The Russian economy ‘will go back twenty or thirty years’ and Vladimir Putin has endangered the future of his regime by attacking Ukraine, says in an interview with AFP Sergei Guriev, former economic adviser to the Russian government and exiled to France.
‘Putin succeeded in destroying the Russian economy in a few weeks,’ says this former chief economist at the European Bank for Reconstruction and Development (EBRD), now a professor at Science Po Paris. He predicts a ‘huge recession’ to come and a ‘likely’ default by Russia due to sanctions imposed on the country by the West.
Former economic adviser to the Russian government in the early 2010s and former member of the board of directors of the main Russian bank Sberbank, Sergei Guriev fled his country in 2013, feeling threatened by the authorities because of his speeches and of his closeness to the former CEO of the Yukos company and Kremlin opponent Mikhail Khodorkovsky, imprisoned in 2003.
According to Sergei Guriev, ‘the last eight years have seen the (Russian) economy stagnate. But what we are facing is that the Russian economy is going to go back twenty or thirty years in terms of household incomes, and in terms of the structure of the economy’.
‘It is difficult to imagine the number of years it will take to return to the level of GDP of 2021’, he continues, referring to ‘a tragedy, not comparable to the drama in Ukraine, but a tragedy all the same’.
Politically, Vladimir Putin ‘shortened his regime’s life expectancy’ due to ‘miscalculated’ attack on Ukraine, Sergei Guriev thinks: Vladimir Putin is a ‘misinformed’ president, who ‘overestimated the power of the Russian army, underestimated the resolve of the Ukrainians to fight, and underestimated the unity of the West.
‘Completely unknown territory’
Since the Russian invasion of Ukraine on February 24, the West has responded with economic sanctions targeting the central bank, Russian imports, the fortunes of the oligarchs, and the ability of commercial banks to carry out transactions.
The effect of these measures, added to that of the departure of many private companies, is today very difficult to quantify. The S&P Global agency has anticipated in recent days a contraction of 6.2% of GDP for 2022, but the magnitude of the shock might be much greater, warns Serge Guriev.
‘We are entering completely uncharted territory,’ he says. ‘Russia has been integrated into the world economic system. When you do decoupling, you break a lot of things. We do not know how the economy will function without Taiwanese semiconductors or without the maintenance of its Boeing planes or its Airbuses, he warns.
Fraudulent contractors
What’s more, ‘for many entrepreneurs it’s the end of a lifelong project’, notes the economist faced with the collapse of the ruble and the departure of many talents from the country.
‘Imagine that you have built a business in the last twenty or thirty years. Today you no longer have access to your partners, you can no longer borrow from the bank, interest rates exceed 20%, you cannot export or invest,’ he says.
However, there is no question of slowing down the train of sanctions: he considers that ‘if the purpose of these sanctions is to stop Mr. Putin’s war, then Europe has no other choice but to stop buying Russian oil.
Failing to stop European imports of gas, which certain countries reject because of their very strong dependence on Russian supplies, a European embargo on oil, in the wake of that of the United States, would put a serious blow to the resources available to Moscow to finance its war, according to him.
If all Western countries come on board, it might then ‘encourage China to follow them in the oil embargo’ and ‘deprive (Vladimir Putin) of resources to continue his brutal war’, he says .
Nobel laureate in economics Joseph Stiglitz had called on Tuesday in an interview with AFP for a total European embargo on gas and oil.
/ ATS
