Does Russia fear further economic sanctions?
Audio 04:07
The arrest of Alexey Navalny at Moscow airport.
via REUTERS - EVGENY FELDMAN / MEDUZA
By: Dominique Baillard Follow
8 min
Several European states are pleading for the strengthening of sanctions against Russia following the arrest of the opponent Alexeï Navalny and his supporters.
Would increased sanctions be a big blow to the Russian economy?
Publicity
The official discourse in Moscow consists of minimizing, or even neglecting the economic impact of these reprisals.
For six years now, Russia has been subject to economic sanctions following the Ukrainian crisis, American and European sanctions regularly renewed since.
These reprisals relate to the prohibition of the trade in arms and certain sensitive technologies, they target personalities, around 180, and some fifty entities linked to the Kremlin.
Finally, they restrict access to capital markets.
If the first measures taken in 2014, together with the fall in the price of oil, caused a serious economic crisis in 2015, since then Russia has taken care to strengthen its autonomy to avoid suffering another shock.
Moscow for example reduced the use of the dollar
For the first time the Russian central bank's gold reserves have exceeded its dollar reserves, this has been true since the summer of 2020, a highly unusual situation.
The Russian central bank has become the number one buyer of gold, a safe haven that helps it weather crises.
The Russian state also avoids borrowing from abroad.
Finally he got into the habit of making provisions: when the price of a barrel exceeds 42 dollars, the surplus abounds in the public funds, an insurance which is also used to face the fall in oil prices, because it is still the main provider of tax revenue.
Finally, Russia has acquired the financial tools to bypass certain European markets, such as clearing houses.
The implementation of these protective measures demonstrate the extent to which sanctions can hamper its economic activity.
All the studies agree: sanctions have a cost for the Russian economy.
The IMF estimates that they deprived it of 0.2% growth per year between 2014 and 2018. Their short-term impact is less harmful than that caused by the fall in the oil markets, but this remains a serious handicap for developing the economy. 'economy.
The fragility of the ruble bears witness to this.
With each new round of sanctions, or each time the business community believes the risk is climbing, the Russian currency plunges.
After the poisoning of Alexey Navalny, the ruble lost 20% of its value against other currencies.
The Russian economy must also absorb the consequences of the pandemic at this time
The coronavirus has taken its toll.
In 2020 the death toll tripled compared to the previous year, a jump attributed to Covid-19 by independent experts.
However, health is not the Kremlin's priority, it comes after the economy: to prevent it from collapsing, the Russian government gave up a second lockdown last fall.
The state spent 4% of GDP last year to help businesses and families, much less than in Europe but comparable to what is done in middle-income countries.
But that safety net is already shrinking to 1% of GDP this year.
The economy should return to its pre-crisis level this fall, according to forecasts from VTB, the country's second largest bank.
Unless new sanctions jeopardize the recovery.
A new salvo would cause the flight of capital, which would permanently hamper the economic development of Russia.
IN SHORT
The European Commission plans to strengthen controls on vaccine exports outside the Union.
As it did in the spring for masks, it could limit these exports to protect its supply.
Discussions with Astra Zeneca came to nothing.
The laboratory has said it could cut its deliveries to Europe by half.
Today it produces in the United Kingdom and on the continent, it is of course this production that would be affected by export restrictions.
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Alexei Navalny
Economy