Russia’s government is prepared to protect its economy from the possible wider sanctions by the U.S. and its allies, Prime Minister Dmitry Medvedev said.
Crimea is being used to put political pressure on Russia, Medvedev said at the lower house of parliament in Moscow today. The government will seek to shield local businesses, minimize the effect of economic sanctions and fulfill its social obligations regardless the restrictions, he said.
“The government is ready to operate under conditions where the priority is to protect the economy and citizens from the unfriendly actions that may follow the escalated foreign-policy situation,” Medvedev said.
U.S. Secretary of State John Kerry yesterday warned Russian Foreign Minister Sergei Lavrov that “there will be consequences” if Russia doesn’t act “over the next pivotal days” to restrain separatists controlling parts of eastern Ukraine. That would threaten to tip the world’s largest energy exporter’s $2 trillion economy into recession.
Sanctions already announced have triggered a selloff in the ruble and capital flight from Russia amid the worst standoff with the U.S. and its allies since the Cold War
The ruble has lost 8 percent against the dollar this year, the second-worst performance among 24 emerging-market currencies tracked by Bloomberg after Argentina’s peso. The Russian currency was little changed at 35.72 per dollar at 5:15 p.m. in Moscow today.
Russia’s economy may halt or contract in the second or third quarter of 2014, Maxim Oreshkin, head of the Finance Ministry’s strategic planning department, told reporters yesterday. Gross domestic product grew an estimated 0.8 percent in the first three months of the year, Economy Minister Alexei Ulyukayev said April 16. GDP expanded 1.3 percent last year, the slowest since a 2009 recession.
Russia is facing the triple pressure of global economic instability, domestic structural issues and hostile policies, Medvedev said. The government needs to follow through with its economic strategy without “hysteria” and the current challenge is an opportunity to develop a new foundation for the economy based on domestic production, he said.
“Imposing restrictions is a primitive path, it is a road to nowhere,” Medvedev said. “But if a number of our Western partners will decide to do so, we will have no choice. In that case we can manage with our own strength and we will prevail at the end.”