Economists from the Russian opposition have concluded in a study that Western states are making false assumptions and that the sanctions are therefore benefiting Russia and harming the West. Economists are calling for a radically different approach if the sanctions are intended to cause real problems for Russian President Vladimir Putin. Instead of imposing an embargo on Russian gas, the West should put Nord Stream 2 into operation immediately and buy as much natural gas as possible. This would push down the price of gas and Russia would have to sell its gas much cheaper than it does now.
The same applies to oil: If the price of oil fell drastically, Russian oil exports to China would bring in less. The economists are also calling for a reversal in the issuance of visas and the flow of money, as they explained on Monday in Berlin at the “Correspondent Café”. The West must recruit the best people from Russia and allow capital inflows from Russia, i.e. provoke capital flight if possible. This is only possible if Russians willing to leave the country can legally bring their money to the West. Currently, many payments are made via cryptocurrencies in order to circumvent the sanctions. However, in order to be able to use the money in the West, there must be legal ways. Nor should all Russians be placed under general suspicion. The current sanctions lists would have to be revised. There must be different categories so that simple translators or uninvolved business people are not treated like war criminals.
The conclusions of economists Vladislav Inozemtsev, Dimitry Nekrasov and Sergey Aleksashenko, the former deputy governor of the Russian Central Bank, are based on a study prepared by the Russian think tank Case with the support of the Konrad Adenauer Foundation. Accordingly, the Russian economy cannot be compared with that of the Soviet Union, said Inozemtsev: “The Russian economy is a free market economy and therefore has much greater potential to survive in a crisis.”
The energy industry is successful despite the sanctions because all countries need gas: “Yes, Russia is a big gas station, but everyone has to come by again and again to fill up,” said Inozemtsev. The economist, who, like Aleksashenko, now lives in Washington and works with various US think tanks, said it was the first time that such massive sanctions had been imposed on a major economy. It has been shown that a large economy is able to produce all important goods itself within a short period of time.
The sanctions also led to many Western companies leaving the Russian market and consumers turning to Russian products. Germany lost its position in the automobile market and was replaced by China. About $100 billion that Russians had spent abroad before the sanctions went back into the Russian economy: “The sanctions have hurt Russia much less than Europe,” said Inozemtsev. The West also misjudged the Russian bureaucracy. There is a very efficient and competent administration, especially at the top: Inozemtsev said that the head of the central bank and the finance minister could be accused of having benefited Putin’s war efforts. From a purely economic perspective, however, they did a very good job. Putin will be able to wage his war for many years to come – and at the same time the economy will grow.
Cyprus-based opposition politician Dimitrii Gudkov said the most effective sanction would be for the West to deny Russia access to its technologies. Russia relied on digitalization and is already further ahead than Europe. Dimitry Nekrasov said there was a real economic boom in Russia. The West must use the time window of peace negotiations to reimpose its sanctions: “The longer the sanctions last, the better Russia can adapt to them.” If there is no change of course here, Russia will be in a position in the next ten years to consolidate, grow and form new alliances with the states of the Global South. The growth of the Russian economy is by no means limited to the defense industry. This only accounts for a comparatively small proportion: around 6.5 percent of the Russian state budget goes towards armaments. In comparison: Israel spends 19 percent of its budget on armaments every year. Russia has invested massively in infrastructure. Public transport was expanded within a year. Nekrasov said that the dimension would be as if the subway in Berlin were to be expanded by 20 percent and the S-Bahn by 50 percent. Real incomes increased by 17 percent. The fact that Russia is operating a mercenary army in Ukraine for the first time also contributed to this. The people were not forcibly recruited, but came voluntarily for the money. One speaks of an “economy of death”: Each soldier receives a one-off payment of $25,000, and in the event of death the family receives $150,000: “That is more than an average Russian can earn over the course of an entire working life until retirement,” said Nekrasov.
The study will be presented to the federal government on Tuesday. Economists are staunch opponents of President Putin and particularly reject the war in Ukraine.
