Will invade? not invade? Europeans and Americans insist that if Russian troops cross the Ukrainian border, the country will face major economic sanctions.
The latest, German Chancellor Olaf Scholz traveling to Ukraine on Monday February 14 promised “ serious consequences in the event of an invasion, while the finance ministers of the G7 countries committed themselves a few hours later to sanctions on the ” massive and immediate consequences on the Russian economy ».
Russia has been preparing for this in recent years. To protect itself, Russia has accelerated the “de-dollarization” of its economy and its international trade. Moreover, the country has built up a veritable treasury in order to absorb future economic shocks that might arise as a result of Vladimir Putin’s expansionist policy.
The dollar is not popular
The central bank of Russia has stored the equivalent of 560 billion euros of foreign currency, in the form of foreign exchange reserves. They are drawn from the surplus generated by Russian exports, mainly hydrocarbons. The euro is the first currency accumulated with around 32% of the kitty. This is followed by gold (22%), the dollar (16%) and the Chinese yuan (13%).
Between Ukraine and Russia, a conflict with embers never extinguished
The dollar is steadily falling – it was more than 40% of reserves in 2018 – while the euro is rising. The greenback has a weight disadvantage. The Americans have included in their law a provision which provides for extraterritoriality: concretely, any transaction carried out in dollars in the world is likely to be subject to checks by the American authorities.
Fifth largest gold reserves in the world
Limiting the use of the dollar allows Russia to leave less room for American economic sanctions… With the euro, Russia can have a stable and abundant currency – which is not the case with the rouble.
→ REFERENCES. The Ukrainian crisis in five dates
At the same time, the country has strengthened its gold reserves. According to the World Gold Council, an organization that brings together the main mining companies in the world, the country has the fifth largest gold reserves in the world, just behind France, with 2,300 tonnes jealously hoarded according to a score made at the end of 2021. This strategy is profitable as the price of the metal has been on the rise in recent years.
A well-endowed sovereign wealth fund
The other pillar of this national treasure is the sovereign wealth fund. It is made up of budget surpluses. The state budget is generally in balance: the latter has very little debt, only up to 17.5% of GDP, and it abounds in this fund to the point that it has the equivalent of approximately 160 billion euros currently.
Enough to cope? This can enable the country to cushion the blow. But Russia remains closely linked to Europe. In an interview given to echoes on February 4, the President of the European Commission Ursula von der Leyen explained that «Russia is highly dependent economically because 37% of Russian trade is with Europe.»
Take the shock
Jacques Sapir, Director of Studies at the Ecole des Hautes Etudes en Sciences Sociales, disputes this point of view: “For imports of manufactured goods such as cars or machine tools, Russia might turn to Asia at an additional cost, largely absorbed by its financial resources. Furthermore, let’s say that its exports fall to 0, these same resources allow it to cover 18 to 20 months of imports.judges the economist.
But Julien Vercueil does not have the same opinion: «Radically redirecting Russian supplies is anything but a cakewalk for businessestempers the economist, author of The Political Economy of Russia (1), because they need high-tech products. Their production will therefore be less efficient. And it will also be a loss for households, as the consequences of the embargo imposed by Russia on Western food products from 2014 have shown: Russia has experienced an increase in poverty in the years that followed. »
