{"id":98886,"date":"2025-05-13T19:50:15","date_gmt":"2025-05-13T19:50:15","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/98886\/"},"modified":"2025-05-13T19:50:15","modified_gmt":"2025-05-13T19:50:15","slug":"european-economist-says-russias-economy-is-strained-due-to-the-ukraine-war-and-sanctions-2","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/98886\/","title":{"rendered":"European economist says Russia’s economy is strained due to the Ukraine war and sanctions"},"content":{"rendered":"

BRUSSELS (AP) \u2014 Russia\u2019s economy is under growing strain as its invasion of Ukraine<\/a> drags on and Western sanctions are undermining President Vladimir Putin\u2019s ability to sustain his war, a leading European economist said after briefing finance ministers on Tuesday.<\/p>\n

The economist, Torbj\u00f6rn Becker, Director of the Stockholm Institute of Transition Economics, warned that should Russia prevail, European Union governments would have to spend 2-3 times more than they currently do on defense for several years.<\/p>\n

Russia\u2019s \u201cfinancial system, their macroeconomic performance, is under pressure. It\u2019s not in balance. Risks are mounting. But it doesn\u2019t mean that we can sit back and relax,\u201d Becker told reporters at EU headquarters in Brussels.<\/p>\n

He spoke after briefing the bloc\u2019s finance ministers to help provide a picture of \u201cthe actual condition of Russia\u2019s economy, which significantly contrasts with the narrative promoted by Russian propaganda,\u201d the EU\u2019s Polish presidency said.<\/p>\n

It said that discussion would help \u201cus to better shape punitive, financial and economic sanctions against Russia.\u201d<\/p>\n

Becker said Russia\u2019s economy only accounts for about 12% of the economies of the world\u2019s biggest trading bloc. He underlined that it is highly dependent on oil and natural gas revenue, and on imports of high-tech equipment to sustain the war effort.<\/p>\n

Still, Russia\u2019s economy has outperformed predictions. High defense spending has propelled growth and kept unemployment low despite fueling inflation. At the same time, wages have gone up to keep pace with inflation, leaving many workers better off. <\/p>\n

Large recruiting bonuses for military enlistees and death benefits for those killed in Ukraine have also put more income into the country\u2019s poorer regions.<\/p>\n

Over the long term, inflation and a lack of foreign investments remain threats to the economy. The question is how long Russia\u2019s militarized economy can keep going before those issues bite and whether it can hold out for longer than Ukraine and its Western backers.<\/p>\n

To hit its economy harder, EU envoys have drafted a new set of sanctions<\/a> that would target more ships in the shadow fleet of tankers<\/a> that Russia has deployed to evade a price cap of $60 per barrel imposed on Russian oil by the Group of 7 democracies.<\/p>\n

They could also freeze the assets of the Nord Stream II gas pipeline consortium. The pipeline is not in use, but the EU believes the move could help to discourage investment. The sanctions could enter force as soon as Thursday.<\/p>\n

\u201cIf we can lower oil prices and gas revenues and put tighter sanctions on what they can import, that\u2019s great,\u201d Becker said. He said U.S. President Donald Trump should press \u201cChina and India about what they are paying for and what they\u2019re exporting to Russia.\u201d<\/p>\n

Russia found new markets for its oil in India and China after the EU imposed a near-total ban and continues to earn a substantial part of government revenues from exports of oil and gas.<\/p>\n

Becker also urged Trump to hit Russia\u2019s financial system by restricting international transactions<\/a>. \u201cIf something ruins an economy pretty quickly, it\u2019s a banking crisis,\u201d he said.<\/p>\n

In a recent report, his institute said that Russia\u2019s oil revenues decreased dramatically in early 2025, notably due to EU and G7 sanctions on the ghost fleet. This has forced Russia to withdraw from its sovereign wealth fund.<\/p>\n

The institute estimates that the liquid part of the fund is now equivalent to less than 3% of GDP. \u201cIf oil prices stay as they are, they will certainly run out of these funds in a year,\u201d Becker said.<\/p>\n

___<\/p>\n

David McHugh reported from Frankfurt, Germany.<\/p>\n","protected":false},"excerpt":{"rendered":"BRUSSELS (AP) \u2014 Russia\u2019s economy is under growing strain as its invasion of Ukraine drags on and Western…\n","protected":false},"author":2,"featured_media":98887,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7654],"tags":[51,45962,32,1700,2000,5215,299,1699,4179,3058,332,657,333,263],"class_list":{"0":"post-98886","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-ukraine","8":"tag-business","9":"tag-david-mchugh","10":"tag-donald-trump","11":"tag-economy","12":"tag-eu","13":"tag-eurocopa-2024","14":"tag-europe","15":"tag-european-union","16":"tag-general-news","17":"tag-international-trade","18":"tag-russia","19":"tag-ukraine","20":"tag-vladimir-putin","21":"tag-world-news"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114502266010277271","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/98886","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=98886"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/98886\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/98887"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=98886"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=98886"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=98886"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}