The Kremlin says Russia’s ‘economic reality’ has ‘considerably changed’ in the face of ‘problematic’ Western sanctions
James Dean – February 28, 2022
- Crippling Western sanctions have changed the “reality” of the Russian economy, the Kremlin said Monday.
- The Russian ruble crashed Monday and Russia’s central bank nearly doubled its base interest rate.
- Western sanctions were “heavy” and “problematic” but could be countered, a Kremlin spokesperson said.
The Kremlin said Monday that Russia’s “economic reality” had “considerably changed” in the face of “heavy” and “problematic” Western sanctions.
The admission came after Russia’s ruble plunged 30% against the US dollar and the country’s central bank more than doubled its base interest rate, to 20%. Russians were reportedly waiting in long lines to withdraw foreign currencies from ATMs.
Western nations have united to impose sweeping sanctions on Russia after it attacked Ukraine, such as cutting off Russian banks from Swift, the international bank payment system; hindering the ability of Russia’s central bank to deploy its foreign exchange reserves; and freezing assets linked to President Vladimir Putin.
On Monday, Kremlin spokesperson Dmitry Peskov said Putin would meet with Russia’s top central banking and finance officials, as well as the CEO of Sberbank, one of the country’s leading lenders. An FT reporter described the planned meeting as “an emergency meeting.”
Peskov said Russia had “the potential to offset the harm” caused by the West’s sanctions. However, per Reuters, he said: “The economic reality has considerably changed. These are heavy sanctions, they are problematic.”
He continued: “Russia has been making plans for quite a long time for possible sanctions, including the most severe ones. There are response plans, they were developed and are being implemented as problems appear.”
He added: “We have had no reason to doubt the effectiveness and reliability of our central bank. There is no reason to doubt it now.”
Peskov also said that Putin was “quite indifferent” about the sanctions leveled against him directly. “The sanctions contain absurd claims about some assets,” Peskov said.
The European Central Bank said Monday that Sberbank’s European operations “are failing or likely to fail.”
The ECB said that Sberbank’s European operations “experienced significant deposit outflows as a result of the reputational impact of geopolitical tensions. This led to a deterioration of its liquidity position. And there are no available measures with a realistic chance of restoring this position at group level and in each of its subsidiaries within the banking union.”