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Sanctions will break Russia’s economy in the end, Germany says

‘He can’t keep going much longer’ – economy minister.
Image: Andrey Rudakov/Bloomberg
Russia’s economy has been dealt a severe blow by international sanctions imposed following the invasion of Ukraine and that damage will become increasingly clear, according to Germany’s vice chancellor.

The revenue Russia receives from commodities like oil and gas is “painful,” Robert Habeck, who is also the economy minister, said Thursday in a speech to parliament. But that doesn’t accurately reflect the pressure President Vladimir Putin is under because the country can “barely spend any of it,” he said.

Habeck said that a shortage of software security updates for aircraft will soon lead to planes being grounded while a lack of high-tech equipment will “lead to production processes being destroyed.”

“He can’t keep going much longer,” Habeck told lawmakers in the Bundestag in Berlin. “Time is not working in favour of Russia, it’s working against Russia, it’s working against the Russian economy.”

Even with Germany and other countries halting or phasing out Russian energy imports, Moscow’s oil-and-gas revenue will be about $285 billion this year, up by more than a fifth compared with 2021, according to estimates from Bloomberg Economics based on Economy Ministry projections. Including other commodities, it more than makes up for the $300 billion in foreign reserves frozen by sanctions.

With the war in Ukraine now into a fourth month, there is little evidence that sanctions are forcing Putin to abandon his military campaign.

“We’re not doing this for fun,” Habeck told lawmakers. “We’re doing it to hurt Putin’s economy and make our economic policy contribution to bringing an end to this war at some point. We’re looking to cut the Russian economy to the quick.”

© 2022 Bloomberg L.P.

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Russia’s natural resources reserves are worth $75 trillion, twice as much as the USA’s, while Russia’s external debt is 478.20 USD Billion. The USA and Germany are closer to bankruptcy than Russia.

Like the average farmer in South Africa, they may experience some cashflow constraints from time to time, but bankruptcy is not on the cards yet. China and India will provide cash flow and take future deliveries of commodities as collateral.

And the sooner the better … hopefully including the downfall of yet another corrupt, brutal despot.

Was there any reason for this war other than one man’s immature ego?

End of comments.

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