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So do sanctions on Russia actually work?

Despite years of economic warfare, there is still no evidence Russia’s economy has been significantly harmed

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(Irrussianality) – In my recent post about the Canadian House of Commons defence committee’s report on Ukraine, I complained that the committee had recommended strengthening sanctions against Russia without producing any evidence that sanctions were an effective tool in changing Russian behaviour. As luck would have it, I have acquired a copy of a recent report which analyzes the effect of sanctions on the Russian economy. I thought, therefore, that I should share the report’s conclusions with you.

Before doing so, it’s first necessary to point out that damaging the Russian economy isn’t the ultimate point of sanctions. If sanctions are to have any meaningful purpose, then that purpose has to be to change Russian behaviour, specifically vis-à-vis Ukraine, given that Ukraine was the pretext for the sanctions. That said, sanctions aren’t going to make Russia change its behaviour if they don’t damage the Russian economy. Coercion has to hurt if it is to coerce. No pain, no gain, as it were. So are they hurting?

The report I have in hand is entitled ‘What difference have sanctions made and is that about to change?’ It was published in September by Macro Advisory Eurasia-Russia Consulting which describes itself as ‘the leading independent macroeconomic and political strategy firm specialising in the Eurasia region, including Russia and the CIS states.’ The report concludes that, ‘it is impossible to say categorically that sanctions have either significantly contributed to the economic decline [in Russia since 2014] or that they have helped the economy survive what would otherwise have been a more severe recession.’ However, the report’s authors tend more towards the latter option, saying that ‘sanctions helped in many respects.’

According to the report, the Russian economy was slowing down even before 2014. The major cause of the subsequent recession was the collapse in the oil price. The impact of sanctions was very small. However, sanctions did affect the way that the Russian government responded to the oil-price-driven recession. Following the global financial crisis of 2008, the government reacted by spending large amounts of its reserves on propping up the ruble, and also by increasing government spending more generally in a type of Keynseian counter-cyclical strategy. In 2014, it abandoned this policy. Instead it allowed the ruble to become a free-floating currency, while it also exercised a tight monetary policy designed to drive down inflation.

The report’s authors credit this latter strategy with preventing the post-2014 recession from becoming as deep as many feared it would be. They write:

Sanctions removed, or made more difficult, the soft options of borrowing and spending … The combination forced the state to be much more fiscally disciplined and more flexible with monetary policy. The ruble free float would not have happened without sanctions. … the decision to stop supporting the currency was the single most important action taken by the government and one of the key reasons why sectors, such as agriculture, have become more competitive and started to grow. … [Therefore] it can be argued that the 2014 sanctions actually helped Russia avoid a steeper recession and a more severe financial crisis.

The report says also that the sanctions forced the oil and gas sector to become more efficient, resulting in an increase, not a decrease, in production after 2014. In general, says the report,

Russia is in good financial shape. … Russia is the sixth-lowest indebted nation and has the sixth-largest financial reserves. … As a result of the sanctions, Russia was forced to repay $250 bn of external debt between 2014 and 2016. That represented 12.5% of pre-devaluation GDP and 25% of post-devaluation GDP. Not many countries in the world could have done that and still avoid a catastrophic crisis. It shows the resilience in the macro-economic and social-political system.

What then of the future?

On this Macro Advisory is a little more cautious. It claims that a lot depends upon the effects of the latest sanctions legislation passed by the US Congress. With this legislation, Congress has effectively seized control of sanctions from the president. Given past experience (e.g. with Cuba, Iran, and the Jackson-Vanik amendment which imposed sanctions against the USSR), the likelihood is that the existing sanctions against Russia will remain for a very long time, regardless of what happens with US-Russia relations more broadly. The new legislation is disturbing, moreover, because it contains stipulations which could be used to dramatically increase sanctions against Russia in the future. This possibility creates a degree of uncertainty which deters foreign direct investment (FDI) in Russia. Currently FDI in Russia is rising again, but that could easily change. A much harsher sanctions regime is possible, and that, says the report, could have a negative effect on the Russian economy.

