The story of the countries in the world most subject to sanctions.. How has the Russian economy become?

MOSCOW

- Within hours of Moscow's announcement of the start of the special military operation in Ukraine, Western countries rushed to impose the widest package of sanctions on Russia, making it the world's leading country in terms of the number of restrictions imposed.

The discussion of sanctions initially began immediately after Russian President Vladimir Putin announced the recognition of the independence of Donetsk and Luhansk as independent republics on February 22, and the most prominent reason for the sanctions is what happened two days later, when Moscow announced what it called a "special military operation."

To highlight the enormous size and harsh nature of these sanctions, it is sufficient to refer to a statement by US President Joe Biden that sanctions are an alternative to World War III.

Record

By the seventh of last March, Russia became the world leader in terms of the number of sanctions imposed on it, bypassing Iran, and by last March 22, the number of Russian individuals and entities subject to sanctions reached 7,116.

The economic crisis began with a sharp decline in the value of the Russian ruble against foreign currencies with the outbreak of the war in Ukraine, followed by subsequent economic sanctions - imposed by several Western countries and their allies - targeting the banking sector, the central bank, sectors of the economy and a number of companies, as well as President Vladimir Putin himself. And a number of senior statesmen, entrepreneurs and others.

shock stage

The Russian economy went through difficult times with the first months of the recent sanctions, according to official statistics at the time, the annual inflation rate in the country last May reached 17.8%.

But the state declared a kind of “counterwar” and carried out the largest operation to support the local currency, which eventually led to its recovery to a large extent, and the ruble reached a better level than it was on the eve of the sanctions.

This does not, in any case, mean the recovery of the economy as a whole. The embargo has not been canceled and Russian assets are still frozen in foreign banks, and hundreds of foreign companies that have left the Russian market refuse to return to it.

However, the issue of the feasibility of Western sanctions against Russia - especially half a year after the start of the war with Ukraine - has become one of the most frequently raised topics in recent times.

Many Western experts themselves describe it as useless, as it has reached the limit, and its expansion threatens to do much harm to the rest of the world and the Western countries themselves. Western politicians and analysts are almost unanimously agreed that it has, at a minimum, not changed the Kremlin's behavior.

official reviews

After the imposition of large-scale sanctions, the Ministry of Economic Development in April 2022 presented the first scenario of economic development in the country, according to which the decline in Russia's GDP at the end of the year was expected at 8.8%, and in 2023 the Russian economy could grow by 1.3% But in May, the agency improved its forecast to between 7% and 8% for this year, while its estimate for 2023 fell to 0.7%.

At the same time, the ministry expected that the peak of the economic contraction will be in the fourth quarter of 2022, and not in the third, as was previously assumed.

But the Central Bank - in a report - last May, gave more negative estimates, as experts from the bank confirmed that the uncertainty about the prospects for the development of the economic situation in the country is still high.

According to them, restrictions on foreign trade and cooperation with other countries will lead to significant structural changes in the Russian economy that may take some time.

On this basis, Russia may need about a year and a half or two years to change the logistical methods, search for alternatives for lost goods, develop technologies, change items and goods, and restore the labor market.

But after the economy stabilizes - according to the report - growth will be limited at first, and it may accelerate over time if the state succeeds in addressing the basic problems in the economy.

Returning to official estimates, the Central Bank expects inflation at the end of this year at the level of 18-23%.

At the same time, Russia's GDP will decrease by 8-10%, and in 2023 the economic decline will slow to about 3%.

The global economy is in danger

It is necessary to mention here the possible options for the impact of the Russian military operation in Ukraine and the geopolitical tension associated with it on world trade.

In this context, the analysts of the World Economic Forum had developed a set of scenarios for the development of the crisis and the implications of this for the global economy, such as declaring a trade “boycott” against Russia, and imposing additional sanctions on it, and if the conflict continues, the restrictions will expand, and more international companies will leave Russian market.

At the same time, Russia will not be excluded from the WTO, but if the conflict continues, increased tariffs and bans on export trade with it will be resorted to.

As for the second scenario, it is assumed that in the event of a ceasefire and a "disguised armistice" with Ukraine, trade relations between Russia and other countries can be gradually restored.

According to analysts, this will reduce the risks of further fragmentation in the global trading system.

In the third scenario, secondary sanctions may be imposed on WTO countries that financially support Russia, and WTO countries may be subject to restrictions if they provide military equipment or ammunition to Russia.

LONG TERM EFFECTS

According to Russian experts, the impact of the 2022 sanctions on the Russian economy will last from 10 to 15 years, and in their opinion, the country is waiting for 3 scenarios for the development of events:

• Transition to self-sufficiency

• Adapting to a normal lifestyle through stagnation with a prolonged stagnation phase

• The struggle for growth

However, they were divided between those who are likely to bet the authorities on boosting growth, and those who favor the second scenario: stagnation and stagnation.

According to economic analyst Anton Velikganov, the sanctions in any case did not lead to a sharp deterioration in the economy or cause tensions in the social and economic spheres of the country.

He adds - in an interview with Al Jazeera Net - that sanctions, as a general rule, "do not work", meaning that the goals set by the countries that imposed sanctions against Russia were not achieved;

It did not change Russian decisions or policies, let alone the “collapse of the system,” as he put it.

But he points out that it will not be possible to simply wait for the sanctions and economic embargo to end, and the facilities associated with the natural "erosion" of the sanctions regime may appear only after 3-4 years.

In turn, the economist Victor Lachon rules out the idea of ​​resorting to a policy of self-sufficiency, explaining that throughout history, including modern history, Russia has always been in close contact with the outside world, east and west, and so far, most countries of the world have not severed foreign trade and economic relations with Russia, so this option - in his opinion - is completely excluded.

The most likely scenario, according to him, is the path of institutional inertia with some “scattered” tools for growth, because the high uncertainty of the current economic situation makes it almost impossible to implement a coherent development policy.