Since February 24, 2022, Russia and Ukraine have been engaged in a major conflict, the first in Europe since the Balkan War in the 1990s. Indignant, the Western world has taken a series of sanctions against Moscow, in what measure the country of Peter the Great will be able to resist?
First of all, we should not forget that the main factor of the poor health of the Russian economy is more the war itself than the sanctions that follow. A war is expensive, freezes trade and drives away capital. It is estimated that $64 billion of capital left the country in March alone. The brain drain is also the brain drain, which is the only hope for Russia to diversify its rentier economy.
As for the sanctions themselves, while those directed at the oligarchs have little direct effect and are more strategic in nature with an uncertain outcome, the most important are those that have affected the financial system. Some Russian banks have been withdrawn from the SWIFT system and the assets of the Bank of Russia in Europe have been frozen. The result was a disorganization of the financial system and a huge fall of the ruble (also linked to the flight of capital). These effects were, however, transitory thanks to the administrative measures taken by Russia and the incompleteness of the sanctions, which did not, for example, affect the hydrocarbon sector, even though Russia is a rentier country. The major lasting effect of these measures is in fact a drastic inflation estimated at 20% for the current year.
Regarding the medium-term future of the Russian economy, Julien Vercueil, Vice-President of INALCO, distinguishes three factors that will determine the future of events.
The first would be the complete cessation of the supply of Russian hydrocarbons by the West and in particular the EU. In this case, Russia would certainly be the victim of a real systemic crisis. If, on the other hand, the Europeans continue this supply without suspending the other sanctions, two scenarios would emerge. Either China would come to Russia’s aid on a massive scale, in which case the repercussions would be limited to manageable inflation for the government and, above all, to a reorientation of Russia towards Asia and a strengthening of the axis between Beijing and Moscow, or China would only intervene to a limited extent, in which case Russia would inevitably become a rentier economy marginalized on the international scene.
Russia’s future therefore remains in the hands of Brussels and Beijing, in any case its economy will not emerge unscathed from this conflict. There is also the question of the real effectiveness of these sanctions in relation to their initial goal. These should prevent Russia from being able to support a war, it must be kept in mind that the collateral victim is the Russian people itself, not its leaders.