Expert about Western sanctions: China won’t save Russia
The European Union decided to impose third-level sanctions against Russia. The United States did the same. Canada said it would follow Brussels and Washington. Restrictions will affect the energy, financial sectors of the Russian Federation, as well as the production of military and double-purpose items. In an interview with Ukrinform’s Moscow correspondent, Russian economist, Professor at the National Research University “Higher School of Economics” Alexei Portansky told how the third-level Western sanctions will affect the Russian economy.
“Sanctions is quite unpleasant thing and, of course, the impact on the Russian economy will be negative. The fact is that the Russian economy over the last year has already been not in the best condition, as the Minister of Economic Development and other officials have repeatedly stated. Therefore, in these circumstances, the sanctions will be particularly sensitive,” he said.
Portansky believes that the Russian economy will also be seriously affected by the ban on the supply of high-tech equipment. In particular, a substantial impact will be made on the military-industrial complex of Russia, which uses a “significant number” of modern machines coming from abroad.
“It’s no secret that the Russian economy, Russian enterprises consume or use a significant amount of components, capacity, any units that come from abroad, including modern machines that are installed on our defense enterprises. That is, if the prohibition applies to the delivery of this type of goods, this type of equipment, it can affect pretty seriously the military-industrial complex, including,” he said.
At the same time, the Russian economist noted that due to the so-called “sectoral sanctions” a restriction on the arms trade will be introduced. For Russia, which is among the leaders in terms of the arms trade in the world, it is also very sensitive. “If in everyday trade one can resort to complaints to the World Trade Organization, so something that concerns trade in military products, there is no one here to complain, because the WTO rules do not apply to trade in military goods,” he said.
Portansky also noted that the result of the sanctions imposed by the West will not affect the Russian economy immediately, in spite of their seriousness and scale. The average consumer will feel them after some time. “There is a certain margin of safety [of the Russian economy – ed.]. During the year, no significant changes are expected, and then the changes will be more sensitive. At the end of the year, much will depend on how large Russian companies will manage to deal with debts, that is, whether they can be refinanced, as it has been in recent years, or not,” the Professor said.
At the moment, many experts express serious concerns that refinancing will not be possible or very high interest rates to pay off debts will be offered, Portansky said. “But what will be with corporate debt of big companies, it will be clear within 6-12 months. It is impossible to predict yet,” the Russian Professor said.
However, he clarified that it is only about borrowing in the western markets.
Potransky believes that “they will not be able to refinance in China.” According to him, Russian companies were always financed in Western markets because of “quite favorable” conditions.
At the same time, the Russian economist does not undertake to make any predictions as to whether the third level sanctions will affect the policy of the Russian leadership with regard to Ukraine. Actually, this is the main goal of all Western sanctions against Russia, and not undermining its economy, as some in the Kremlin interpret it today.
“It’s a question that no one has a definite answer. Some say that they can [sanctions can affect the policy of Russia – ed.], the sanctions are being actually worked out for that purpose. Others say that Russia is a specific state, the more the sanctions, the greater the resistance is. Even the decline in living standards cannot particularly influence the policy of the leadership. Now no one can predict what will be the result,” he emphasized.