GENEVA — Western sanctions are not damaging Russia’s economy as much as expected, Ukraine’s Deputy Economy Minister Taras Kachka told POLITICO.
“Russia seems to be more resilient to sanctions than we estimated at the beginning,” Kachka said. “Initially, there was an assumption that impacts [of] sanctions will be more and more visible,” he added.
“But it seems that revenues from commodities ensure stability of Russia’s public finances,” Kachka said, pointing out that Russia’s central bank lowered its interest rate to 9.5 percent last Friday, which is back to what it was before February 28.
Days after Moscow invaded Ukraine in late February, Russia’s central bank hiked the interest rate up to 20 percent to prop up a plummeting ruble, but they’ve now re-evaluated the rate downward because “the decline in economic activity is of a smaller magnitude than the Bank of Russia expected in April,” the bank wrote in a press release.
According to Kachka, this means that the West needs to ramp up its embargo on Russian commodities and services.
“There is a necessity to go further and to increase sanctions on Russia,” Ukraine’s deputy minister said. “We need to get rid of oil and eventually gas: these are the commodities that are bringing in direct revenues for the Russian budget.” He added that Ukraine would also welcome widening sectoral bans, for instance adding products like slabs to the steel embargo.
Beyond commodities, the West needs to target Russian services again. “Financial services and transport services, the broader exclusion of Russian financial institutions from SWIFT, insuring vessels — that will constrain Russia in a way that is more efficient,” Kachka said.
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