Post by pieter on Dec 29, 2023 17:03:05 GMT -7
NOS News• Yesterday, 22:28
Despite sanctions, Russia's economy is doing quite well
To bring Russia to its knees economically; that was the idea when the EU imposed sanctions because of the war in Ukraine. But anyone who takes stock almost two years later must conclude that the Russian economy is not doing badly. Pretty good even.
This is not only said by Russian President Vladimir Putin, but is also evident from figures and conversations that Nieuwsuur had with experts. “The sanctions actually help the Kremlin's propaganda.”
A ban on Russian oil, freezing of cash reserves and chaining up mega yachts; it is a selection of the measures that the EU has introduced since February 2022.
But all those sanctions do nothing for Russia, Putin said this month in an interview on state television. Those words may sound like propaganda, but they are not far from the truth. So says Marek Dabrowski, a Polish-born economist who specializes in Eastern Europe.
Dr. Marek Dabrowski is a Non-Resident Scholar at Bruegel, Brussels, Professor of the Higher School of Economics in Moscow, Co-founder and Fellow at CASE - Center for Social and Economic Research in Warsaw.
Used to sanctions
Because the EU already imposed measures when Russia annexed Crimea in 2014, Putin's economy was already 'used' to sanctions, according to Dabrowski. Russia expert Hubert Smeets agrees and even goes a step further. "Russia has been living under sanctions since the October Revolution (in 1917, ed.)."
From a PR perspective, the sanctions even suit Putin well, says Dabrowski. They reinforce the message that the president continually preaches to his own people: "Look, the whole world is against us. We have to defend our country, our dignity."
Russia carried out air strikes this morning on the cities of Kyiv, Lviv, Kharkiv, Dnipro, Odesa and Zaporizhia. Russia did this with a large arsenal of weapons. At least thirty people were killed, dozens of others were injured.
Putin argues that his military's successes are linked to the healthy economy. This concerns a so-called war economy, which, according to Russia expert and journalist Hubert Smeets, indeed works well.
"Factories run 24/7, and the ruble press runs at full capacity." With the latter goal, Smeets aimed at printing additional currency notes. An economic trick that countries often use during war, but which has a downside in the long term. The coin then decreases in value.
"That downside will not become visible in 2024. But in 2025 or 2026 the economy could collapse like a plum pudding."
The numbers
In 2022, the Russian economy shrank: GDP is estimated to have fallen by 2.1 percent. According to the OECD, an economic partnership of 38 countries, the decline this year could even be 2.5 percent. But according to other sources, Russia is in better shape. For example, the World Bank predicts a decrease of 0.2 percent and the International Monetary Fund even an increase of 0.7 percent.
Hubert Smeets, Dutch correspondent in the Soviet Union and Russia (1990-1993), understands that Moscow residents are not concerned about the economy. Putin spares the capital's residents as much as possible.
"Because he knows very well that power is centralized in Moscow. He must prevent the people there from turning against him." In other parts of the country, people are more affected by inflation, for example.
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Hubert Smeets (Amsterdam, April 22, 1956) is a Dutch journalist and historian. Smeets is an employee of the Dutch quality newspaper NRC Handelsblad, where he started as a volunteer in 1980. He is one of the founders of the knowledge and analysis platform Window on Russia and wrote, among other things, a (political) biography of the Dutch politician Hans van Mierlo. From 2003 to 2007 he was editor-in-chief of the opinion weekly De Groene Amsterdammer.
Oil sanctions
Back to the sanctions that have so far affected Russia so little. For example, the price ceiling for oil. EU countries agreed last year that they would buy Russian oil for a maximum of $60 per barrel.
But then the Kremlin intensified trade with countries such as India and China. They will pay an estimated $80 to $85 per barrel next year, the American news agency Bloomberg reported this week.
In October, Putin's oil revenues were $13 billion. That amount has not been this high since April 2022.
Ferraris and Lamborghinis
Lamborghini Aventador in Moscow
Trade routes are also changing in other markets. American, European and Japanese manufacturers no longer do business in Russia. So rich Russians are now importing their cars from Dubai. Russians often buy electronics via Kyrgyzstan or Kazakhstan.
Then there is also the illegal trade. Russian journalists recently reported that Russia imports expensive Ferraris and Lamborghinis through secret routes. This would involve approximately a thousand cars worth around 90 million euros. That trade would mainly be possible via friendly Belarus. Western countries still trade with that country.
Source: nos.nl/nieuwsuur/collectie/13965/artikel/2503183-ondanks-sancties-draait-de-economie-van-rusland-best-goed
Translated from Dutch to English by Pieter
