Are sanctions from Europe and the United States destined to bring Vladimir Putin’s Russia to its knees? That’s all to be seen, because while we send arms to Kyiv and condemn the Russian army’s invasion, we continue to buy Russian gas and oil from Moscow. Robin Brooks, chief economist at the IIF Institute of International Finance, former strategist at Goldman Sachs and the International Monetary Fund, provides some figures and their interpretation.
The economist presents an eloquent chart of Russia’s current account surplus, ie the account surplus, which indicates that a nation is a net lender to the rest of the world. Well, the column on February 2022, that of the invasion of Ukraine and the start of sanctions on Russia, sees an unprecedented rise, almost double the best result since 2007. “Russia’s financial conditions are looser and the bite of our sanctions is easing , because Russia’s energy exports are constantly generating hard currency inflows, so Russia is making new ones even though we have frozen FX reserves. A Russian energy boycott would stop that…” Brooks commented on Twitter.
Some users ask him if it wouldn’t be wiser to rely on data from March, the month when the sanctions grip could have had a greater impact. “Sure. But that also means waiting a month while the war in Ukraine rages on. We intuitively know what’s happening. Energy exports will fall slightly due to selfsanctions by Western companies. But imports are also collapsing due to the recession.” the current account surplus will be huge,” replies the economist. Mario Sechi, director of agency Agi, also relaunched the tweet: “Open gas sanctions. Unexpected Consequences” is the effective summary of the situation.
Russia’s financial conditions are loosening and the impact of our sanctions is wearing off because Russia’s energy exports are constantly generating hard currency inflows, so even though we have blocked foreign exchange reserves, Russia is generating new ones. A Russian energy boycott would stop this… pic.twitter.com/knfdKnpTNb
Robin Brooks (@RobinBrooksIIF) March 19, 2022