Will Western Sanctions Actually Impact Putin’s Political Prowess?

Related stories

Tinubu Names IBB’s Son, Top Experts to Lead Key Nigerian Agencies

By Abiola Olawale President Bola Ahmed Tinubu has appointed Muhammad...

2027: Labour Party Appoints Nenadi Usman as Interim National Chairperson 

By Abiola Olawale  Ahead of the 2027 general elections, the...
  • A prominent Russian economist says President Vladimir Putin may emerge unscathed despite Western sanctions weighing on the country’s economy.
  • Sanctions have hit Russian coffers hard, but average citizens have remained fairly sheltered from the economic impact of the West’s actions. 
  • “Sanctions certainly have an economic effect, but they really do not lead to a serious change in foreign and domestic policy and to a change in power,” he said.

Russia’s economy will be hit hard by Western sanctions, but President Vladimir Putin faces no immediate political risk and his government will likely weather the economic fallout, a prominent Russian economist and banker said.

In an interview with RFE/RL’s Russian Service, Andrei Movchan said the war in Ukraine — now in its fourth month — was a powerful drain on the Russian government coffers, as were the punitive sanctions imposed by the West in response.

But he said that high global oil prices would buttress the government’s finances and that even though the wider Russian economy — and average Russians, in particular — will suffer, that was unlikely to pose a threat to Putin’s rule.

“Predictions about the imminent death of the regime have been made largely by the same people who have been making them for the past 20 years, and these predictions have not changed in any way,” Movchan said in the June 7 interview, speaking from London. “Petrocratic regimes are generally stable. Sanctions pressure rarely changes regimes.”

“Sanctions pressure consolidates regimes, makes them more stable, self-contained, and reactionary,” he said. “The war has indeed now become the means for maintaining hydrocarbon prices. The budget, of course, will suffer, and the Russian economy will have even greater problems in the coming years, comparable to those of the 1990s.”

EU Again Accuses Russia Of Weaponizing Food

An economist by training, Movchan was a top executive at two of Russia’s leading independent investment banks during the 1990s and 2000s before launching his own asset management firm.

Russia’s economy is forecast to shrink drastically this year, as Western sanctions cripple the country’s GDP. The World Bank predicts output will shrink 11.2 percent this year, while Russia’s own Central Bank forecasts a drop of 7.5 percent.

The Bank of Finland forecasts a 10 percent decline in GDP, while the Washington-based Institute of International Finance has a dramatically darker forecast, predicting a drop of 15 percent.

Such a decrease would be the sharpest since the early 1990s, when Russia was struggling to make the difficult transition from a state-controlled economy to a free market.

Russia remains heavily reliant on the export of oil and gas, revenues from which have bolstered its finances and stymied Western efforts to restrain Moscow economically.

The European Union foreign affairs chief has estimated that oil exports alone yield $1 billion a day for Russia.

Movchan said that whatever economic pain Russia feels is likely to be felt most acutely by average citizens.

“Of course, the losers from this war, despite these [high oil] prices, are the ordinary people of Russia who had little access to the export of hydrocarbons before — and now it will be much less.

“For the elites, the balance of the current account of foreign exchange transactions is really important, and it will be maintained quite stably,” he said of an important indicator of economic health. That “will allow the elites to rule, satisfy their needs, and control the power bloc” — a reference to the security, law enforcement, and military agencies that hold oversized influence on government policy.

“Stability of the type seen in Iran, Venezuela, North Korea: that’s what Russia is now entering into,” he said.

Asked about the likelihood of substantive political change as a result of the sanctions, Movchan predicted there would be little.

“Sanctions certainly have an economic effect, but they really do not lead to a serious change in foreign and domestic policy and to a change in power,” he said.

NB: RFE/RL staff wrote this article for oilprice.com

Rfe/rl Staff
Rfe/rl Staffhttps://newdiplomatng.com/
At The New Diplomat, we stand for ethical journalism, press freedom, accountable Republic, and gender equity. That is why at The New Diplomat, we are committed to speaking truth to power, fostering a robust community of responsible journalism, and using high-quality polls, data, and surveys to engage the public with compelling narratives about political, business, socio-economic, environmental, and situational dynamics in Nigeria, Africa, and globally.

Subscribe

- Never miss a story with notifications

- Gain full access to our premium content

- Browse free from up to 5 devices at once

Latest stories

NDN
Latest News
Drama as Okpebholo Tells Peter Obi: Notify me Before Visiting Edo or Else I Can't Guarantee Your SecurityTrump Vows to Sue Rupert Murdoch as Epstein Report Opens New Rift in Their RelationshipTinubu Names IBB’s Son, Top Experts to Lead Key Nigerian Agencies2027: Labour Party Appoints Nenadi Usman as Interim National Chairperson Alleged $9.6 Billion P&ID Fraud: Fleeing Briton’s Surety Arrested, Produced In CourtWhy Oil Prices Could See a Significant Upside ShiftPresidency Announces Gov Umo Eno as APC Leader in Akwa Ibom, Sparks ReactionsBreakdown of Buhari’s Family EntitlementsThaksin touts golden visa, higher travel fees to boost ThailandDangote Refinery Halts Fuel Discount Program Over Alleged Marketers Fraud2027: Intrigues as PDP Confirms Move to Bring Peter Obi Back After Atiku’s DepartureAre You Pregnant? By Johnson Babalola2027: Buhari’s exit Cripples APC in entire North as CPC Loyalists Defect in Large NumbersDrama as 16, 17-year-olds Now Allowed to Vote In UK ElectionsSenate passes $9 billion in spending cuts to public broadcasting, foreign aid requested by Trump
X whatsapp