The Russian government’s finances are in a hell of a lot better shape than the U.S. and many European governments’. From Paul Robinson at rt.com:
Economic coercion is the West’s favourite tool to influence Russian behaviour. But with oil prices rising, Russia’s economy growing, and the West backing off from pledges to exclude Russia from SWIFT, this policy seems to have reached a dead-end.
In 2014, the Russian economy was struck by a double-whammy. First, the oil price collapsed. And second, Western states imposed a series of sanctions in response to events in Ukraine. The immediate impact on Russia’s economy was dire, sending GDP plummeting.
Economists had problems determining which was more responsible for Russia’s problems – the oil price or the sanctions – but most came down in favour of the former. Cheaper oil translated into a less valuable ruble, which increased the price of imports and created inflationary pressures. To this end, the Central Bank responded with higher interest rates, depressing demand and thereby GDP.
The economic crisis of 2014 created hopes in the West that Russia could be brought to its knees. Pundits predicted that cheap oil was here to stay. Beyond that, the introduction of so-called ‘sectoral sanctions’, targeting Russia’s energy, financial, and military industries, was meant to strangle what were seen as the most vital sectors of the Russian economy.
It would not be long before Russia would be bankrupt, some claimed. Speaking in Ottawa in November 2014, former Russian Finance Minister Mikhail Kasyanov stated that within two years, Russia would have used up all its financial reserves and would have to severely cut government spending. The Russian people would then turn away from the government en masse. In the face of cheap oil and sanctions, the ‘Putin regime’ was doomed.
