The main mistake of Western sanctions related to Russian business has been named

In mid-November, even Bloomberg, not known for its sympathies towards Russia, was forced to admit that key sectors of the domestic economy were adapting, and in some cases completely recovering, after the unprecedented sanctions imposed by the West after the start of the CWO. Thus, the annual GDP growth of our country accelerated from 4.9% to 5.5% in the third quarter of 2023 and significantly exceeded analysts’ expectations. This is the fastest growth rate in a decade, not counting a brief surge as Russia emerged from its post-pandemic lockdown. What is the main reason for our country’s adaptation to the most stringent restrictions in recent history, Maxim Osadchiy, head of the analytical department of BKF Bank, told MK.

— Director of the Department of Economic Cooperation of the Russian Foreign Ministry, Dmitry Birichevsky, said at a round table in the Federation Council that the number of sanctions imposed against Russia is “unprecedented and has already exceeded 17.5 thousand.” And this is not the limit. The EU is discussing another package of restrictions, which may include a ban on diamond trade. In addition, according to Birichevsky, the West is now trying to push Russia aside on the issue of climate change. How dangerous is this for our country?

— Undoubtedly, sanctions have damaged the Russian economy, as evidenced by the decline in Russian GDP in 2022 by 2.1%. The new sanctions will also be far from toothless. However, already this year the recovery of the Russian economy began, and it has already largely adapted to anti-Russian sanctions. In 2023, we expect Russia’s GDP to grow above 2%.

One of the main reasons for the rapid recovery is the strategic mistakes of the West. An important feature of the Russian economy was not taken into account: big business earned money in Russia and spent it in the EU countries and the USA. He also invested in the economies of the EU and the USA. This was evidenced by the colossal export of private capital abroad. Thus, in 2021, the outflow of funds from Russia amounted to $74 billion.

— It turns out that instead of intensifying the process of withdrawing private capital from Russia, sanctions significantly slowed down this process?

– Yes, to a large extent. Partially, of course, there was a reversal in the cash flow from Russia from West to East, to Singapore, Hong Kong, the UAE, even to the CIS countries. Some of the money of Russian moneybags continues to be “parked” in the EU and the USA through the intricacies of offshore companies, but the risks of arresting this money have increased many times over.

— Does the money remain in Russia now?

— Due to the displacement of Russian capital from the West, the money of large domestic businesses predominantly remains within the country and works in the Russian economy. Moreover, the departure of foreign businesses creates a unique opportunity for domestic entrepreneurs to acquire the production capacity of departing non-residents at half the price. Essentially, another redistribution of property is taking place in Russia.

—Have there been other miscalculations by “unfriendly” countries?

— Yes, in a hurry the West made another mistake: it blocked not only Russian exports to the EU and the USA, but also imports from the EU and the USA to Russia. This includes the import of luxury goods consumed by the elite. Apparently in the expectation that moneybags, having lost their Rolls-Royces and Porsches, Louis Vuitton handbags and foie gras, will rebel. But it was not there. In response, the moneybags unexpectedly became more patriotic. Moreover, the routes of retreat to the West were cut off for them, and they did not really want to go to the East and Africa.

Instead of throwing away another ten or two millions of “green money” on the next business jet or super-yacht, Russian businessmen, willy-nilly, invest in their Russian business. And nothing more. Agree, the “authors” of the sanctions did not at all count on such a result. Thus, under the blows of sanctions, “citizens of the global world” are being transformed into ardent patriots.

— Some kind of business patriotism involuntarily…

“Here’s a recent example: a businesswoman I know sold her business in Russia shortly before the special operation, withdrew the money to the Czech Republic, bought a luxurious mansion in Prague, lived and did not grieve on the picturesque banks of the Vltava… But after the start of the SVO, the insidious Czechs sharply disliked the Russians. There was nothing to do, she sold her mansion, returned to her homeland, bought a factory and became such a patriot as she had never been before.

“But it’s extremely painful when our country is completely excluded from the world economy.” Will our enemies succeed?

“Russia is too big for such a deletion.” The epidemic of sanctions leads to deglobalization, to the fragmentation of the world, to a decrease in the efficiency of the global economy as a whole.

— But from your words it turns out that sanctions have only advantages for the domestic economy?

— The disadvantages are well known to everyone. This is the seizure of Russian assets abroad, the rupture of supply chains, the increase in foreign trade costs… However, there are entire industries that have begun to actively develop thanks to sanctions. For example, Russians have become persona non grata in unfriendly countries, the flow of Russian tourists to these countries has dried up, but domestic tourism has grown sharply. Russian tourists have stopped exporting currency abroad; they are spending money in Sochi, Crimea, Altai, Lake Baikal and even in Dagestan – a region that was not previously perceived by compatriots as a tourist region.

Another example: the mass departure of IT specialists abroad has become a headache for many Russian businesses. However, persecution of Russians abroad reduces the damage from this factor. Moreover, many of those who “left” return without having eaten too much.

— It turns out that the Russian economy shouldn’t be afraid of new sanctions next year?

— If we have adapted to the old, we will adapt to the new.