Since the annexation of Crimea in 2014, Vladimir Putin has been able to reduce his country’s dependence on foreign countries. But if the United States decided to prevent Russian banks from working in dollars, the situation would become very complicated.
“By escalating tensions with Ukraine, Vladimir Putin has shown that the main Western tactic of deterrence — the threat of heavy economic sanctions — may not avert Europe’s biggest war in decades.”notes the American weekly Newsweek.
And for good reason: since the United States and other countries imposed sanctions on Russia following it annexed Crimea in 2014, “the Russian president has restructured his country’s economy with the specific aim of holding up once morest financial pressures from the West”add the New York Times. A reorganization that “casts doubt on the effectiveness of sanctions”estimates the Wall Street Journal.
Russian officials “are quite proud – and they have good reason to be – of the work they have done”, comments Alexander Gabuev, of the Carnegie Moscow Center think tank, quoted by the New York Times. The country knew “harden its economy to create space for it to pursue its foreign policy goals”complete Newsweek.
“Dedollarization”
With revenue from its gas and oil exports, it has “consolidated its gold stocks and increased its foreign exchange reserves to a staggering 631 billion dollars, equivalent to a third of the entire Russian economy”emphasizes the New York Times. It is “the fourth largest currency reserve in the world”.
More importantly, the country has made progress in its “de-dollarization” strategy. greenback, “formerly dominant, now represents only 16% of these reserves”, now supplemented with euros and yuan. If necessary, Moscow might draw on this woolen stocking to support the course of the ruble and finance its imports.
Russia has also reduced spending and debt, which “represents less than two-thirds of its foreign exchange reserves”. Having become more restrained, the country should be able to balance its budget – civil and military – as long as the price of a barrel of oil, which today is close to 100 dollars, does not fall below 44 dollars.
And, in the event of a showdown with the Europeans, the latter would not leave
[…]
