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Ex-finance minister says fears of tougher sanctions restrain Russia’s economic growth

February 15, 9:31 UTC+3 SOCHI

This is the first time after the crisis that Russian economy is facing such a weak rebound, Alexei Kudrin said

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© Sergei Konkov/TASS

SOCHI, February 15. /TASS/. Expectations of harsher economic sanctions against Russia imposed by the United States and the lack of structural reforms are the key factors curbing the country’s economic growth, former Finance Minister and Chairman of the Center for Strategic Research Alexei Kudrin said in an interview with TASS.

"Sanctions are one of the factors curbing economic growth. They are a very strong disturbing factor, I would say that sanctions would have been a far smaller factor if we all expected them to subside or at least not expected their escalation. But since there are concerns that they will get harsher, it curbs investment," he said.

The US administration plans to impose sanctions against certain oligarchs and government leaders included in the so-called ‘Kremlin List’ in the near future, US Treasury Secretary Steven Mnuchin said earlier this week.

Kudrin expects Russia’s GDP growth to remain at 1.5-2%, and industrial production to be in the negative territory within several months. The current weak growth is due to accumulated large structural disproportions and problems that can be solved through structural reforms, he explained.

"This is the first time after the crisis that we are facing such a weak rebound. After the 1998 crisis the rebound was 10% of GDP, after the crisis of 2008 and 2009 the rebound was 4.3%, whereas now the rebound only totals 1.5%. By the way, the oil price is not that low now, which is why we could have expected more," Kudrin said, adding that he considers it an alarming signal.

On January 29, the US Department of Treasury published the unclassified version of the so-called ‘Kremlin List’. The document includes the names of 210 Russian officials, major businessmen and CEOs of state companies. The US Treasury Department claimed this is not a sanction list as no restrictions or bans apply to the listed persons in the United States.

However, on Wednesday Steven Mnuchin said in a hearing before the Senate Finance Committee when commenting on further plans to implement the Countering America’s Adversaries Through Sanctions Act (CAATSA), that the Treasury Department is actively working on those sanctions, and one should expect them in the near future.

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