Oligarch Oleg Deripaska said Russia had withstood Western sanctions for its invasion of Ukraine, admitting it was “amazing” its resilience after a war he said would bankrupt the Kremlin.
Deripaska, one of Russia’s richest men, told the Financial Times that Moscow has survived efforts to isolate its economy by developing new trade ties with the Global South and investing more in domestic production.
Meanwhile, the private sector is performing stronger than he expected just a few months ago. “I’m amazed at how flexible the private sector has been. I was more or less sure that up to 30% of the economy would collapse, but the reality is much lower,” he said.
“Yes, there is war spending and all this subsidies and government support, but growth is still staggeringly low [ . . .] The private economy found its way and succeeded. “
Despite Russia’s isolation from global markets and supply chains, its apparent resilience has been a source of pride for Russian President Vladimir Putin, who last week said the “recovery of the Russian economy” came after “we emerged from unprecedented external pressure.” The phase is over.”
Russia was hit hard after the invasion but has since managed to avoid G7 sanctions on the vast majority of its oil exports. The International Monetary Fund predicts that Russia’s GDP will grow by 1.5% this year and 1.3% in 2024. Putin was more optimistic last week, predicting growth of 2.8% this year, more than double the top rate predicted by his own cabinet. April.
The comments by Deripaska, the founder of leading aluminum producer Rusal and its parent energy company En+, show a growing belief among Moscow elites that Russia is relatively strong despite concerns that sanctions will hit the economy hard in the early stages of the war. Unscathed.
“I’ve always suspected that miracle weapon [wonder-weapon]As the Germans used to say, sanctions weaponize the financial system as a negotiating tool. ” The Russian version of Forbes estimates Deripaska’s wealth at $2.5 billion.
“We have made great efforts to make the world globalized in terms of trade, investment, and information flow. [ . . .] Things are really over when you can use sanctions, which were a tool of the 19th century. We don’t think it will be effective in the 21st century. “
Deripaska was one of the few oligarchs to criticize the invasion in its early months, albeit cautiously. But while he said he saw “no value” in the conflict, he has recently toned down his anti-war rhetoric as oligarchs face growing pressure to pay more taxes and, in some cases, turn their assets over to the state .
“I don’t see why both sides shouldn’t stop it […] I can’t see anyone achieving their stated goals,” Deripaska said. “Can you give F-16s, F-35s? [fighter jets]?You know, the only thing that’s going to be achieved is more pain, more lives lost, more people hurt. [for] Maybe 5, 10, 20, 25 kilometers to the left or right. “
Ukraine has rejected Deripaska’s call for “real negotiations” on the grounds that it would legitimize Russia’s territorial gains. But the oligarch added that more fighting would mean “a further 50,000 deaths on both sides” [and] “There could be 150,000 injured by next year.” “Do you really believe it’s wise to have another two hundred thousand people?” . . Who will suffer for another 12 months? “
The Kremlin last year urged Deripaska to tone down his criticism, while prosecutors seized a hotel complex he owned in the Black Sea resort of Sochi and handed it over to a Putin-linked foundation – part of a growing push for coercive state ownership An early salvo in the wave of transformation. He declined to comment on the incident.
To explain the economy’s “resilience,” Deripaska pointed to the Kremlin’s investments in industry and efforts to force the inefficient state-owned enterprises that dominate the economy to increase production capacity, in part to support the war effort.
“State capitalism has created these large conglomerates with low productivity, low utilization, and low wages. I was surprised to see today that some of their factories have wages that are similar to [at companies] I founded the company in the same area,” he added. “They have the money, they recruit, they compete. “
Deripaska, who has been subject to personal sanctions by the United States since 2018 and the European Union since 2022, said his trip to Asia had convinced him that southern hemisphere countries would resist pressure to join Western sanctions, providing Russia with a lifeline.
“You know, these are the people who need to feed a billion people every day, and you’re asking them to make a commitment or they’re going to suffer,” he said. “Those who think they can use this excellent mechanism to put pressure on authoritarian regimes are making a grave mistake.”
According to official news agency RIA Novosti, in the first eight months of 2023, trade volume with China increased by 32% year-on-year to US$155 billion, while in the first half of this year, trade volume with India tripled to US$33 billion.
At the same time, Deripaska said, Russia’s rich natural resources make it a difficult trading partner for countries that rely on its energy, metals and food exports.
“Of the next billion people who are going to be born, 70% will live in this region. Let’s face it. They want to develop, they need Russian resources, Russian solutions, trade with Russia,” Delhi Pascal said.
“Believe that sanctions will stop [the war] Or cause regime change or somehow bring us closer to the end of the conflict. . . No, we need to have another solution. “