Russian Economy and Sanctions: Key Points from Steve Rosenberg's Report

Introduction

• Russia: Most sanctioned country in the world.
• Current Economic Outlook: Expected to grow faster than all advanced economies (IMF).
• Event: International Economic Forum in St Petersburg hosted by President Vladimir Putin.

Expected Focus of the Forum

• Main Topic: Economy
  • Russian authorities' message: Despite Western sanctions, there are many regions and countries ready to do business with Russia.
  • Notable absence: Few CEOs from America or Europe.
  • Participation: Delegations from Asia, Africa, Middle East, and South America.

Geopolitical Context

• Key Issues:
  • Ongoing war in Ukraine.
  • Rising tensions between Russia and the West.
  • Potential escalations: Russia considering supplying advanced missiles to allies for strikes against Western targets.

Circumventing Sanctions

• Support from Friendly Nations: India and China
  • Oil Exports: Redirection from Europe to India and China.
  • China: Significant economic support, becoming a lifeline for Russia.
  • Export Revenue: Continued income from energy exports despite sanctions.
  • Military Spending: Funds directed to defense sector, driving short-term economic growth.

Sustainability Concerns

• War economy likely unsustainable in the long term.

Criticism and Loopholes in Sanctions

• Oil Price Cap: Initiative by G7 and EU to cap Russian oil prices at $60/barrel.
  • Russia has circumvented this cap.
• Trade Sanctions: Aimed at reducing Russia's trade revenue;
  • Russia continues to find ways around these sanctions.
• Proposed Secondary Sanctions:
  • Suggested by US Treasury.
  • Target international banks transacting with Moscow.
  • Potential to exert more pressure on the Russian economy.

Conclusion

• Growing economic pressure: New measures may concern Russian authorities.
• Outlook: Continued focus on how Russia navigates and sustains its economy under these conditions.