By Sarah Lindemann-Komarova, Substack, 10/23/25
Many Western economists and pundits have concluded that the future prospects for the Russian economy are grim. Unimpressed by Russia’s resilience in the face of “bone crushing sanctions”, impending economic collapse is seen as a way to strengthen the Ukrainian hand at the negotiating table. To some, it is a strategic victory that will lead to regime change and, if all their dreams come true, the breakup of the Russian Federation.
Pers Hogan used an apt anecdote to frame his negative forecast. Clinton asks Yeltsin to describe the Russian economy in one word and he responds “Good/Khorosho”. When asked to expand on that, Yeltsin says “Not good/Ne Khorosho”.
The “not good” is foreboding. It includes lackluster GDP growth (but still in the plus column), daunting interest rates (even with recent tweaks downward), inflation (even with slight improvements), and disastrous demographics (despite massive incentives to have babies). Then, the doomsday recipe of economic isolation, military support at the expense of social, and limited economic diversification.

3 of 4 cars Chinese in this courtyard
The “good”, not much, but drafting off of the “not good” catastrophic worker shortage, there has been a dramatic increase in salaries. This is true even in poorer regions like the Altai Republic that went from $405 in March 2022 to $831 in July 2025.
To bolster an argument for a more nuanced vision of Russia’s future, it is helpful to apply a “yes, but” addendum. This is justified by the Russian character that is rooted in patience and a predilection to perezhit (live through it). Closing in on four emotionally hard and costly years of the SMO, the key “yes, but” is that for the first time in post-Soviet Russia real money is going to the regions (home to 91% of the population). This includes private investment (the money the West rejected) and Federal government support.

Manzherok Skate Park
Some Federal support is related to National Projects that predate the SMO. However, there is an increased emphasis on accountability and results. In July, Prime Minister Mishustin announced that President Putin was expanding the Altai Republic’s Federal social-economic development plan until 2030 providing over $12 million annually for schools, medical facilities etc.
Incentives for people to enlist are so impressive that in depressed regions like Altai they are economic development drivers. Signing bonuses are 1,460,000 r. (almost 2 years of the new, improved local avg. monthly salary). Those in the battle zone receive a minimum of 210,000 r a month (over 3 times the avg. salary). In addition, their children receive free and guaranteed places in kindergarten, free school lunch, university tuition, and no credit or tax payments while serving. Plots of land are waiting for those who return and need them.
The following is an example of other economic activity and its impact on Manzherok, a Village in the Altai Republic. Located in Southern Siberia bordering Mongolia and China, the Republic is home to 200,000 people, 1/3 of them are Altai. Famous for its natural beauty, it has been referred to as the Switzerland of Russia and some believe it is a gateway to the Buddist/Hindu spiritual kingdom Shambhala. (Full disclosure, I live in Manzherok)

Sunset fishing on the Katun River
This case requires an asterisk because Manzherok, pop. 2,000, is the epicenter for the development of domestic tourism in Russia. The foundation for this began over a decade ago when Sberbank (the largest bank in Russia) took over a failing ski resort project. German Gref, Sber CEO, described his epiphany, “The Manzherok project is a poor asset we inherited and we tried to sell for eight years. We couldn’t.. We could create a new growth point in our country…and create a highly competitive resort, making it the best resort in the world.”

More attractions….More Impressions Manzherok Resort
At a Sber investors conference Gref expressed his plan to repatriate $10 Billion that Russians spend at ski resorts abroad, “While Europe is closed, we will name Courchevel Manzherok and everyone will come to us”. Thus, a massive public private partnership was formed with the Russian Government.

Sber Resort at night
Limited diversification
Domestic tourism is not much of a thing in Russia. The Russian summer vacation tradition is the dacha, visiting relatives, or staying home. According to the Levada Center in 2018 only 12% of respondents visited a Russian destination as a tourist, in 2024 it was 19%. Better, but money and lack of infrastructure, beyond Moscow, St. Petersburg, and Sochi, continue to be constraints.

Hikers on their way to Sofyski Glacier
Despite terrible roads and no hotels, the Altai Republic was a summer destination for neighboring Siberian regions. The season was short from the middle of June to the end of July. It attracted nature lovers who were fine sleeping in tents so they could raft down the Katun River, climb the Belukha Mountain and take long hikes to pristine glaciers, waterfalls, and lakes for cold water plunges. University students never forgot their days exploring the Ukok Plateau and other ancient wonders marking home to some of the Earths first people.

