St. Petersburg Economic Forum

New Sanctions Won’t Hurt Russia

September 26, 2018
Andrey Movchan
This is a summary of an article originally published by Foreign Policy with the subheading: "Washington thinks punitive measures will change Moscow’s calculus, but the Russian economy is doing just fine."

The author writes that Russia's economy has become well-insulated against sanctions. Moscow's foreign currency reserves are at an all-time high, and the falling value of the ruble has actually been a boon for Russia's state budget. Furthermore, Russia's sovereign debt levels only make up 17 percent of its GDP and are therefore manageable. Moscow has exploited the sanctions regime for political purposes and has protection due to the Kremlin's heavy domination of the economy. Capital flight from Russia has decreased markedly, and sanctioned Russian oligarchs merely draw closer to the Kremlin. Even the unpopular pension reform plan has been blamed on Western sanctions. While Russia could "be vulnerable to restrictions on critical imports of advanced technology and equipment," Moscow is betting that the West will not cut off the exportation of hydrocarbons and other raw materials from Russia, as it would harm Europe greatly.

Read the full article at Foreign Policy.

Author

Andrey Movchan

Andrey Movchan is a nonresident scholar at the Carnegie Moscow Center.

Photo by Kremlin.ru shared under a CC BY 4.0 license.