Sanctions have effectively cut Russia off from global finance streams – analyst

He said this on Espreso TV.

"The sanctions have led to three key outcomes. First, economic sanctions have shut Russia out of international financing. Moscow simply can’t raise money on foreign markets anymore. Second, the tech sanctions. Russia has lost access to a big chunk of modern technologies. Even with attempts to smuggle parts or work through third countries, the shortage of critical tech is becoming more obvious — and the country is clearly paying the price," Aslund said.

The analyst noted that oil sanctions are now hitting the Kremlin’s ability to fund the war, though they started out weak due to concerns in Washington over oil prices.

"The third point is oil sanctions. At first, they weren’t effective, but they’ve started to bite. One reason is that the Biden administration was initially afraid of rising oil prices in the U.S. But now we’re seeing the opposite — global oil prices are falling. Urals crude is down to $50 a barrel, which is $20 below what Russia needs for its budget. That’s a serious blow to the Kremlin’s revenue and adds more pressure on the Russian economy. This alone could cost Russia around 2.5% of its GDP. On top of that, Russia is quickly burning through the liquid part of its National Welfare Fund — only about 2% of GDP is left. That means in the second half of the year, the government will likely have to slash public spending by around 4% of GDP. That kind of cut is a real hit to the system," he stressed.

Aslund says Russia no longer appears strong — but it's not close to collapse either.

“Right now, Russia’s military spending is around 10% of GDP. In Ukraine, it’s closer to 50%. Russia technically still has room to boost spending, since its economy isn’t fully on a war footing. As Elvira Nabiullina has pointed out, stagflation is expected in Russia this year, with GDP growth of just 1–2%. That’s not a collapse, but it’s far from stable. Uralvagonzavod is turning out only about 300 tanks a year — nowhere near enough for a war this size. And the air force looks completely worn down. So yes, Russia no longer looks strong — but it’s not on the edge either,” he concluded.

• On April 24, Politico reported that the White House was allegedly considering lifting sanctions on the Nord Stream 2 gas pipeline. The State Department denied the claim.
• On May 3, reports said U.S. officials had finalized a new round of economic sanctions against Russia, but it’s unclear whether President Donald Trump will sign off on the package.