Archeologists lifting the legendary Princess of Ukok, a 5th Century BC Mummy
Manzherok’s celebrity pre-dated Sberbank marketing. Surrounded by mountains and overlooking the Katun River rapids, it is home to the only warm water lake in the Republic. it was immortalized in two films by director/ writer Vasily Shukshin and by pop star Edita Piekha’s 1966 hit “Friendship is Manzherok” honoring the 1966 Soviet-Mongol Friendship Festival that took place there.
At the dawn of the 21st century, only abandoned buildings remained of the furniture factory that once supported most of the villagers. There was no indoor plumbing. Andrei, a young man in his early 20’s who lived with his mother in a beautiful spot on the river bank, was the first to invite tourists to stay in a primitive shed in 2000. The other villagers were shocked and against, one sued but Andrei fought back and won.

Abandoned Manzherok Furniture Factory. It is now a Sber Resort Headquarters
Today, the majority of villagers have some form of housing on their property to generate income. Others provide banya or driving services, sell fresh produce from their gardens or souvenirs. Some work at the Sber Resort or in an ever expanding number of stores and restaurants. A small but growing group have opened stores or restaurants.
In addition to 5 and 3 star hotels, the Sber “Manzherok” Resort now has 13 chalets. Each one was designed to reflect the art and culture of a neighboring Central Asian country. During peak season the chalets are listed for up to $5,700 a night. There are currently six ski lifts, 50 km of trails, night skiing, and a panorama restaurant on top of the mountain.

Manzherok Resort Phase Two
Gref recently described his vision forward, “It will be the largest ski resort in Russia with 250 km of trails. There are 870 snow-making guns, 100% of the trails are covered with snow. The ski season will be 151 days with 2.5 million cubic meters of snow = 1.5-2 m of snow on each trail. That means in April girls can ski in bikinis.” Sber has already spent $1.5 Billion and Gref expects they will at least double that number to realize their future plans that include an amusement park (Siberian Disneyland).
The government is an essential partner in this process. Prime Minister Mishustin has been the point man for two major projects. Sber is primary financer for the small airport to expand into an international airport capable of accommodating 1.2 million passengers (it was built to accommodate 100,000 and is currently handling 400,000). The government will fund 20 km of four lane highway leading to and through the Village to the Resort. Both of these projects are scheduled for completion by 2028.

Camp Coffee Manzherok’s first coffee shop started by 2 women from Moscow
Economic Isolation
July, peak tourist season and the month critical to many of the new small business owners, messages started to appear in the Village chat. The Resort was closing for a week and the only road in and out was closing for two days from the North and one day to the South. A day later came an announcement that the Internet may break down so you better get cash in case you need to buy something. Subsequent messages scolded everyone to clean up their yards and take pride in our fine Village. Hunker down and explain all this to the tourists staying in your guest house or mini hotel. Government at all levels was buzzing, excited, and honored and expected residents to feel the same.

Residents and tourists dunk in the Katun River
The Resort was hosting the International Ecology Forum, the first such event in Russia. Why Manzherok? Sber’s Deputy Chairman of the Board explained that respecting the environment was a key aspect of their development plan. It was also clear from his explanation, “It’s here that you can experience pristine nature, which has a unique energy and allows you to recharge your batteries”, that inviting five Prime Ministers and two high ranking officials from Central Asian countries, Byelorussia, and Armenia was a great marketing strategy. Mishustin served as Russian host.
Several days before the event an army of security personnel descended on the Village and were posted on every dusty road. One day a sidewalk was closed until a bomb squad could check out an abandoned blue plastic bag that turned out to be garbage.

The highway through downtown Manzherok
The dignitary’s airport arrivals were live-streamed. They traveled along the empty highway in black limousines through the middle of the Village and up the hill to the Resort. Beyond the devasting reports presented, important discussions and cooperation agreements were made targeting specific issues such as animal, water, and tree preservation. One example, Kazakhstan will help restore Manzherok Lake.
The importance of what they were talking about up on the mountain made it possible to appreciate the helicopter circling the Village throughout the night and forget the inherent contradiction of a ski resort location for an environmental conference. A rare evening of hope for the environment and a reminder that Altai has some street cred fighting to defend it.

