Russia’s economy “will go back 20 to 30 years” and Vladimir Putin endangered the future of his regime with his attack on UkraineSergei Guriyev, a former adviser to the Russian government and an exile in France, said in an interview with Agence France-Presse.
“Putin has managed to destroy the Russian economy in a matter of weeks,” said the former chief economist at the European Bank for Reconstruction and Development (BERD), now a professor at Science Po Paris, the Institute for Political Studies in Paris. He predicts an impending “huge recession” and “possible” bankruptcy of Russia due to Western sanctions against Moscow.
A former financial adviser to the Russian government in the early 2010s and a former member of the board of directors of Russia’s largest bank, Sberbank, Sergei Guriyev fled the country in 2013, feeling threatened by power because of his position and proximity to Mikhail Khodorkovsky, former president and CEO of Yukos and an opponent of the Kremlin, was jailed in 2003.
According to Sergei Guriyev, “the last eight years have seen a stagnation of the Russian economy. But what we are facing is that the Russian economy will go back 20 to 30 years in terms of household income and the structure of the economy.”
“It is difficult to imagine how many years it will take to return to the level of 2021 GDP,” he said, referring to “a tragedy that is not comparable to the drama in Ukraine, but is nevertheless a tragedy.”
Politically, Vladimir Putin “reduced the life expectancy of his regime” because of this “miscalculated” attack on Ukraine, Guriyev said: “Vladimir Putin is a ‘misinformed’ president who ‘overestimated the power of the Russian army’ “underestimated the determination of the Ukrainians to fight and underestimated the unity of the West.”
“Completely uncharted waters”
Following the Russian invasion of Ukraine on February 24, the West responded with financial sanctions targeting both the central bank, Russian imports, the property of oligarchs, and the ability of commercial banks to trade.
The impact of these measures, added to that of the departure of many private companies, is very difficult to estimate today. S&P Global has forecast a 6.2% drop in GDP for 2022 in recent days, but the extent of the shock could be much higher, warns Guriyev.
“We are entering completely uncharted waters,” he says. “Russia has become part of the global financial system. When you disengage, you break a lot of things. We do not know how the economy will work without the Taiwanese semiconductors or without the maintenance of Boeing or Airbus aircraft,” he warns.
Moreover, “for many entrepreneurs, this is the end of a life plan”, the economist observes in the face of the collapse of the ruble and the departure of many talents from the country.
“Imagine that you have built a company in the last 20 to 30 years. Today you no longer have access to your partners, you can not borrow from the bank, interest rates exceed 20%, you can not export or invest,” he said.
However, there is no reason to slow down the sanctions package: Guriyev believes that “if the purpose of these sanctions is to stop Mr. Putin’s war, then Europe has no choice but to stop buying Russian oil.”
If European gas imports are not cut off, which some countries reject because of their heavy dependence on Russian supplies, a European oil embargo, in the wake of the US embargo, would severely damage Moscow’s resources for to finance its war, Guriyev estimates.
“If all Western countries were to take part in this initiative, it could then ‘encourage China to pursue an oil embargo’ and ‘deprive (Vladimir Putin) of the resources to continue its fierce war.’ declares.
Nobel Laureate in Economics Joseph Stiglitz called for an overall European embargo on gas and oil on Tuesday in an interview with Agence France-Presse.
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