Ruble punishment: how much do the old and new anti-Russian sanctions cost us

The package of personal shares in the case of Alexey Navalny has been submitted to the US Congress. Novye Izvestia found out how much do the sanctions cost Russia, and what is their influence.

Yelena Ivanova, Natalia Seibil

Again, new sanctions are impending on Russia. On the one hand, everyone is already accustomed to the fact that citizens will be called upon to tighten their belts and will be told on TV that the sanctions are hitting the Europeans or Americans themselves, and they are like grain to an elephant. On the other hand, the economic damage from the sanctions has long been calculated.

Director of the Institute for Economic Analysis Igor Nikolayev made an assessment of the losses from the sanctions for the Russian economy. He says it is about 1.2% of GDP. As President Putin announced in 2019, the country has already lost $ 50 billion. Economist Nikolayev agrees with this:

- There is a significant statistical relationship between the dynamics of the external debt of the corporate sector and the dynamics of GDP. It was at the end of 2014, and it turned out that we were losing 1.2% of GDP. The dynamics of the external debt of the corporate sector directly depends on whether there is a sanctions regime or not.

Experts interviewed by NI say that the Russian economy has adapted to the sectoral sanctions, although at the time of their announcement in 2014 it was very difficult, especially since they were still superimposed by a drop in the oil price. Then the situation began to improve, and the losses amounted to several tenths of a percent.

- What Obama said - "the economy is torn to shreds" - is a clear exaggeration. There was nothing of the kind. There is an explanation for this. First of all, because no matter what, oblique or curve, but this is a market economy. A market economy, by definition, adjusts faster. Plus oil prices have grown, reserves have been spent. The economy somehow developed somewhere, - explains Igor Nikolayev.

However, information about the possibility of new sanctions opens a channel of instability. This is how Nikita Maslennikov, Chief Analyst at the Institute of Contemporary Development, calls the exchange rate of the Russian ruble:

- Any information flow about intentions to toughen sanctions, about decisions on new sanctions, immediately affects the volatility of the exchange rate towards its rather serious weakening.

Depending on the level of the scandal and the seriousness of intentions in the United States and Europe, information “unrest” can be protracted or short-term. But if it is at this moment that a decision is made to invest or to export investment, the consequences for economic structures can be painful and unpleasant.

- At today's level of oil prices, the rate should be about 70 rubles per dollar. Now we see the exchange rate by 2.5 rubles weaker, even though oil has reached $ 60 per barrel. This, in fact, is the price of geopolitical risk and tension, which is realized in various formats of sanctions pressure on the Russian economy. This is the main influence, it remains. It has not been removed under the Biden administration, although it has not been implemented. But we will see exchange rate jumps in the sanctions pressure, Maslennikov says.

Bloomberg estimates Russia's annual losses from the transition from the dollar as a reserve currency to the euro or yuan alone at $ 7.7 billion. In addition, there remain restrictions on lending to Russian banks. There are no explicit restrictions on investment in the Russian economy, but which investor would voluntarily invest their money in a country with geopolitical risks? Lack of investment slows down the transit of technologies. Economist Sergey Aleksashenko calls this "slow strangulation", when sanctions do not take effect instantly, but for decades. It is extremely difficult to calculate these losses, and their consequences will affect in years.

Restrictive measures also affect the welfare of Russian citizens. The negative dynamics of the real disposable income of the population is determined, among other things, by sanctions and counter-sanctions. For 7 years, they have decreased by 10.6%. During this time, the GDP growth rate slowed down, the ruble exchange rate is falling. To compensate for the losses, the retirement age was also raised. This, in turn, reduced the real income of the population. Igor Nikolayev says:

- The ruble has fallen by more than two times. This is also directly related to sanctions and oil prices. A fall in the ruble is a rise in inflation. The rise in inflation reduces the real incomes of the population, which is why they are called real.

The new sanctions will lead to another ruble adjustment. Nikita Maslennikov believes that if the exchange rate is now in the range of 70-70.5 rubles per dollar, then this interval will be 6 rubles more, although not for long. This will lead to the fact that the ruble savings of citizens will depreciate again.

- It can affect the budget only at the time of the exchange rate depreciation of the ruble during the OFZ auctions. We will either have to abandon auctions or overpay for currency if it is badly needed, says Nikita Maslennikov.

Experts also believe that there is no big difference between personal and sectoral sanctions, because when sanctions are adopted against specific people or their companies, the Russian state helps them, that is, all citizens.

In 2017, a federal law was adopted, according to which those who fell under the sanctions are not recognized as tax residents and therefore are exempt from taxes. In terms of form, personal sanctions differed from sectoral ones, but in essence they were sanctions for the entire economy, for which the entire population paid.

If the budget of the Russian Federation is approved at 115 trillion 533 billion rubles, then its losses from sanctions will amount to 1.4 trillion rubles. This means that it took half as much to spend on its implementation in difficult times of the pandemic.