to Western markets and technologies, has been battered by its diminishing energy revenues, a critical pillar of its financial stability. While the country’s official unemployment rate remains low, labor shortages are widespread, and the rising cost of food, housing, and utilities has put additional pressure on households. Inflation has surged to 9.5%, and the banking sector remains under strain as sanctions have restricted access to international financial systems. Meanwhile, skyrocketing military spending continues to drain resources, leaving other parts of the economy struggling to adapt.

This all comes as President Donald Trump recently criticized Russian President Vladimir Putin over Russia’s struggling economy, calling it “failing” and urging Putin to end the war in Ukraine. Trump warned that if Russia does not negotiate a resolution to the conflict soon, it could face even harsher sanctions and trade restrictions from the United States and its allies.

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