Alwaght- Ukraine crisis and Crimea’s attachment to Russia have led to the West reaction and imposing sanctions on Moscow. The sanctions on some of Russian economic activists and active banks and energy companies were so intensive that even made Putin and Medvedev to warn over their destructive effects. By the way, like other weapons, Sanction has its advantages and limitations. Reason behind sanctions' far-reaching effects on Russia’s economy in a short period of time could be sought in structural bottlenecks of this emergent power's economy.
After Soviet Union dissolution, Russia tried to move towards free market economy. Meanwhile, Russia’s ruling oligarchy, buying the stocks of big and profitable companies and establishing banks, was changed into a mafia. In other words, changing its face, governmental corruption of the communist system entered the field of economy which had a negative effect on absorption of foreign capitals and even capital accumulation. Nevertheless, thank to growth in energy price, Russia’s oil-dependent economy, which oil petroleum sector accounts for %17 of its GPD and %40 of its budget revenues, had covered these structural inefficiencies. Russia earned $ 52 billion in 2000 and more than $ 320 billion in 2012 from oil export.
These high revenues, which could act as a catalyzer in Russia's economic process if it were invested in the country's infrastructures, helped consumerism and doubled corruption by direct intervention into Russia’s mafia economy. Therefore, sanctions and oil price reduction unveiled the severity of Russia’s ailing economy. Russia's ill economy paved the way for West's sanctions to work, so upon imposing the sanctions, the exit of capital – existing due to instability of monetary and financial policies as well as corruption- was doubled in the first three months in comparison with the same period of two past years, reaching 50 billion and 600 million dollars which is predicted to top $ 120 billion in the next year. As the result, Russia central bank was forced to increase the bank interest rate from %10 to %30 that didn't work, and the stock market index was decreased %13.
Finally, the reciprocal and progressive effects of these factors led to unprecedented fall of the Ruble so that every 100 Rubles was transacted with one Euro and every 8o Rubles with one dollar; it means that the value of Russia’s money was reduced %60.
These conditions, according to Putin, will result in sever inflation and recession and will have effects on Russia’s economy for two years. But the sanctions helped Moscow to discover dark aspects of Russia’s declining economy so that, in his meeting with leaders of Russia’s parliaments’ parties, Medvedev spoke about structural changes and fighting against corruption as the country's priorities.
Russia’s recent problems are not due to sanctions but stem from its structural economic weaknesses. Although increase in oil price may help to betterment of Russia’s conditions, it can act as Achilles’ heel for Russia against the West sanctions if the country does not solve the issues fundamentally.
Broad structural changes in Russia’s economy and establishing dynamic and oil-independent economy is of great necessity for Russia in order to disarm the west from its destructive weapon that is sanctions.
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In Focus
Ansarullah
A Zaidi Shiite movement operating in Yemen. It seeks to establish a democratic government in Yemen.
Shiite
represents the second largest denomination of Islam. Shiites believe Ali (peace be upon him) to be prophet"s successor in the Caliphate.
Resistance
Axis of Resistances refers to countries and movements with common political goal, i.e., resisting against Zionist regime, America and other western powers. Iran, Syria, Hezbollah in Lebanon, and Hamas in Palestine are considered as the Axis of Resistance.
Persian Gulf Cooperation Council
A regional political u n i o n consisting of Arab states of the Persian Gulf, except for Iraq.
Taliban
Taliban is a Sunni fundamentalist movement in Afghanistan. It was founded by Mohammed Omar in 1994.
Wahhabism & Extremism
Wahhabism is an extremist pseudo-Sunni movement, which labels non-Wahhabi Muslims as apostates thus paving the way for their bloodshed.
Kurds
Kurds are an ethnic group in the Middle East, mostly inhabiting a region, which spans adjacent parts of Iran, Iraq, Syria, and Turkey. They are an Iranian people and speak the Kurdish languages, which form a subgroup of the Northwestern Iranian branch of Iranian languages.
NATO
The North Atlantic Treaty Organization is an intergovernmental military alliance based on the North Atlantic Treaty which was signed on 4 April 1949.
Islamic Awakening
Refers to a revival of the Islam throughout the world, that began in 1979 by Iranian Revolution that established an Islamic republic.
Al-Qaeda
A militant Sunni organization founded by Osama bin Laden at some point between 1988 and 1989
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