Russia-Watching: Economic Dysfunctionalities

[from the Russian Analytical Digest]

This issue deals with dysfunctionalities in the Russian economy. The first three contributions look at the direct impact of sanctions. Ilya Matveev provides an overview, while Andrei Yakovlev compares the government’s anti-sanctions measures to its reaction to the economic impact of the COVID-19 pandemic. Janis Kluge offers a more detailed picture of the short- and long-term effects of the unfolding sanction regime. Michael Rochlitz then goes on to explain the lack of strategic planning in the country’s economic policy. Finally, Olga Masyutina and Ekaterina Paustyan provide a case study of inefficient governance mechanisms looking at waste management.

Read the full issue [archived PDF].

Analyses

Sanctions against Russia: No Blitzkrieg, but a Devastating Effect Nonetheless

by Ilya Matveev

In response to the Russian invasion of Ukraine, over 40 countries have introduced sanctions against Russia. The new restrictions concern finance, trade, logistics, and personal sanctions against businessmen and officials. In addition, more than 1,000 companies have ceased or limited their activities in Russia. In this article, Ilya Matveev argues that the sanctions, despite their unprecedented scale, have not led to the collapse of the Russian economy, yet their effect is dramatic, multi-faceted, and will increase over time.

Read the full issue [archived PDF].

Fighting the Pandemic and Fighting Sanctions: Can the Russian Economy Now Benefit from Its Experience with Anti-Crisis Measures?

by Andrei Yakovlev

Faced with tough international sanctions in reaction to its war against Ukraine, the Russian government has resorted to measures developed during the COVID-19 pandemic in order to stabilize the economy. This short analysis discusses the rationale behind this approach and demonstrates its limits.

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Russia’s Economy under Sanctions: Early Impact and Long-Term Outlook

by Janis Kluge

Four months after a coalition of Western states imposed unprecedented sanctions on Russia, the Russian economy seems to be holding up better than expected. The Central Bank has managed to stabilize the country’s financial system and Russian officials are trying to project optimism about the future. However, this optimism is likely to be short-lived. The sanctions’ effects are only just beginning to unfold: supply-chain problems are intensifying and demand is falling quickly. In the longer run, Russia’s economy will become more primitive as it partially decouples from international trade. To avoid social tensions, the government will intervene to support Russian businesses, leading to more protectionism and a larger state footprint in the economy.

Read the full issue [archived PDF].

Why Russia Is Lacking an Economic Strategy for the Future

by Michael Rochlitz

Even before the economic crisis caused by Russia’s full-scale attack against Ukraine and the ensuing sanctions, the Russian economy was plagued by a number of growing problems. As a result, Russia’s economy has hardly grown for almost a decade, with an average annual growth rate of just 0.5% between 2013 and 2021. However, the Russian government does not have a strategy for addressing the fundamental economic challenges that are looming just over the horizon. There also seem to be no public debates about these challenges, whether in the policy circles around the government or among the wider public.

Read the full issue [archived PDF].

The Political Economy of Waste Management in Russia

by Olga Masyutina and Ekaterina Paustyan

The problem of household waste is one of the numerous environmental challenges facing Russia today. The 2019 nation-wide waste management reform was designed to tackle this problem by promoting recycling. However, the reform is stalling, due in large part to the nature of state-business relations in Russia. The lack of transparency in the public procurement process and the importance of personal connections between businesses and the federal and regional authorities undermine the implementation of the reform and produce suboptimal outcomes in the fight against waste.

Read the full issue [archived PDF].

Essay 84: World Watching: U.S.-China Tariffs

(from the PIIE Insider)

News and Analysis from the Peterson Institute for International Economics
November 13, 2019

They Saved the Worst for Last: Why Trump’s Impending December Tariffs on China Should Be Rolled Back

The terms and deadlines of President Donald Trump’s trade war with China are hard to follow, but one thing is clear: American consumers and businesses should welcome a rollback of impending final rounds of China tariffs as part of a possible “phase 1” deal to be announced later in November, say Mary E. Lovely and Yang Liang. Washington has acted against China to punish it for preventing US access to the Chinese market and for violating US intellectual property rights.  Beijing is reportedly demanding that impending December tariffs be dropped before they sign any deal. Trump says he hasn’t decided how many tariffs might be lifted.

Key Takeaways

Read the full story at PIIE [archived PDF].