Analysts named six factors of Russia's protection from sanctions

Economists at an Austrian think tank have analyzed scenarios for possible Western sanctions against Russia over the Ukrainian conflict.They identified at least six factors in Russia's resistance to sanctions.

Since 2014, Russia has built a macroeconomic system of protection against Western sanctions, the elements of which are low external debt, significant budgetary and foreign exchange reserves, etc., economists at the Vienna Institute for International Economic Studies (WIIW) write in a note “Possible Russian invasion of Ukraine, scenarios and likely economic impacts on Russia, Ukraine and the EU”.

Protective factors

The authors identify the following factors for the stability of the Russian economy and the financial sector against sanctions:

very low levels of external debt, as well as a positive current account balance (meaning that in its financial and foreign trade accounts, Russia receives more funds from the rest of the world than it gives back); strong fiscal performance: oil and gas savings accumulated in the National Wealth Fund (NWF) are able to cover three times the emergency budget deficit that has developed in the pandemic 2020;