Economic crisis in Russia as a result of aggression against Ukraine



2014/10/02 • Russia

Article by: Olena Matusova

Moscow – If the separatists in the east of Ukraine gain control over Donetsk airport, combat over which has been going on for days, or the city of Mariupol in order to create a corridor to Crimea, the EU may impose additional sanctions on Russia, reported Bloomberg agency today, citing a source close to German foreign policy. Meanwhile European and U.S. sanctions which had been imposed earlier and are already in effect, are leaving a mark on the state of the Russian economy. This topic was one of the main ones at the Russian Calling! investment forum in Moscow. 

The speeches representatives of the economic block of the Russian government made at the investment forum confirm that experts’ pessimistic predictions are coming to pass. Inflation surpasses eight percent as of today, meanwhile economic growth is less than one percent. Such a combination, according to Russian Minister for Economic Development Alexey Uliukayev, is “dangerous and explosive.”

Citizens are already feeling economic problems not in the abstract sense, but with their wallets, as well. The dollar and euro are growing exponentially and, according to expert prognosis, the U.S. currency may cross the 40-ruble barrier before the end of the year.

The dollar, the ruble and motivation

Head of Sberbank German Gref said in his speech that the crisis had launched irreversible processes.

“Half of our economy is monopolized. Which means there will be zero efficiency. The ruble has jumped to 39,5 per dollar, it will bounce back. However, the prices will not. We do not believe that prices will bounce back. Why? Because there is no competition. Nothing will force the prices to turn around. If Artemyev (head of the Russian anti-monopoly committee – ed.) works well again, he may be able to gain some product groups. But no more. Investment climate, motivation… We cannot motivate people with the GULAG, like in the Soviet Union. This motivation is not long and it breaks,” Gref says.

Putin await Ukraine’s escape from the crisis

Russian President Vladimir Putin also spoke at the investment forum. He called the actions of western governments (the sanctions) that limit business on such a prospective market as Russia “complete madness,” and said that the state would assist the companies and entire sectors of the Russian economy which were subject to Western sanctions. Putin did not forego the topic of Ukraine, either.

“Russia’s national interests will benefit from Ukraine’s escape of the political and economic crises. The country is really in a state of deep political and economic crises today. The renewal of the economy, political and social sphere. We are interested in having a predictable partner and neighbor,” Putin noted.

Entrance to and escape from the crisis

The events in Ukraine became, essentially, a detonator for the economic crisis in Russia. They are direct consequences of Russia’s involvement in the conflict in Donbas, experts note.

Academic head of the National Research Institute High School of Economics Yevhen Yasin thinks that the current economic crisis in Russia is a direct consequence of the policies of the government which may soon face a crisis of trust. According to Yasin, even with the most optimistic prognosis, it is pointless to expect a swift solution to the crisis.

“It began with the toppling of Yanukovich’s government and making radical decisions again. Including Crimea, Donbas… In general, surrounding Ukraine. However, it is not just Ukraine, as sanctions are now aimed at Russia. Russia has imposed response sanctions, which also landed a real blow to the population. This process is currently far from reaching its end. Because it is easier to enter crisis than to escape it,” Yasin said live on Radio Liberty.

All local economists without exception speak about the Russian economy being in crisis. Their predictions fluctuate between weak optimism and a swiftly impending catastrophe.

Translated by: Mariya Shcherbinina
Source: Radio Liberty

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  • Edison

    “U.S. currency may cross the 40-ruble barrier before the end of the year.” Why would anyone dream it will take that long? It will probably cross tomorrow or next week!

    • Arctic_Slicer

      Exactly. if things keeping going as they have been we’ll probably be looking at a 41 or 42 rubles to the dollar by year’s end.

  • Edison

    “actions of western governments (the sanctions) …“complete madness,” “We are interested in having a predictable partner and neighbor,” Putin noted.” Putin isn’t psychotic, just a liar.

  • Tom Von Hommel

    BUT the big problem is, that Putler STILL dont get it. “We want a PREDICTABLE UKRAINE” predictable nope, obedient and enslaved.

  • Jacks Channel

    Can you imagine a World where roles were reversed and Russaia and China were the dominate powers? And they say that the West is bad.

  • Michel Cloarec

    If this is not propaganda, then the sanctions work !
    If it is propaganda to make russians hate west and Ukrainia and justify agression, the useful idiots from Kremlin have been doing their homeworks well !

  • Adrian Rrllc

    “Madness” brought about by Putin and blamed on anyone he can think of, including real and fictional characters.

  • Murf

    Wars begin when you choose but rarely end when you prefer.
    Putin’s Afghanistan.
    Lets hope it has the same end result.

  • Jacob Schønberg

    Russia is using very much money on military more than 10 % of BND. They can easily half this expense – But i hope Yukos do their best to claim the 60 Billion USD Rossneft was convicted to pay! This will reduce the Russian economy , and even more money will try to escape because people with money know restrictions will come. Then Putin promished a brigde to Crimea , and i think he will be surpriced how much such bridge cost him