Summary: Western sanctions aimed at causing Russia’s economic collapse proved ineffective. Of course, they had an impact on the Russian economy, but they were unable to crush it. Moreover, Russia used the situation to its advantage and was able to replace the Western corporations that chose to cut business with it.
The Ukrainian conflict dealt a significant blow to the Russian economy, but it survived and recovered. Russia’s economy accounts only for only 1.8% of the world GDP, while the Western countries that imposed harsh sanctions on Russia account for a whopping 42% of the global economy. Russia’s strong position in world trade is primarily due to raw materials – key commodities that are difficult to replace. Russia is responsible for 11 percent of world trade in oil and petroleum products, 17 percent of natural gas, 17% of wheat, 20% of potassium fertilizers, 30% of ammonia, and the list goes on.
The export of precious commodities, which constitutes the lion’s share of Russian income, did not collapse as a result of a skilled policy of establishing a position in the global market.
Today, the global market is controlled by the United States. It profits greatly from it but is also responsible for keeping it in balance and ensuring that poor nations can survive. However, as a result of its failed anti-Russian sanction policy, these countries were placed on the verge of starvation due to a shortage of food and astronomical prices of food and fertilizer.
Russia’s financial system has also taken a hit. The central bank’s response was exemplary: it carried out a series of operations to restore the functioning of banks that had been affected by sanctions and the outflow of foreign capital. The Russian payment system “MIR,” which had been in place for several years, was in high demand. Prior to this, the Russian market was dominated by Western monopolies – Visa and MasterCard – but it was due to MIR that their withdrawal from Russia in March 2022 did not result in the financial system collapsing. Furthermore, for more than a decade, the dollarization of the economy has been on the rise, which has helped soften the blow of the sanctions.
Additionally, Russia’s balanced fiscal policy has aided in the prevention of the crisis. The state budget of Russia has virtually no deficit, so the attempt to force Russia’s bankruptcy in the financial market has not been successful.
The Russian economy has proven to be stable, withstanding the massive outflows of major Western corporate players. Despite the temporary paralysis of many industries, services, and trade, by the fall of 2022, 90% of lost jobs had already been recovered, technology partners had been replaced, and markets that had previously lost all revenue had been restored. All of this was made possible by the state’s intervention.
Consequently, instead of a wave of bankruptcies of Russian enterprises cut off from Western capital, they eventually expanded and absorbed former Western competitors’ space. As a result of this, only one out of every ten Western corporations have left Russia permanently; others have scaled back their operations, but the vast majority continue to operate, unwilling to abandon the market they have worked so hard to acquire.
Fri, 03/03/2023 – 18:44