The Prime Minister of Russia, Mikhail Mishustin, acknowledged on Thursday that his country is facing its most difficult situation in three decades due to Western sanctions that punished the invasion of Ukraine, which began on February 24 and has claimed the life of thousands of civilians, many of them massacred by Russian troops.
Western countries are progressively expanding a series of imposed economic measures to try to force Russia to end its military operations in Ukraine and withdraw its forces.
Moscow describes its actions in Ukraine as a “special operation” which, it says, is not intended to occupy territory, but rather to destroy the military capabilities of its neighbor and capture those it considers to be dangerous nationalists.
“Without a doubt, the current situation could be described as the most difficult in three decades for Russia,” Mishustin told the Duma, or lower house of parliament. “Such sanctions were not used even in the darkest times of the Cold War.”
Western sanctions have already isolated Russia from the global financial network and left several of its major banks without access to the international banking messaging system SWIFT, while some merchants have started to refuse shipments of Russian oil, intensifying pressure on Moscow's finances.
Before the recent sanctions, Russia expected a budget surplus of 1.3 trillion rubles ($17 billion) this year, equivalent to 1% of Gross Domestic Product. On Thursday, Mishustin said that Russia will spend everything it earns this year on state aid.
The government has so far pledged more than 1 trillion rubles in anti-crisis aid to businesses, social payments and families with children, of which 250 billion will go to state aid for Russian railways.
Russia has introduced capital controls in retaliation for sanctions, making it almost impossible for foreign investors to sell their assets, both industrial and financial, if they decide to withdraw from the country.
” If they have to leave, production must continue to work, as it provides jobs. Our citizens work there,” Mishustin said. The Kremlin suggested that it could nationalize the assets of Western investors who decide to leave.
As some of the companies leaving are transferring their shares to Russian companies, Mishustin said, the situation offers scope for new business opportunities.
“Our financial system, the lifeblood of the entire economy, has resisted,” Mishustin said. “The stock market and the ruble are stabilizing. I doubt that any other country would have resisted this. We do.”
(with information from Reuters)
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