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“Russians don’t give up”: how the Russian economy managed to get around the “hellish” sanctions of the West

Date: April 14, 2024 Time: 19:51:59

The Minister of Industry and Trade of the Russian Federation, Denis Manturov, has a large area of ​​​​responsibility: Russians are used to the fact that world innovations quickly enter the country. Everyone is in a good mood, when they have decent discounts. Photo: Alexey DANICHEV / RIA Novosti

The recent forecast of the International Monetary Fund: in 2023, the Russian economy will grow by 0.3%. Stronger than in Germany. This IMF prediction surprised many. But what about the famous “torn to pieces” old Biden? It turned out not. To the surprise of foreign and even domestic economists, our economy turned out to be very adaptable and enterprising, resourceful. “Komsomolskaya Pravda” summarizes the results of the last year of the fight against sanctions.

BROKEN THE PANIC IN THE FINANCIAL MARKET

The most effective way to destroy the economy of any country is to bankrupt its banks. The financial system is often compared to the circulatory system. It pumps money from one economic entity to another. And if for some reason this process is hampered, then big problems can begin in the economy. The clot obstructs the vessel and the blood does not reach the vital organ.

The blow to the financial system last year was very strong. In the week since the start of the special operation, depositors withdrew 2 trillion rubles from banks. And they began to actively exchange them for currency. The dollar jumped one and a half times, up to 120 rubles. It was necessary to urgently suppress the panic, otherwise the consequences could be catastrophic.

The Central Bank has already gone through similar crises, for example, in 2008 and 2014. Some mistakes were made each time. Therefore, the solution of the new problem was approached comprehensively and accurately. First, they raised the key rate to 20% per year. This forced banks to raise deposit rates to the same level. Second, they introduced currency restrictions. They could only withdraw up to $10,000 in cash.

All this led to the desired result. The outflow of money from the financial system has been stopped. Why withdraw savings from the bank if you can’t buy currency with them yet? And staying at home is pointless with such inflation. So they recovered the money to put it at a fabulous 20% per year.

As a result, the panic subsided and investors calmed down. And a month later, the Central Bank began to gradually reduce the key rate. And all banks, even those under severe Western sanctions, operate quietly and even make a profit. Currency restrictions have not yet been lifted.

THE RESPONSE TO THE BAN – PARALLEL IMPORTATION

It turns out that in recent years our business has been very, very law-abiding. The laws stood firm on the side of the rights holders. It was impossible to import anything without the permission of the official supplier. On the one hand, it protected legal sellers and distributors. On the other hand, it caused an increase in prices and a reduction in the assortment. Some experts have long advocated allowing parallel imports into our country, that is, importing well-known brand merchandise without unnecessary bureaucratic procedures. But the big business lobby has always interfered in this process. Naturally, they explained all this by concern for consumers. They say that otherwise fakes will come in.

Following the announcement of numerous sanctions, the supply of many goods to our country through legal schemes became impossible. Suppliers stopped shipping them to Russian companies. But the government found a way out very quickly. The parallel import system is already fully operational. According to the Federal Customs Service, $20 billion worth of goods were delivered to Russia last year under this scheme and, although this is only 5% of total imports, this year the share will be clearly higher.

Let me remind you that according to this scheme, not everything can be imported, but only those goods that are on a special list proposed by the Ministry of Industry and Trade and approved by the government. Officials come from the shortage of specific products.

As a result, almost all sanctioned goods now enter Russia: iPhones, foreign cars, car components, even new films.

EXPORT CANNOT BE PROHIBITED

One of the measures that was supposed to sink our economy was the introduction of a maximum price for oil and its derivatives. Both restrictions have been introduced in recent months. And before that, Western countries methodically limited the supply of Russian energy resources to buyers. The apotheosis of this struggle was the three-armed undermining of the Nord Stream.

All these sanctions were supposed to lead to a decrease in the export of our energy resources. It was partly successful. In the first few months, the volume of deliveries sank considerably. But then the relevant authorities and larger companies found ways around the sanctions and dramatically increased sales to friendly countries. So India alone now receives about a third of all Russian oil exports. And you don’t plan on reducing your appetite.

Yes, according to the latest data from the Ministry of Finance, our oil is selling for about $50 a barrel (versus benchmark Brent, which is $80 a barrel). But it is still sold, and moreover, in almost the same volumes. At the same time, the surplus ends up in the domestic market, which slows down the growth of the cost of gasoline within the country.

Western economists predicted empty store shelves for us. However, his predictions did not come to pass. And we have our own diamonds. Photo: Svetlana SHEVCHENKO/RIA Novosti

BY THE WAY

Expert advice helped find the antidote

In order to effectively fight the sanctions of the collective West, a wide range of economists were actively used in the government. For this, an expert council was created in the early days. As Prime Minister Mikhail Mishustin recently stated, the priority measures to support the economy, taken by the government after the imposition of Western sanctions, helped maintain budget stability, helped key sectors and the Russians.

– Representatives of the council of experts presented 750 proposals to improve the sustainability of economic development in the face of sanctions. Many of them have become the basis for bills or government acts, the prime minister said.

At the same time, the work must continue. The West does not stop trying to weaken the Russian economy. Introduces all new sanctions packages. And they need to be countered effectively. Maybe even work ahead of the curve.

– It is important to respond quickly to challenges, interact with deputy prime ministers, ministers, heads of government bodies, pay attention to solving industry-specific problems. To maintain the dynamics of development, it is necessary not only to stop current risks, but also to predict the emergence of new ones on an ongoing basis so that responses to them can be proactively crafted. Among the priority tasks is balancing the economy, Mishustin stressed.

SAYING

Alexander Auzan, Dean of the Moscow State University Faculty of Economics, in an interview with RTVI:

“The Russian economy has survived. It did not collapse, as so many economists predicted. But this happened due to the fact that within the economy, business, and people, there were forces to do what was done. In March we saw a much more pessimistic outlook. We were wrong. There is a market economy in Russia, and it works. And she showed up. Talking to senior managers, I said: We thought they had three-month reservations, but they had six. And we had three months. During this time we have found replacements. Worse, it is not like that, not all, but they are found. We had enough time to turn around. This applies even to quite complex technological problems. Business is efficient when it is not disturbed. The government and the Central Bank acted very professionally. First they extinguished the fire hazard of financial collapse. The market did the rest. The business has been actively adapting. He sewed up broken trade chains. Our economy, of course, is weaker than it was. But this is a labor feat of Russian businessmen.”

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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