How much damage has economic sanctions done to Russia?

In response to the Russian invasion of Ukraine that began in February 2022, the United States and other Western countries implemented severe economic sanctions.

However, the economic sanctions do not seem to be having any effect, as the market price of the Russian ruble, which plummeted for a time, has returned to the level before the invasion of Ukraine.

Sergey Guriev, an economics professor at the Institut d’Etudes Politiques de Paris who specializes in the Russian economy, explained the effects of such economic sanctions.

According to Guriev, although the Russian economy was stagnant before the war started, it was not critical from a macroeconomic perspective, that is, from the perspective of the Russian economy as a whole.
This state of affairs is described by economists as “stuck in the mud and not worried about falling off a cliff,” he says.

In fact, since 2013, the Russian economy had been growing at an average annual GDP growth rate of around 1%.

Although the Russian economy had its challenges, such as “corruption, business practices tied to political ties, and isolation from the international economy,” its strengths, such as “low government debt, a substantial sovereign wealth fund, and abundant foreign exchange reserves,” allowed Russia to continue its moderate economic growth.

Also, when Russia occupied the Crimean Peninsula in 2014, the United States threatened to cut Russia off from the Society for Worldwide Interbank Financial Telecommunications (SWIFT), so Russia developed its own financial network, the Financial Message Forwarding System (SPFS), to replace SWIFT in preparation for the worst case scenario. The SPFS had been in operation since 2017, albeit almost exclusively in Russia.

Against this background, it was customary among economists to compare Russia to a “fortress” that could withstand economic sanctions. However, once the war actually began, the Western countries imposed economic…

Related posts:

The past year has challenged all of us in ways we could never have anticipated. Despite months of warranted civil unrest, the transition to fully remote work in response to the COVID-19 pandemic and…

pppppppppppppppppppppppppppppppppppppppppp. “ooooooooooooooooo” is published by Trung Le Tan.

In the morning I awoke, the lake before me now calm. It thrashed against a heavy wind the night before, beating against the rock it had churned down into sand over the centuries. Now, exhausted, it…