The report lays out three possibilities. The first involves a relaxation of sanctions by European powers. The second sees sanctions remaining as they are. The third envisages much tighter US sanctions. The report assesses that in the first scenario, growth in Russian GDP will pick up to 3.0% by 2020, accelerating to 4.5% by the end of Putin’s final term in office in 2024. In the second scenario, growth will gradually rise to 3.0% by 2022 and remain roughly constant at that level thereafter. In the third scenario, growth will drop to 0.8% by 2020 before increasing to 2.3% by 2024.

Personally, I suspect that scenario two is the most likely – things will continue on much as they are. If the authors are correct, therefore, we should expect that, barring some external shock such as another global recession, during Putin’s final term in office the Russian economy will experience steady if not extremely rapid growth, ending up with three years of 3.0% growth per annum. That’s not enough to catch up with the West, but it’s not bad either, and certainly sufficient to put a noticeable amount of extra money in Russians’ pockets. If that’s really true, then economically speaking Putin’s last years will be a moderate success from an economic point of view.

Of course, these are all just projections and, as we know, economists often get their projections wrong. Nevertheless, none of this is good news for those who think that sanctions are an effective tool against ‘Russian aggression’ or who imagine that the collapse of the ‘Putin regime’ is just around the corner.

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Photos of new Iskander base near Ukrainian border creates media hype

But research into the photos and cross-checking of news reports reveals only the standard anti-Russian narrative that has gone on for years.

Seraphim Hanisch

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Fox News obtained satellite photos that claim that Russia has recently installed new Iskander missile batteries, one of them “near” to the Ukrainian border. However, what the Fox article does not say is left for the reader to discover: that in regards to Ukraine, these missiles are probably not that significant, unless the missiles are much longer range than reported:

The intelligence report provided to Fox by Imagesat International showed the new deployment in Krasnodar, 270 miles from the Ukrainian border. In the images is visible what appears to be an Iskander compound, with a few bunkers and another compound of hangars. There is a second new installation that was discovered by satellite photos, but this one is much farther to the east, in the region relatively near to Ulan-Ude, a city relatively close to the Mongolian border.

Both Ukraine and Mongolia are nations that have good relations with the West, but Mongolia has good relations with both its immediate neighbors, Russia and China, and in fact participated with both countries in the massive Vostok-2018 military war-games earlier this year.

Fox News provided these photos of the Iskander emplacement near Krasnodar:

Imagesat International

Fox annotated this photo in this way:

Near the launcher, there is a transloader vehicle which enables quick reloading of the missiles into the launcher. One of the bunker’s door is open, and another reloading vehicle is seen exiting from it.

[Fox:] The Iskander ballistic missile has a range up to 310 miles, and can carry both unconventional as well as nuclear warheads, putting most of America’s NATO allies at risk. The second deployment is near the border with Mongolia, in Ulan-Ude in Sothern Russia, where there are four launchers and another reloading vehicle.

[Fox:] Earlier this week, Nikolai Patrushev, secretary of Russia’s Security Council, said authorities of the former Soviet republic are being “controlled” by the West, warning it stands to lose its independence and identity as a consequence. “The continuation of such policy by the Kiev authorities can contribute to the loss of Ukraine’s statehood,” Mr Patrushev told Rossiyskaya Gazeta, according to Russian news agency TASS.

This situation was placed by Fox in context with the Kerch Strait incident, in which three Ukrainian vessels and twenty-four crew and soldiers were fired upon by Russian coast guard ships as they manuevered in the Kerch Strait without permission from Russian authorities based in Crimea. There are many indications that this incident was a deliberate attempt on the part of Ukraine’s president Petro Poroshenko, to create a sensational incident, possibly to bolster his flagging re-election campaign. After the incident, the President blustered and set ten provinces in Ukraine under martial law for 30 days, insisting to the world, and especially to the United States, that Russia was “preparing to invade” his country.

