The war in Ukraine has recently entered its fourth year. At the same time, Russia has been explicit in signaling that its war-ending terms have remained static. Russian President Vladimir Putin has condemned the new sanctions announced by Western countries. He even goes so far as to threaten that Russia will retaliate “harshly” for any dangers to its assets.
Putin’s remarks come in light of a significant downturn in Russia’s oil and gas revenue, which has decreased by 21% year-on-year. This revenue represents around a quarter of Russia’s national budget. Experts say Russia is unlikely to feel the impact of these sanctions anytime soon. Russia is different in that it mainly derives its revenue from taxing output through domestic taxation. It is not financially dependent on exports for this source of income.
In reaction to the sanctions, Putin threatened a “painful response” if Russia’s assets were confiscated. He argued that ceasefire isn’t really an option anyway. Even then, it would be just a temporary solution before hostilities would be certain to break out again. While negotiations for peace stay at an impasse, Russian forces are still making slow but tangible progress in Ukraine on the ground.
The European Union’s recent decision to ban imports of Russian liquefied natural gas has only further aggravated the situation. Indian refiners have no doubt been encouraged to sharply reduce their imports of Russian oil. At the same time, Chinese state oil majors have stopped buying Russian oil temporarily. These developments illustrate the mounting toll on Russia as it contorts itself in the geopolitical blender, perilously avoiding or evading sanctions.
“This is, of course, an attempt to put pressure on Russia,” stated President Putin, highlighting his perspective on the international sanctions implemented against his country.
While Western nations aim to undermine Russia’s economic stability, Putin expressed confidence in the resilience of his nation’s economy. He explained how the structural features of Russia’s economy would help to absorb sanctions damage in the near term. Analysts keep a close eye on the long-term effects of these sanctions on Russia and those who oppose it.