Russia has proved resilience to western sanctions, says Oleg Deripaska

Author: Editors Desk Source: Financial Times

September 25, 2023 at 17:15

Oleg Deripaska: ‘Believing that the sanctions will stop [the war] or create regime change or somehow make us closer to the end of the conflict . . . No. We need to have another solution’ © Dmitri Lovetsky/AP

Metals oligarch tells FT of his ‘surprise’ at performance of economy in wake of invasion of Ukraine

Russia has weathered western sanctions over the invasion of Ukraine, the oligarch Oleg Deripaska has said, admitting “surprise” at the country’s resilience after a war he thought would bankrupt the Kremlin.

Deripaska, one of Russia’s richest men, told the Financial Times that Moscow had survived the effort to isolate its economy by developing new trade ties with the global south and ramping up investment in domestic production.

The private sector, meanwhile, proved more robust than he had expected only months earlier. “I was surprised that private business would be so flexible. I was more or less sure that up to 30 per cent of the economy would collapse, but it was way less,” he said.

“Yes, there is war spending and all this kind of subsidies and government support but still it’s a surprisingly low slowdown [ . . .] The private economy found its way to operate and to do so successfully.”

Russia’s apparent resilience despite being cut off from global markets and supply chains has been a point of pride for President Vladimir Putin, who said last week that “the recovery stage for the Russian economy is finished” after “we saw off unprecedented external pressure”.

Russia was hit hard in the wake of the invasion but has since succeeded in avoiding G7 sanctions on the vast majority of its oil exports. The International Monetary Fund has forecast Russia’s gross domestic product will grow by 1.5 per cent this year and 1.3 per cent in 2024. Putin was more bullish last week, predicting 2.8 per cent growth this year, more than double the maximum his own cabinet predicted in April.

A Rusal aluminium smelter in Sayanogorsk © Andrey Rudakov/Bloomberg

The comments by Deripaska, the founder of leading aluminium producer Rusal and its parent energy company En+, indicate growing confidence among Moscow’s elite that Russia has emerged relatively unscathed despite fears sanctions would crater the economy early in the war.

“I always doubted this Wunderwaffe [wonder-weapon], as Germans used to say, of the sanctions — weaponising the financial system as a kind of tool to negotiate,” said Deripaska, whose fortune is estimated at $2.5bn by the Russian edition of Forbes.

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