The economic sanctions are only a tertiary cause of Russia's trouble with economic growth. The recession is in full swing, but Vladimir Putin will not reform the economy – argues Sergei Guriev, former President of Moscow's New Economic School.
The decline in oil price and economic sanctions deepened the slowdown in Russia’s GDP lasting from 2011. Due to the lack of internal and external growth drivers, this time Russia is unlikely to return to a high-growth path over the next few years.
The Russian embargo on the Polish food imports will result in excess supply arising on the domestic food market. The lower demand in Russia will not be compensated by consumption in Poland. The goods exported to Russia belong to the group of goods the real consumption of which has been dropping in Poland in recent years.
Two events have called into question the advancing integration of Ukraine with the European Union. President Petro Poroshenko has acknowledged there is no chance of the Ukrainian government winning the war in eastern Ukraine as Russia will not allow that, and so he has pledged a series of major concessions.
Despite very high global oil prices, Russia has entered a period of considerable economic slowdown. The possibility of continuing economic growth relying on natural resource-based export, with increasing involvement of the state, has worn out. Yet, Russia is unprepared for the new situation, it has no ideas for necessary changes and steering its economy out of the woods.
"Poland is in a very difficult situation in terms of its relations with neighbors, but all the disagreements between the country and its neighbors should not affect their economic relations. With only one exception: Russia. Money that comes from Russia has to be controlled and not every Russian investment should be allowed", Edward Lucas, a longtime correspondent from Central and Eastern Europe for The Economist, says.
William Browder, a grandson of the former General Secretary of the Communist Party USA, became one of the biggest foreign investors in Russia at the end of the 1990s. Mr. Browder, CEO of Hermitage Capital, who was initially an avid follower of Vladimir Putin and a critic of Mikhail Khodorkovsky, suddenly became public enemy No. 1. In 2006 he was expulsed from Russia on the claim that he poses a threat to national security. Soon afterwards some corrupted officials illegally seized his company. The company’s lawyer, Sergey Magnitsky, who exposed the scheme, was jailed and afterwards died in prison in mysterious circumstances. Mr. Browder did not lay down his weapons and started lobbying against corrupted Russian officials. Owing to his efforts, contrary to the suggestions of the Obama administration, in November 2012 the US Congress passed the so-called Magnitsky Act – banning several dozen individuals responsible for the lawyer’s death from entering the USA and freezing their bank accounts.