Ukraine says Russia ‘more resilient’ to sanctions
than expected
‘Revenues from commodities ensure stability of
Russia’s public finances,’ deputy economy minister says.
BY SARAH
ANNE AARUP
June 14,
2022 5:00 pm
https://www.politico.eu/article/ukraine-says-russia-more-resilient-to-sanctions-than-expected/
GENEVA —
Western sanctions are not damaging Russia's economy as much as expected,
Ukraine’s Deputy Economy Minister Taras Kachka told POLITICO.
“Russia
seems to be more resilient to sanctions than we estimated at the beginning,”
Kachka said. “Initially, there was an assumption that impacts [of] sanctions
will be more and more visible,” he added.
“But it
seems that revenues from commodities ensure stability of Russia’s public
finances,” Kachka said, pointing out that Russia’s central bank lowered its
interest rate to 9.5 percent last Friday, which is back to what it was before
February 28.
Days after
Moscow invaded Ukraine in late February, Russia’s central bank hiked the
interest rate up to 20 percent to prop up a plummeting ruble, but they’ve now
re-evaluated the rate downward because “the decline in economic activity is of
a smaller magnitude than the Bank of Russia expected in April,” the bank wrote
in a press release.
According
to Kachka, this means that the West needs to ramp up its embargo on Russian
commodities and services.
“There is a
necessity to go further and to increase sanctions on Russia,” Ukraine’s deputy
minister said. “We need to get rid of oil and eventually gas: these are the
commodities that are bringing in direct revenues for the Russian budget.” He
added that Ukraine would also welcome widening sectoral bans, for instance
adding products like slabs to the steel embargo.
Beyond
commodities, the West needs to target Russian services again. “Financial
services and transport services, the broader exclusion of Russian financial
institutions from SWIFT, insuring vessels — that will constrain Russia in a way
that is more efficient,” Kachka said.
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