Russian President Vladimir Putin warned on Thursday that Western sanctions targeting his country in connection with Ukraine would aggravate the energy crisis and the inflation of food prices on a global scale.
While the bite of these punitive measures begins to be felt in Russia, with in particular a collapse of the rouble, Mr. Putin wanted to be reassuring by arguing that they would not affect his fellow citizens harshly.
Since its outbreak on February 24, the Russian military intervention in Ukraine has been causing concern in world markets. The prices of gas and oil, of which Russia is a major supplier, have soared.
During a government meeting broadcast on television, Mr. Putin assured that his country “respects all (its) obligations in terms of energy supplies”.
He insisted on the fact that “all volumes” were delivered to Europe as elsewhere and that even the “gas transport system of Ukraine is 100% full”, this gas pipeline network constituting one of the key gas arteries to supply the European continent, of which approximately 40% of the gas consumed is Russian.
Soaring oil and gas prices on world markets have nothing to do with Russia, Putin says, as prices hit record highs since Russian forces entered Ukraine en masse .
“Prices are going up there, but it’s not our fault, it’s the result of their own miscalculations, they can’t blame us,” he said.
Fertilizer
The Russian head of state also estimated that Western sanctions would complicate the export of fertilizers and lead to a global rise in food prices.
Russia, like its neighbor Belarus, also harshly sanctioned, are major suppliers of mineral fertilizers and supply both Europe and South America.
“If it continues like this, it will have serious consequences…for the food sector as a whole, rising inflation will be inevitable,” Putin said.
While Russian fertilizers are not directly targeted by the sanctions, the finance and supply chain sectors are, affecting Russia’s ability to export.
The Russian Industry Ministry last week recommended that fertilizer producers temporarily suspend exports.
“If we continue to create problems for us to finance this work, to ensure it, in logistics, the delivery of our products (…) then the prices will increase more and more, and this will be felt on the price of the product final, food products”, insisted Mr. Putin.
While describing this disaster scenario, the Russian president tried to reassure the Russians by arguing that the country’s economy would adapt.
“It will lead to greater economic independence, autonomy and sovereignty,” he said.
“Isolation”
Faced with the sanctions, which caused a fall in the ruble and a further acceleration of inflation, Russia took measures to stem as much as possible the flight of foreign currencies and capital.
Without pronouncing the word “nationalization”, Mr. Putin said Thursday for the appointment of “external” administrators at the head of foreign companies seeking to leave Russia “to transfer them to those who want to make them work”.
“There are enough legal instruments” to do so, he said without providing details, while assuring that Russia remained “open” to foreign economic actors wishing to do so and that their rights “must be protected” .
Despite Mr. Putin’s reassuring statements, economists are anticipating severe economic turbulence in Russia.
According to official figures published on Wednesday, inflation in February reached 9.15% at an annual rate, a high figure which does not yet take into account all the effects of Western sanctions.
For the firm Capital Economics, it is “highly probable” that the conflict in Ukraine will “accelerate Russia’s turn towards isolation and autarky”, which “will prevent it from catching up with the most developed economies”.