While western leaders are proud of imposing largest sanctions ever, it seems that Russia can withstand the crisis longer than some expect. The following two points, underrepresented in popular media, support this claim:
- Historical Analogy
Russia’s went through 2014 financial crisis, where the currency significantly lost its value (from mid 30-s to around 80 for one dollar). Russia was then hit not only by sanctions after the annexation of Crimea, but in addition by drop of oil prices and its commitment to maintain high military expenditure. The last two don’t pose a problem now.
- Current Extraordinary Measures
Russia does not only use its large foreign-exchange reserves in the central bank but also: make state-owned oil companies play on Forex to support the currency, introduces control over foreign capital and does not pay interests to bond investors. More tools than one might think.
Russia seems both experienced and equipped to contain this crisis in short-term. After the crisis in 2014 it has used oil-generated income to collect more reserves and keep founding military.
But time will tell what the long-term financial consequences for the West and Russia would be.