Russia recognizes that its economy must change as a result of unprecedented Western sanctions in reprisal for the invasion of Ukraine to avoid going back to the times of the Soviet Union. For this, the country must reduce dependence on exports and encourage private initiative, as highlighted this Thursday (16) the Russian Central Bank.
“External conditions changed a long time ago, if not forever,” said Central Bank of Russia (BCR) president Elvira Nabiulina at a conference at the International Economic Forum in St. Petersburg.
“It is necessary to respond to these changes proactively”, stressed Nabiulina, at a time when the Russian Central Bank itself predicts 2022 the worst recession since 1994. The forecast for a drop in GDP is between 8% and %, although the Central Bank of Russia has already announced that it will revise its forecasts upwards in July.
For Nabiulina, Russia’s economy heavily depends on exports, mainly oil and gas, must be rethought. “An important part of the production should benefit the domestic market”, defends the president of the Russian BC, in a scenario in which the European Union agreed to reduce dependence on Russian oil under the sanctions imposed on the country of Vladimir Putin.
On the other hand, Nabiulina predicts that the fact that the country does not have access to technology with the sanctions could cause a degradation of the Russian economy. Problem experienced precisely by the Soviet Union in relation to the West. “In order not to return to the USSR in certain aspects, we have to focus on the private sector. Without that, there is no space for technological development”, warns the president of the Central Bank.
The modernization of the Russian economy is a must, emphasizes the BC president. Maxim Oreshkin, adviser to President Rutin, recalls that in the past Russia has had to depend on itself. Only now there is no danger of going back to Soviet times.
“Definitely. no. The economy of the Soviet Union was inefficient in many ways. It was closed, non-competitive, inefficient, because it was so centralized. This is not the case now in Russia and it will not be the case. There will be an economy that is more efficient, more flexible, more prone to change, more resistant to pandemics”, highlights.
The Minister of Economic Development Russia’s Maxim Reshetnikov argued, in turn, that Western sanctions forced Russia to change supply and production chains. “We need some time, we need this time to see the structural changes”, he commented.
Finance Minister Anton Siluanov, on the other hand, considered that the division between the West and Russia “is very clear ” now, since globalization is based on the principle of “friend or foe”.
In his opinion, it is obvious that Russia now needs a “new economic program, its own program of production and also develop key technology, which is absolutely necessary”.
The lack of proprietary technology in an environment of unprecedented sanctions has already had an impact, for example, on Russian gas exports to Europe .
Technology and gas
This week, the Russian giant Gazprom alleged problems with the technical review of turbine engines by the German company Siemens to reduce by almost 60% the supply of gas to Europe via the Nord Stream pipeline.
Germany, however, sees a political intention in reducing the gas supply it is a strategy that aims to provoke an increase in prices, in the words of the country’s Minister of Economy and Climate, Robert Habeck. What the Russian government denies. “There is no premeditation. It is a problem that has nothing to do with us,” Kremlin spokesman Dmitri Peskov said today.
Gazprom CEO Alexei Miller said on Thursday. fair that “today there is no solution to the problems” of the gas pipeline, which transports Russian gas to Germany via the Baltic Sea. Miller explained that Siemens has only one factory where technical overhauls of engines are carried out, which operates in Canada, a country that imposed sanctions on Russia. “Now Siemens cannot take the turbines out of that country to return them to Russia,” he said.
Moreover, Miller admitted that gas exports to Europe fell in the first five months of the year. , but at the same time the price has gone up. The price of TTF natural gas for July delivery in the Dutch market is quoted today at 118 euros per megawatt hour (MWh).
In this context, Russia’s ambassador to the European Union, Vladimir Chizhov, warned that technical problems could force Gazprom to completely cut off supplies if no solution is found.
From January 1st to June 15, Gazprom’s exports to European countries fell 15,9 % compared to the same period from 2021, to 65, 6 billion cubic meters.
“Yes , we have a decrease in the supply of gas to Europe. But prices have increased several times more. So if I say we’re not offended, I’m not faking it,” Miller said.