World Economy

Russian Economy Adapts to West’s Sanctions

Russian Economy Adapts to West’s Sanctions
Russian Economy Adapts to West’s Sanctions

The Russian economy has fully adapted to the western sanctions regime, making the time frame of their removal inconsequential to Russia, Russian Economic Development Minister Alexei Ulyukaev said Wednesday.

March 16 marks the two-year anniversary of Crimea’s reunification with Russia, when a referendum on whether to join Russia was supported by over 90% of voters who went to the polls in the peninsula, Sputnik reported.

“Of course Crimea is our land. It always has been and always will be ours. And the sanctions regime is something that we have completely adapted to as an economy,” Ulyukaev said at a plenary session of the lower house of parliament, State Duma.

The US State Department said in a statement on Tuesday that it did not recognize the referendum and vowed to maintain anti-Russia sanctions “as long as the occupation continues”.

“In fact, whether it [the sanctions regime] disappears this year, in 5 years or 10 years, does not matter,” Ulyukaev stressed.

Washington, the European Union and several of their allies imposed a series of sanctions targeting key sectors of the Russian economy, as well as a number of individuals and entities over Crimea’s reunification with Russia and Moscow’s alleged interference in the Ukrainian conflict.

Russia has regularly denied playing a role in the clash between Ukrainian government forces and pro-independence militia. It maintains that the referendum on the Black Sea peninsula was held in accordance with democratic principles and reflected the will of the people.

He pointed out that Russia had recently experienced two waves of oil-related shocks. The first was triggered by a sharp decline in prices on the world market, which precipitated a sharp devaluation of the national currency that in turn led to a rise in inflation and an economic recession. The second wave did not cause a further devaluation of the ruble while the annual inflation rate dropped to below 8% with GDP dynamics ranging in recent months between +0.1% and minus 0.1%.

“This means that the Russian economy under the current conditions has shown a high degree of adaptability. We were able to reduce costs, managed to focus on the major priorities and make use of factors that had not been used before,” Ulyukayev said.

Global oil prices plunged from $115 to less than $30 per barrel between June 2014 and January 2016, hitting their lowest levels since 2003 amid an ongoing glut in global oil supply. The slump has caused significant financial problems for many oil exporting countries.