Russia expressed no such sentiment in any way, but they are holding the soldiers until the end of January. However, on January 17th, a Moscow court extended the detention of eight of these captured Ukrainian sailors despite protests from Kyiv and Washington.

In addition to the tensions in Ukraine, the other significant point of disagreement between the Russian Federation and the US is the US’ plan to withdraw from the Intermediate Range Nuclear Forces Treaty (INF). Russia sees this treaty as extremely important, but the US point of view expressed by John Bolton, National Security Adviser, is that the treaty is useless because it does not include any other parties that have intermediate range nukes or the capability for them, such as Iran, North Korea, and China. This is an unsolved problem, and it is possible that the moves of the Iskander batteries is a subtle warning from the Russians that they really would rather the US stay in the treaty.

Discussions on this matter at public levels between the Russian government and the US have been very difficult because of the fierce anti-Russia and anti-Trump campaigns in the media and political establishments of the United States. President Putin and President Trump have both expressed the desire to meet, but complications like the Kerch Strait Incident conveniently arise, and have repeatedly disrupted the attempts for these two leaders to meet.

Where Fox News appears to get it wrong shows in a few places:

First, the known range for Iskander missiles maxes at about 310 miles. The placement of the battery near Krasnodar is 270 miles from the eastern Ukrainian border, but the eastern part of Ukraine is Russian-friendly and two provinces, Donetsk and Lugansk, are breakaway provinces acting as independent republics. The battery appears to be no threat to Kyiv or to that part of Ukraine which is aligned with the West. Although the missiles could reach into US ally Georgia, Krasnodar is 376 miles from Tbilisi, and so again it seems that there is no significant target for these missiles. (This is assuming the location given is accurate.)

Second, the location shown in the photo is (44,47,29.440N at 39,13,04.754E). The date on the “Krasnodar” photo is January 17, 2019. However, a photo of the region taken July 24, 2018 reveals a different layout. It takes a moment or two to study this, but there is not much of an exact match here:

Third, Fox News reported of “further Russian troops deployment and S-400 Surface to air missile days after the escalation started, hinting Russia might have orchestrated the naval incident.”

It may be true that Russia deployed weapons to this base area in Crimea, but this is now Russian territory. S-400s can be used offensively, but their primary purpose is defensive. Troops on the Crimean Peninsula, especially at this location far to the north of the area, are not in a position strategically to invade Kherson Oblast (a pushback would probably corner such forces on the Crimean peninsula with nowhere to go except the Black Sea). However, this does look like a possible defense installation should Ukraine’s forces try to invade or bomb Crimea.

Fox has this wrong, but it is no great surprise, because the American stance about Ukraine and Russia is similar – Russia can do no right, and Ukraine can do no wrong. Fox News is not monolithic on this point of view, of course, with anchors and journalists such as Tucker Carlson, who seem willing to acknowledge the US propaganda about the region. However, there are a lot of hawks as well. While photos in the articles about the S-400s and the Russian troops are accurately located, it does appear that the one about Iskanders is not, and that the folks behind this original article are guessing that the photos will not be questioned. After all, no one in the US knows where anything is in Russia and Ukraine, anyway, right?

That there is an issue here is likely. But is it appears that there is strong evidence that it is opposite what Fox reported here, it leaves much to be questioned.

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Vladimir Putin calls new Ukrainian church ‘dangerous politicking’

President Putin said creation of the “Orthodox Church in Ukraine” is against Church canon and that the West drove Constantinople to do it.

Seraphim Hanisch

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In an interview with the Serbian newspapers Politika and Vecernje Novosti ahead of his visit to Serbia, Russian President Vladimir Putin noted the creation of the “Orthodox Church of Ukraine”, a schismatic agglomeration headed by Ukrainian ultra-nationalists was “dangerous politicking.” He further noted that:

The establishment of the new religious entity in Ukraine is nothing but an attempt “to legalize the schismatic communities that exist in Ukraine under the jurisdiction of Istanbul, which is a major violation of Orthodox canons.”

