Russia loses $6.3bn due to sanctionsStaff Writer | February 19, 2019
Various restrictions, including economic sanctions, introduced by other countries cost Russia $6.3 billion by late 2018, according to the estimates presented by the Russian Economic Development Ministry.
Russia The heaviest blow was dealt to Russia’s metallurgy industry
The ministry noted that Russia suffered the biggest loss ($2.42billion) due to restrictions introduced by the EU countries. U.S. sanctions cost Russia nearly $1.17 billion, and Ukraine’s restrictions were the third hard-hitting to the tune of $775million.
The European Union ranks top in terms of the number of restrictions - 25, while Ukraine imposed 22 restrictions on Russia.
India took the third spot for the number of restrictions, while the United States came sixth with just nine restrictions, falling behind Belarus and Turkey, TASS reported.
The heaviest blow was dealt to Russia’s metallurgy industry, which lost more than $3.99 billion. The agricultural industry sustained damage to the tune of $1.1 billion and the chemical sector was the third hardest-hit industry in Russia, with the loss of $640.7million.
By the end of 2018, 62 countries imposed a total of 159 restrictions against Moscow.
Professor of the RANEPA faculty of Finance, Money Circulation and Credit, Yuri Yudenkov, speaking to Vestnik Kavkaza, noted that indeed, $6.3 billion is a significant loss for the Russian economy.
"Metallurgy suffered the most in the last year due to the introduction of increased duties on metallurgical products supplied to the U.S. That is, the Russian economy was hit the most in the last 1.5 years - about $4 billion out of $6 billion. Let me remind you that because of the duties, we even had to stop the Novolipetsk Metallurgical Plant, as part of its products was in little demand," he said.
At the same time, the Ministry of Economic Development has bypassed the issue of the Russian economy's losses from Russian counter-sanctions. "It should be considered as well, because, in fact, we voluntarily refused to supply the products we needed.
"There is an assumption that, having formed a new food industry, having developed agriculture, we won back some positions, but the damage has been done. Now, I think we need to abolish counter-sanctions. The fact is that we already have such a gap in prices for our own and European products, that it's not that people do not really want imported goods, but just cannot buy them," Yury Yudenkov noted.
The Ministry of Economic Development considered only direct losses by industry in the report, while indirect losses were not explicitly assessed.
"In fact, investments in industry were banned, so the economy does not develop. But in addition to direct losses there are also non-supply of technologies.
"Technologies always have a cumulative effect, and if we take into account the damage from the technological lag, the final number will surely be greater than $6.3," the professor of the RANEPA faculty of Finance, Money Circulation and Credit stressed.
The professor at the department of the stock market and investments at the Higher School of Economics, Alexander Abramov, also noted that the Ministry of Economic Development estimated only the most direct, unconditional losses of the Russian economy.
"Of course, $6.3 billion for Russia is not that much, and the department clearly estimated only direct losses.
"After all, Russia's main loss from sanctions is low economic growth. Of course, Western sanctions did not affect the stability of Russia as much as low oil prices, but the problem is that Russian companies have lost access to foreign financing, global markets and the latest technologies.
"This is the main thing that hinders economic growth. Therefore, genuine damage from sanctions is largely indirect - the restricted ability of importing technologies and conservation of the investment climate in the country, which is very significant," he explained.
"But it is also necessary to take into account the influence of Russian counter-sanctions on the Russians’ wallets - since the restriction of agricultural exports from Europe caused a noticeable increase in food prices, which dealt a very strong blow to the Russian budget. It should also be included in the damage statistics," Alexander Abramov added. ■