After President Vladimir Putin sent Russian troops to Ukraine in February, the West retaliated with various sanctions. Russian banks have been barred from SWIFT – the service that facilitates global bank transfers and has been described as the arteries for the movement of money around the world. Putin and his relatives were also sanctioned, having their assets frozen in the United States, the United Kingdom and Europe among others. But one aspect of the Russian economy has pundits wondering if the sanctions really work: the rouble.
The Russian currency reached its highest value against the dollar in seven years in June.
As the ruble seemingly soared, President Putin even bragged that it showed sanctions weren’t working.
However, economists from Yale University spoke to Express.co.uk this week, explaining how the high ruble exchange rate was not representative of the whole Russian economy.
Steven Tian, co-author of a study on the impact of sanctions on Russia, said: “Put simply, if you’re Russian right now, you can’t legally access dollars.
They argued that Putin was facing “economic oblivion” and that the sanctions were “crippling” the Russian economy.
The authors added: “Despite [Russian president Vladimir] Putin’s illusions of self-sufficiency and import substitution, Russian domestic production has come to a complete halt, with no ability to replace lost companies, products and talent.
“The depletion of Russia’s innovation and production base has led to soaring prices and consumer angst.”
As Russia increasingly isolates itself on the world stage, Putin this week met with Turkish President Recep Tayyip Erdogan.
They held secret talks in Sochi, Russia on Friday focusing on Ukraine and trade.
Putin thanked his Turkish counterpart for his role in a deal that saw Ukrainian grain exports resume after Russian forces blocked the Black Sea.
The Russian President added: “This is a very urgent problem for many countries, above all the developing countries which are on the verge of serious problems with the supply of food and fertilizers.
“The decisions made with your direct participation are very important for all these countries.”