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Russians don't associate sanctions with Putin, rather attack on Russia — first deputy PM

January 23, 2015, 12:44 UTC+3 DAVOS
First Deputy Prime Minister Igor Shuvalov said without the Ukrainian crisis and anti-Russian sanctions the situation in the Russian economy would be harsher
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Russian First Deputy Prime Minister Igor Shuvalov

Russian First Deputy Prime Minister Igor Shuvalov

© ITAR-TASS/Anton Novoderezhkin

DAVOS. January 23. /TASS/ The economic situation in Russia could be even worse if it were not for the crisis over Ukraine, First Deputy Prime Minister Igor Shuvalov said on Friday at the Davos Economic Forum.

"For many, it is beneficial to imagine that all that is taking place is taking place because of the Ukrainian crisis. But I will say that even if there were no crisis, and if we entered a phase of oil prices at $ 47 per barrel, or lower, which still may happen, and there were no Ukraine factor or sanctions, the situation would be much harsher," Shuvalov said.

Shuvalov said that ordinary Russians do not associate sanctions with Putin, but rather see them as an attack on Russia, which leads to a certain unity among the citizens.

"When people talk about sanctions, it’s seen as an instrument to hurt us and not Putin, and so we must rally around our leader. In that respect, this is the Russian mentality,' said Shuvalov.

He added that with such a high level of unity and harsh internal and external conditions, we have to learn how to "fulfill the agenda."

"But even if there was no unity and the price of oil would be $40 per barrel, and we would be in a difficult situation and would be twice as hard to fulfill the agenda," he said. Shuvalov added that the unity and harsh internal and external conditions are all a good platform for reforms.

Russia’s economic crisis worse than 2008

Shuvalov also spoke on the current economic situation in Russia saying the situation will deteriorate further and will be more severe than the crisis in 2008.

“There is nothing good in the current situation and it is very difficult and I think it will deteriorate,” Shuvalov said during the Davos economic forum.

Shuvalov stressed that most people wrongfully believe that the current situation is better than the global recession some seven years ago. “The difficulty is much greater,” he said.

“I believe that in fact judging by the depth and the difficulty, it seems to me that we have been for a year already in a condition when we are entering a further protracted and a complex crisis,” Shuvalov said.

The official believes that the government’s anti-crisis plan should help businesses and households to “adapt to new conditions” and a “heavy landing” when there will be no high revenues and high oil prices.

“The anti-crisis plan is how ordinary citizens and businessmen in Russia will adapt to new realities and when there is a need to live in other way,” Shuvalov said.

Russia's Prime Minister Dmitry Medvedev said on Thursday at the Cabinet meeting that the country’s federal anti-crisis plan should be finalized no later than early next week.

The government anti-crisis measures will be based on three main areas - enhancing economic growth, support for individual sectors and ensuring social stability, Medvedev said.

Positive outlook

“I believe that sooner or later investors will start looking at real benefits even if they get negative signals,” Shuvalov said. “There is no business that can be ordered either to invest or refrain from investments if it is profitable.”

According to him, Russia is currently studying how other countries developed under sanctions.

“We followed how the South African Republic developed under the sanctions, how difficult Chili’s development was,” Shuvalov added.

Infographics Economical sanctions against Russia Economical sanctions against Russia
The USA, EU, Canada and Australia have introduced sanctions against Russia over its involvement in the Ukrainian crisis. Infographics by ITAR-TASS

Anti-Russian sanctions

The West started imposing sanctions on Russia in March 2014 over the events in Ukraine. First, an early EU summit stalled the talks on a visa-free regime and a new base agreement on Russia-EU cooperation. Further on, the sanctions were grouped into three categories - personal, corporate and sectoral.

By the beginning of September, some 420 Russian individuals and 143 companies had been put on the sanction lists of the European Union, the United States, Canada, Australia, Japan, Switzerland and Norway.

The sectoral sanctions imposed for a term of one year include an embargo on the supply of arms to Russia and the importation of Russian weapons and related materials, a ban on the delivery of dual-purpose products and technologies to Russia, as well as innovative technologies for Russia’s oil extracting industry.

In mid-September, the European Union published new sanctions against Russia in its official journal.

Russia fully banned from August 7, 2014 the imports of meat, fish, cheeses, milk, vegetables and fruits from western countries that had imposed economic sanctions against Russian citizens and companies.

The countries that have slapped sanctions against Russia include the European Union member states, Norway, the United States, Canada, Australia and Japan. Russia’s food imports from these countries amounted to $9.1 billion in 2013, according to the Federal Customs Service, of which the EU accounted for 66%.

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