According to the expert, the Russian economy is beginning to experience difficulties. Even Russian government officials have begun to recognize the impact of Western sanctions.
John Reiter, a professor of political science at the University of Wisconsin-Milwaukee Ora, said the Russian government has finally begun to recognize that Western sanctions are working.
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According to him, limiting oil prices can be one of the most effective sanctions introduced by the West so far. It is reported that the expert commented on the statement of the Minister of Finance of the Russian Federation, Anton Sulianov, that the Russian budget deficit may actually exceed 2%. And this creates additional financial uncertainty against the background of war spending.
“Is a larger budget deficit possible? It is possible if revenues are lower than planned,” Siluanov said.
However, Capital Economics emerging Europe economist Nicholas Farr said it was too early to fully assess the impact of the oil price cap. According to him, there are signs that the Russian economy is beginning to experience difficulties.
“High-frequency data shows that Russian oil exports have fallen since the sanctions were imposed, and the spread (the difference between the best bid and ask prices at the same time, ed.) between Brent and Urals prices has widened to a six-month high last week,” Farr said.
The newspaper recalled that the first vice-prime minister of the Russian Federation, Andrey Belousov, frankly admitted that the next year will be quite difficult for Russia financially.
Josep Borrell: sanctions against Russia are working
The EU’s chief diplomat, Josep Borrell, considers the sanctions introduced by the European Union against Russia for the war it unleashed to be effective, and is convinced that their effect will become more noticeable over time.
When asked whether he considers the EU sanctions to be effective, the diplomat answered in the affirmative. “Sanctions, combined with military support, international pressure and diplomatic efforts, are bearing fruit. And the more time passes, the more painful they will become for the leadership in the Kremlin and the Russian economy,” Borrell said.
He noted that the main goal of sanctions restrictions is to make it difficult for Putin to finance the Russian military machine.
“Sanctions are not a panacea, they will not stop the war by themselves. This is only one of the tools we have used, but it is already clear that they are working and have serious consequences for Russia: the Russian economy has suffered significantly and is losing its ability to modernize,” – added the diplomat.
He noted that, according to OECD forecasts, the economy of the Russian Federation will shrink by 5.6% in 2023, the largest among the countries of the Group of Twenty; that more than 1,000 international companies, which made up about 40% of Russia’s GDP and supported 5 million jobs, left Russia by decision, and the EU has already reduced Russian oil imports by 90% and reduced dependence on Russian gas to a record.
It will be recalled that Putin banned the sale of oil to countries that supported the “price ceiling” for raw materials. According to the document, the decision of the head of the Kremlin will enter into force on February 1 next year. It is also known that the government of the Russian Federation wants to introduce similar restrictions on petroleum products.