Moscow Takes Concrete Measures to Protect the Real Economy

In response to the unprecedented set of sanctions imposed on Russia by Western powers, the Russian government announced March 10 a package of measures to defend the national economy. The key measures include:

  • Departing foreign companies will be taken over by “external management”, i.e., by Russians, to keep them running and maintain jobs.
  • Foreign capital flows out of the country are being “strictly controlled”, which means capital and exchange controls have been established
  • Foreign debt will be paid in rubles, not dollars or euros. The conversion will be carried out “by de-freezing our gold and currency reserves”, Finance Minister Siluanov stated. He later elaborated that foreign creditors will only be able to convert their rubles back into dollars or euros out of the funds of the Russian Central Bank now frozen abroad — if and when the Western powers decide to unfreeze those funds, which is intended to prevent capital flight. The foreign creditors will have to convert at the official ruble rate, which is now significantly devalued (by some 40%) from what it was before the crisis as a result of the financial warfare.
  • Under the “mandatory surrender of foreign exchange proceeds” that was implemented, all export earnings must be turned over to the central bank.
  • Various measures will be taken to defend the domestic real economy, such as granting a six-month moratorium to the agriculture sector on all debt service payments, with a roll-over of existing loans.

An interesting take on the financial and economic warfare has been given by Russian economist Sergei Glaziev, a former presidential adviser, in an interview posted on youtube. He believes that a new world economic order is now developing, with the collapse of the American-centered system. He urges Russians and others to understand that they need to get out of the dollar system which has become poisonous, and totally unreliable.

He also expressed optimism that Russia has no limits to economic growth, and that with the right macroeconomic policies, a growth rate of 10% per year could be achieved. As for the western sanctions, in his view, they only affect about 10% of total Russian consumption, so their effect will be limited. On the issue of the “energy transition,” Glazyev said that real climatologists laugh at the idea: man’s impact on the climate is perhaps 5%, while solar activity accounts for 90%. He concluded by saying that if Russia creates a broad international coalition along with China and India, the American power will be overwhelmed.

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