This week, the State of the Union Address talks about a new round of sanctions imposed on Russia. Should President Vladimir Putin declare bankruptcy?
To talk about it, journalist Stephen Grove interviewed Adnan VatanseverDeputy Director of the Russian Institute of King’s College London.
Question: Putin has been Russia’s longest-serving leader since Stalin and presided over a period of relatively economic prosperity. Is this period nearing the end?
Vatansever:“Sure, this is a very important period of economic prosperity in line with Putin’s rise in power. Is it really over now? Well, you need to go back eight or nine years. 2014 With the sanctions of the year, the Russian economy was already struggling in terms of growth, but because growth was still underway, it still brought some prosperity to the citizens. It would have a more serious impact on the economy. “.
Question: Do ordinary Russians already feel the effects of sanctions?
Vatansever:“Yes, __ The first impact they witnessed was to line up at various banks to withdraw deposits, now.The worst expected hasn’t happened yet. There was no bank collapse in Russia.However, due to the significant devaluation of the Russian currency, many Russians probably lost a significant portion of their savings, and many of them were not completely ready for war.
As you know, Russian politicians and the media have said that no war will occur. Some believe that no war will occur. And because of this lack of preparation, many realized that they were surprised and lost a significant portion of their savings due to devaluation.
Apart from this Unemployment has not yet emerged as a very explosive problem. But given that more than hundreds of companies have decided to leave Russia or cut back on investment, this issue is very likely to become even more explosive in the coming months. “
Question: Russia can default. What does that mean for the country?
Vatansever : “In the event of a default, it would be a very important development for this large emerging market, which is unable to repay its debt. In general, this means much higher borrowing costs and a lower standard of living. But you also have to keep that in mind.
Russia has already experienced a major default in 1998. And following this failure, prosperity has increased over the years. But at that time the situation was different. These were the first years of Vladimir Putin’s mission to carry out many reforms, the head of a highly reformed state and cabinet.
On the other hand, it should be noted that it is unclear how donors will recognize this default, as defaults usually occur when the state cannot afford to pay due to lack of funds.
In this case, Russia has no money, so it will not be the default. It is unclear where in the future when the donor decides to return to Russia, because Russia does not have access to that money. “