“Yet, hardly anyone in the U.S. or in the Ukrainian leadership worries about this,” Putin said.

“Once again, this has nothing to do with spiritual life; we are dealing here with dangerous and irresponsible politicking,” he said.

President Putin had more things to say in the interview, and we present what he said in full here (emphasis ours), as reported on the Kremlin.ru website:

Question: The Serbian Orthodox Church has taken the side of the Russian Orthodox Church in the context of the ecclesiastical crisis in Ukraine. At the same time, a number of countries are exerting pressure on Patriarch Bartholomew and seek to ensure recognition of Ukrainian ”schismatics“ by Local Orthodox Churches. How do you think the situation will evolve?

Vladimir Putin: I would like to remind your readers, who are greatly concerned about the information regarding the split in the Orthodox community but are probably not fully aware of the situation in Ukraine, what it is all about.

On December 15, 2018, the Ukrainian leaders, actively supported by the USA and the Constantinople Patriarchate, held a so-called “unifying synod”. This synod declared the creation of the Orthodox Church of Ukraine, with Patriarch Bartholomew signing the tomos (decree) granting it autocephaly on January 6, 2019. Thus, it was attempted to legalize the schismatic communities that exist in Ukraine under the jurisdiction of Istanbul, which is a major violation of Orthodox canons.

Yet, hardly anyone in the US or in the Ukrainian leadership worries about this, as the new church entity is an entirely political, secular project. Its main aim is to divide the peoples of Russia and Ukraine, sowing seeds of ethnic as well as religious discord. No wonder Kiev has already declared ”obtaining complete independence from Moscow.”

Once again, this has nothing to do with spiritual life; we are dealing here with dangerous and irresponsible politicking. Likewise, we do not speak about the independence of the Orthodox Church of Ukraine. It is de-facto fully controlled by Istanbul. Whereas Ukraine’s largest canonical Ukrainian Orthodox Church, which has never requested autocephaly from Patriarch Bartholomew, is absolutely independent in its actions. Its connection with the Russian Orthodox Church is purely canonical – but even this causes undisguised irritation of the current Kiev regime.

Because of this, clergymen and laymen of the Ukrainian Orthodox Church are being persecuted and deprived of churches and monasteries, and attempts are made to deny the Church its legitimate name, which raises tensions and only leads to further discord in Ukrainian society.

Evidently, Ukraine’s leaders have to understand that any attempts to force the faithful into a different church are fraught with grave consequences. Yet, they are eager to put interconfessional concord in the country at stake in order to conduct the election campaign of the current Ukrainian President based on a search for enemies, and to retain power by all means.

All of this does not go unnoticed by Orthodox Christians.

Naturally, Russia does not intend to interfere in ecclesiastical processes, especially those happening on the territory of a neighboring sovereign state. However, we are aware of the danger posed by such experiments and blatant interference of the state in religious affairs.

The situation continues to degrade in Ukraine, and though the Orthodox faithful of the Autonomous but Moscow-based Ukrainian Orthodox Church are the hardest hit, worry over Ukrainian lawlessless-made-law has the Jewish community in that country nervous as well. This is perhaps to be expected as the Azov Brigade, a neo-Nazi aligned group that is hypernationalist, is a good representation of the character of the “hate Russia at all costs” Ukrainian nationalists. A parallel piece in Interfax made note of this in a piece dated January 17th 2019:

[A] bill passed by the Verkhovna Rada introducing a procedure by which parishes can join the new Ukrainian church makes it easier to seize places of worship, and supporters of autocephaly have already started doing this across the country, the Ukrainian Orthodox Church said.

“They need this law to seize our churches. You can’t just come with a crowbar to someone else’s barn, but now the law allows you to do so. They aren’t creating something of their own, but are trying to steal what’s ours,” Ukrainian Orthodox Church spokesperson Vasyl Anisimov told Interfax on Thursday.

