Billions of dollars in losses for Russian business empires and a record fall in the stock markets — the sanctions imposed by the US government hit Russia hard. But how will the war of sanctions between the Kremlin and the West affect the economy of Belarus?
The “Rusal” company owned by the oligarch Oleg Deripaska has announced a possible default. Shares of Russian companies on the Moscow stock exchange plummeted by nearly 10 percent, and the euro now costs 73 Russian rubles. The 50 richest Russians lost $ 12 billion over a day. That was how the markets responded to the introduction of new sanctions by the United States.
Russian Prime Minister Dmitry Medvedev said that the government will support the companies against which the West adopted restrictive measures.
“These decisions are, of course, unacceptable. We consider them illegitimate, and, of course, reserve the right to take retaliatory measures, including existing trade agreements and procedures,” said Russian Prime Minister Dmitry Medvedev.
Last Friday, in response to the destabilization of the situation in Ukraine, Syria and interference in the American elections, US Treasury Department imposed sanctions against seven major Russian businessmen and 14 companies. The list also contains firms operating in Belarus.
“There is a “Gazpromneft” office in Belarus, which is the co-owner of the Mazyr refinery, but it is not under sanctions. The VTB bank credits a number of projects in Belarus, but the important projects that could have a significant impact on the economy of Belarus are not here,” says economic commentator of Belsat.eu Stanislau Ivashkevich.
At the end of 2014, the fall in oil prices and sanctions imposed against the Russian defense, finance and oil sectors led to the collapse of the Russian ruble. This caused another devaluation in Belarus. The worsening economic situation in Russia may weaken the Belarusian currency again.
The deterioration of the economic situation in Russia will also have unpleasant political consequences for Belarus.
“If the confrontation between Russia and the West becomes more “hot”, Russia will be more demanding with regard to the official Minsk. Russia will expect that it fulfills the signed agreements,” said political analyst Ales Lahvinets.
However, the US has not prohibited the import of Russian oil. Source of economic problems in Moscow lies not in the deterioration of relations with the West, but with the corruption and the technological gap.
“For several years the Russian economy has been growing more slowly than the world’s average. It loses markets, loses technology, becoming more and more dependent on raw materials. Due to its focus on Russia, Belarus is suffering from the same. We are increasingly becoming dependent on raw materials, we lose the technology, we rely only on the Russian market, as it is separated from the rest of the world,” sums up Stanislau Ivashkevich.
After the panic caused by US sanctions, Russian companies’ share prices may go up. However, a significant improvement in the economic situation is not to be expected. Therefore, Belarus is not threatened by the US actions, but rather by the general decline of the Russian economy. The Belarusian government, however, does not know how to get rid of the Russian “Titanic”.
Alyaksandr Papko; photo – Valery Sharifulin / TASS