War in Ukraine: Sanctions set Russian economy back 15 years, says IIR – 20 Minutes

International sanctions are hurting Russia very badly. Imposed on Moscow following the invasion of Ukraine, they are wiping out about 15 years of the country’s economic progress and three decades of integration with the West, according to a report by the Institute of International Finance (IIF) published on Wednesday. However, the impact of these measures remains difficult to predict as they are fluid with, on the one hand, potential new sanctions and, on the other, a possible response from Russia, particularly in the energy sector. In its latest analysis, the IIF predicts that the Russian economy will contract by 15% this year and another 3% in 2023. Russian President Vladimir Putin, but sanctions don’t work like “flicking a switch”, said IIF economist Elina Ribakova. Financial sanctions, such as reducing Moscow’s ability to repay its foreign debt, rising prices and the exit of foreign companies from the country are slowing domestic demand, “thus clouding the economic outlook in the short, medium and long term”. The authors of the report thus note that “some of the most significant consequences have yet to be felt”. Elina Ribakova further noted that the sanctions disrupt global value chains. She sees it as a “disintegration of 30 years of investments and connections with Europe.” According to IIR Executive Vice President Clay Lowery, assessing the effectiveness of sanctions imposed on Russia depends what governments are trying to accomplish. “If by success, we mean harming the economy (…) then these sanctions certainly have an impact”, and this should increase. However, in the past, sanctions have not proven their effectiveness in changing course policies, he recalled.