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Russia has been under sanction since 2014 for the annexation of Crimea. Now, the West imposed more sanctions, and the construction work of the NordStream-2 pipelines has also been suspended.

What is Russia's plan to cope with invasion-related economic damage to itself in the near and distant future?

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    Conquer anyone that sanctions them? I mean that would be a possible plan. Getting close with China might be another. Maybe both. Feb 24, 2022 at 23:05
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    There's also the possibility that they just don't care, either because Putin is secure in his total power and/or because he's gone a bit crazy after 2 years of COVID induced isolarion
    – divibisan
    Feb 24, 2022 at 23:08

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The only way to cope with the economic damage that I can think of is to strengthen its tie with China, as Russia kept doing recently:

Russia, China agree 30-year gas deal via new pipeline, to settle in euros

China calls for talks on Ukraine, OKs Russian wheat imports

China ready to soften economic blow to Russia from Ukraine sanctions

This will only mitigate, but not eliminate the economic damage. I also saw people saying the sanctions on Russia will not work as expected unless China could cooperate with U.S. over this issue.

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    China has been busy on the other end. They call it "the belt and road." And China has ambitions of its own that it can trade for such coziness.
    – Dan
    Feb 25, 2022 at 2:41
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Russia seems to have acquired resistance to economic damage at this point.

Russian Federation has experienced the default of 1997, then 2008 global crisis, followed by 2015 oil price shock and then the pandemic of 2020. Each of these added some knowledge within the system on how to cope with economic damage as well as limit its impact in the first place. The accumulated system strength was sufficient to survive the amount of economical damage presented by the year 2022.

If we are talking about any specific mechanisms:

  • Central Bank of Russia and specifically Elvira Nabiullina is credited for the combination of economical agility (keeping free floating currency exchange rates and reasonable key rate) and economical stability (exchange rates that tend to bounce back instead of spiralling in either direction, borrowing still possible due to trust in financial system)
  • Low amount of foreign debt, and low state debt minimizing risk of default, especially deliberate default caused by third party action. Loans in Russia usually denominated in Roubles so they may survive exchange rate jumps.
  • Large domestic market with high degree of autonomy.
  • Specialization in economic sectors where Russian produce is hard to replace, often causing more pain for buyers to find another supplier than for Russia to find another buyers.
  • Large share of companies are partly government-owned and have conservative approach towards laying off employees.

More specifically, Central Bank tends to let the currency devalue up to 1.5x thus allowing state budget to have surplus, since the bulk of it comes from export tariffs. Then after the main phase of economic downturn has passed, currency may revalue 10-20% and boost domestic consumption after the Rouble denominated wages has caught up partially with the new exchange rates.

It is not known at this point whether lasting effect of economical damage will cause any structural issues in the future. But it would make sense to conclude that by default, that kind of damage is least effective against Russian Federation.

Update: From the late Soviet experience, Russian Federation also understands which steps you have to take to destroy your economy, and how bad it would be once you do that. So it makes effort to avoid doing any of these things even if they seem lucrative to do. This allows Russia to avoid self-inflicted harm, compared to some countries such as Venezuela, Turkey or India.

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    It's perhaps also worth mentioning Russia's accumulated experience with Soviet central planning. Their resilience to economic attacks designed to cause chaos in markets, is probably partly driven by their long experience with state economic management, and the absence of any fundamentalist commitment to markets (and therefore a widespread ideological readiness to think about how to correctly manipulate them using state power).
    – Steve
    Aug 5, 2023 at 20:14

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