A helicopter circling during the Forum
It was in Altai that the perestroika environmental movement was born when locals stood in front of the tractors to stop the Soviet government from building the Katun Hydroelectric Dam. More recently, the Power of Siberia 2 pipeline, that was announced at the September Shanghai Cooperation Organization meeting, was originally supposed to transit through the sacred Altai Ukok Plateau, a UNESCO heritage site. It was rerouted in response to local and international protests.
Villagers
No one in the Village is against development but they expected to be the caretakers of their land. Tension between local people and a big corporation moving in are to be expected. In this situation the problem was exacerbated when Gref gave an interview and said “Today, everything related to Manzherok zone is under our control.” And worse, he referred to people’s homes as “Shanghai” (the old scruffy, poverty ridden Shanghai) and “kibitki” (gypsy tents).

Villagers are replacing their ancestral homes (2 “kibitki”)
A former Sber manager became Mayor and spent most of his time trying to push local deputies to support Sber’s wish list for the Village General Plan for development. The pot kept getting sweetened with gifts like a garbage truck, playgrounds, school bus, skate park etc. Everybody drove a hard bargain but in the end Sber got a lot of land but the Villagers got what they needed which was to save the last local wild place and outlawing 5 story buildings.

Villagers are replacing their ancestral homes (2 “kibitki”)
Another card was played at the Federal Level establishing zones equivalent to eminent domain (complex territorial development-KRT) in the US. But, so far, they appear to know where the lines are. Both KRT and the four lane highway construction have been designed to avoid all houses. Beyond a few million dollar buyouts on the mountain everyone has been assured their property rights will be respected. No one feels assured and even if the homes are safe, it is clear that beyond a few horses, cows, and goats that continue to roam the riverbank, the Village of Manzherok, as it was long loved, is gone.

A neighbor and her goat
The Governor has made creating a welcoming business and investment climate the number one priority. This is shared by some of the people moving in. It is called progress. A non-resident who is in charge of land issues explained, “There is going to be development, there are going to be tall buildings, tile, cement, lights that’s development, you can’t stop it. You are going to have to get used to noise, and lights, and tons of people.” Change is hard and the bar keeps getting raised. The Ministry of Finance RF is pitching the idea of making the Republic a gambling zone. The Governor thinks it is a good idea, “I understand all the concerns of our residents. But the days when the gambling business was synonymous with crime…are long gone. Now it’s a civilized part of the entertainment industry generating significant budget revenue.”
Conclusion
How quickly and smoothly Russia can reorient its economy and how desperate the West is to hinder this process are the key questions. The transition for the automobile market has been stunningly fast with China going from 2% of the market in 2019 to 60% in 2024.

A Villagers first time on skates at the Sber Resort
Developing domestic tourism is a long term process. There is currently an import substitution project for ski resort equipment since the first generation of the Resort’s ski lifts came from Europe. Not only does it require building massive amounts of infrastructure that has been catastrophically ignored in the regions, but you must change habits and inspire people to vacation beyond the dacha. Another challenge for the Manzherok ski resort is that 300 km away there is Sheregesh that has legendary snow, a hip vibe, has had girls skiing in bikinis for years, and they are also building an airport.

The view from the Sber Hotel Restaurant
Still, early indicators are promising. In the first 8 months of 2025 domestic tourism was up 5% in Russia. In Manzherok, growth with a 55% increase in winter visitors to the Resort (327,000). For the Republic overall, also good news. In the first 6 months of 2023 income from accommodations was $22,825,000 and in 2025 it was $56,087,500. This is only what is officially reported. You hear complaints from hosts that they have fewer people this year but competition is fierce with dozens of new guests houses, motels, and hotels springing up.

The Governor is pleased, in the first eight months the tourist business generated 1.5 billion rubles in taxes, two times greater than last year. The Republic’s budget revenue increased by 2.2 billion rubles in September. Still, the whole thing is a huge bet with a lot of moving parts beyond sanctions. How much marketing do you need to do to get Moscovites and foreigners excited about spending their holiday in Siberia?

No one expects the sanctions to end when the shooting does. No one expects the world to go back to where it was in that millisecond shared post-Soviet euphoria when a peace dividend was assumed. Living through it is no longer enough, the people in Manzherok and beyond want to thrive and they have enough skin in the game to want to be part of the development process. No one is sacrificing for the status quo.



