Households and businesses in the West are paying dearly for the war that began with Russia's invasion of Ukraine. The barrage of sanctions has exacerbated the already big supply chain problems created by the pandemic and combined with the energy rally have caused big price increases.
Indeed, Bloomberg's review of economic data shows that Russia is still benefiting significantly from the situation at the expense of most other countries, particularly those forced to import large amounts of energy. The data show that Russia is benefiting from cash inflows of as much as $800 million a day from oil and gas sales alone.
Even as some countries are phasing out energy purchases from Russia, that country's oil and gas revenues will be about $285 billion this year, according to estimates by Bloomberg Economics. That's an increase of more than 20% over 2021 receipts. If revenues from sales of other commodities and raw materials, where prices have been on the upswing, are factored in, the amount going into Moscow's coffers this year is estimated to exceed $300 billion in the country's foreign exchange reserves that the West froze as part of sanctions, Bloomberg data show.
For many years, Russia functioned as a vast "supermarket" of commodities, selling everything an insatiable world needed to function: Not just energy, but also wheat, nickel, aluminum and palladium, Bloomberg notes. The invasion of Ukraine has prompted the U.S. and the European Union to rethink that relationship, but that seems to take time."
All this is not to say, of course, that Russia has not been significantly hurt by the sanctions, which have made it a pariah throughout the developed world. Many large companies that had a presence in the country have decided to leave temporarily or permanently, Russian assets abroad have been frozen and the economy is heading for a deep recession. "But Putin can ignore that damage for now because his coffers are overflowing with commodity revenues, which have become more lucrative than ever thanks to a surge in global prices due in part to the war in Ukraine," Bloomberg reports.
Turning to India - China
To offset the sanctions, President Vladimir Putin has struck deals with other countries that have been Russia's traditional allies, such as India and China. In terms of natural gas, Russia has fewer options to sell quantities elsewhere, but European countries are locked in because of mutual dependence. About 40% of the EU's gas needs are met by Russia.
At the same time, in the US the US administration is looking for ways to further tighten the economic noose around Russia, possibly by imposing sanctions on countries and companies that continue to do business with Russian firms.
The US has already banned Russian oil, which was not meeting its major needs anyway, but Europe is moving more slowly towards such a decoupling. That gives Moscow time to find other markets - such as China and India that are filling up with its goods - to limit the damage from declining export revenues, the sources said.
Source: in.gr
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