The religious entity set up in December with Constantinople’s involvement and called the Orthodox Church of Ukraine “in fact doesn’t yet exist in nature. It’s fake. It doesn’t have any parishes of its own or government registration,” he said.

However, “the supporters of autocephaly don’t have plans to create anything of their own at all, so they have chosen the path of takeover, and the authorities are helping them in that,” Anisimov said.

“Hence, the legislation passed by the Verkhovna Rada today is in fact absolute lawlessness,” he said.

“If you pass legislation affecting an industry, you should talk to industrialists, and if it’s legislation on the agricultural sector, talk to farmers. And here legislation on a church is passed, and moreover, this legislation is aimed against this church, it is protesting, and Jews are protesting, too, because this legislation may affect them as well – but nobody is listening, and they change the law for the sake of an absolutely absurd and unconstitutional gimmick. But, of course, it’s the people who will ultimately suffer,” Anisimov said.

 

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According to Ukraine, the Crimean Bridge doesn’t exist (VIDEO)

Ukraine tries to deny the reality of the completion and soundness of the Crimean Bridge, though Ukraine was unable to build it, itself.

Seraphim Hanisch

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Russia’s VESTI News is truly an entertaining channel at times. This news service is strongly supported by the Russian government, and one of the criticisms it receives from Russian people is that it is an “extreme” propaganda house, telling all manner of crazy stories to distract its watchers’ attention away from the real problems that Russian people face at home.

No doubt there is truth to this, as this is a technique certainly duplicated in the US, Great Britain and elsewhere. Every nation has the right to its own propaganda. However, Vesti also seems to have a lot of fun making fun of other nations’ propaganda, and here they found a great one. Apparently, Ukraine’s propaganda ministry is trying to make the assertion that the Crimean Bridge collapsed and its debris is floating around in the Kerch Strait, “with the tectonic plates.”

See for yourself.

According to Ukrainian scientists and even “psychics”, this bridge is doomed to fall into the Kerch Strait once a sufficient earthquake hits it. Some claims appear even to say that the bridge already is not there, or at least, is not there in the way the Russian news sources have described it.

Of course, the VESTI team erupts into its famous snark, talking about how the bridge is very much alive and well and that it is the new “pride of Russia,” and so on.

This bridge is indeed quite an engineering feat, being completed only about three years after the rejoining / annexation / invasion / hostile takeover / or was it a voluntary referendum? of Crimea to the Russian Federation. This is a rapid speed for such a major project, but it is not very unusual for such projects to progress rather quickly when they are done with a will.

Burj Khalifa (formerly Burj Dubai) is presently by far the tallest building in the world, reaching skyward 828 meters, over half a mile into the sky. It took a little over four years to construct this landmark building, and it was done steadily and with a will to completion. Its would-be successor is not having as smooth an experience, for the Jeddah Tower in Jeddah, Saudi Arabia, has hit problems, and even though this tower is projected to go only about 130 meter higher (reaching a significant milestone of one kilometer tall), its construction started in 2013, and as of the latest update, only 63 floors are completed.

The Crimean Bridge was built with a will to make a point, presumably to Ukraine, the rest of Russia and the world:

This is the New Russia. Look what we can do!

And, they did a marvelous feat of engineering in a very short time.

VESTI indeed does try to make some people feel better by pointing out the problems of other countries. Sometimes that is a distraction. But sometimes it is worth a serious bit of consideration.

Ukraine has a leader most of its people apparently cannot stand, who is a warmonger and a crybaby at the same time, begging the West for help while breathing threats against Russia.

While there are no doubt many, many wonderful people there trying to do wonderful things, it does seem to be that the country is suffering because of its willingness to be a pawn of the West. Russia is feeling the Western squeeze and it is not pleasant, but the Russians also seem to know that they can get themselves through this, and so they have reason to be glad when the country makes a good accomplishment such as the Crimean Bridge. The political and geopolitical importance of this project is such that it is very likely that all sorts of great engineering went into the bridge. It is prudent, and Russians seem to understand prudence very, very well.

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