Sanctions aren`t the key source of Russia`s woes
 Tbilisi 14:00 - 30.01.15 «GHN»
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Russia has been heading towards a heavy recession for a long time. Now the EU is discussing new sanctions against Moscow. What part do sanctions from the West actually play in this crisis?, reports GHN based on DW.
If European media report that the Russian economy runs the risk of a severe recession because ofsanctions from the West and falling oil prices, then they are undoubtedly right.
However, the economic difficulties in Putin's empire are largely home-made. The sanctions the West imposed on Russia because of Moscow's aggressive politics toward Ukraine have only exacerbated existing structural problems.
Declining oil prices at fault
That is also how Russian Finance Minister Anton Siluanov says he sees the situation. At the end of November 2014, he already estimated that Russia's losses due to geopolitical sanctions could amount to approximately $40 billion (35.32 billion euros) a year. The consequences of these measures may be considerable, but nonetheless "not that critical for the political course and maybe for the budget as prices for export goods," he said, referring to oil and natural gas. The price point of those commodities has usually been coupled with the state company Gazprom's oil prices.
"First and foremost, the decline of oil prices has an impact; we're earning less foreign currency," emphasized the minister.
In November, Siluanov had estimated that annual losses due to the decline of oil trading prices would be $90 to 100 billion. At that time, the most important Russian export product by far had already lost around 30 percent of its value. Soon thereafter, once the loss was over 50 percent, the finance ministry recalculated.
The effect of the "outer shock," as Moscow has been describing the cheap oil and the sanctions as of late, is now around $200 billion, declared Anton Siluanov in front of the upper house in Russian parliament on January 28.
Sinking oil prices can be traced back to the dramatic fall of the ruble at the end of 2014, which became one of the most dramatic precursors of the country's crisis. Since then, the exchange rate has been fluctuating simultaneously with the oil trade prices. Russia's main problem is that its political leaders had depended on a never-ending stream of petroleum revenue for far too long and had done astoundingly little for the modernization and diversification of the domestic economy.


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