Rich in raw materials, Russia should still manage to get through the new economic calamities that it has brought on by its own fault. But this will not be done without harm to its population or without further hampering its chances of future prosperity.
The Russian president on Wednesday promised a series of financial aid to Russian households and businesses to deal with the avalanche of economic sanctions that their country has faced since embarking on the invasion of Ukraine. . In particular, he pledged to increase “the subsistence minimum, the salaries of civil servants” and pensions, reported Agence France-Presse, and even to “reduce poverty and inequality”. “Of course, the new reality is going to require profound structural changes to our economy,” he admitted. “It will be difficult”, but it will allow us to be more independent of Western countries.
The economic and financial sanctions that have been imposed on Russia since the start of the crisis are the heaviest imposed on a great power since the Second World War, the Peterson Institute for International Economics recalled again this week. We would speak at the very least of 5,500 measures imposing a commercial embargo on the sale or purchase of certain goods (fossil fuels, armaments, technologies, etc.), freezing Russian assets abroad or cutting off the country from important financial channels.
It is still difficult to predict the repercussions that all these measures will have, noted this week the wall street journal, firstly because it is too early to have the official statistics, but also because the Kremlin has no interest in making them known. Expert estimates range from an economic contraction this year of 6.2%, according to Standard & Poor’s, from 13.4% to 24% for Moody’s, to as much as 33%, according to the Institute for International Finance, leaving foresee a shock greater than that of the terrible Russian financial crisis of the end of the 1990s (-10%). “It’s a tremendous act of self-destruction,” noted one of these experts.
summer in april
The ruble has already lost at least half of its value, sending the price of imported goods skyrocketing and risking catapulting inflation to peaks. At last count, more than 400 foreign companies have left Russia, at least temporarily, either because they were directly exposed to the sanctions, or because they feared being hit anyway indirectly, or to protect their brand image. . For everyone else, times are going to be tough, with domestic demand collapsing and supply chains disrupted. Employees of Avtovaz, the country’s leading car producer, learned this week that their summer holidays, normally scheduled from July 25 to August 14, will finally be moved up to the beginning of next month, due to a lack of parts to assemble.
A major producer of fossil fuels, cereals and minerals that the world economy is thirsty for, Russia will, however, continue to find takers abroad, experts warn. Especially because Europe cannot, for the moment, do without its energy. But also, because other countries, including China and India, are less observant of Ukraine’s fate, especially since they know they will be in a position to demand generous rebates.
Everything will depend on what Europe and China do. But Russia can hold out for a long time yet.
There is a limit, however, to the fuel that can be redirected elsewhere, for lack of enough pipelines in particular, observed Thursday The Economist. And then, even China cannot always offer products and technologies at the same level as Westerners. In addition, Chinese companies do not want to expose themselves to sanctions either.
Long-term costs
Anyway, the lesson that Vladimir Putin learned from the sanctions imposed on him when he annexed Crimea in 2014 is that it is better to depend as little as possible on others and tend instead towards security and peace. autarky, recalled this week The world. It has actually come closer to it in terms of basic necessities as well as public finances. This was much less conclusive in terms of technology, in addition to resulting in a relative impoverishment of the population.
“Everything will depend on what Europe and China do. But Russia can hold out for a long time,” Sergei Guriev, former adviser to President Putin and now professor at Sciences Po Paris, explained last week in an interview at the Bruegel Institute, a European economic research center.
Either way, it will result in a huge economic setback, the expert said. Particularly for the poorest populations, whom their president thought to charm with his military campaign. But also in the long term with, in particular, all these brains fleeing the country, the investors who are turning away from it and the technologies to which Russia will not have access. “You know, dictatorships are already expensive in terms of the army, means of repression and corruption. But here, Putin could well set the Russian economy back 30 years. »