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Sanctions threat? Russia isn't likely to be worried

Video Credit: Reuters - Politics
Published on September 24, 2020 - Duration: 01:53s

Sanctions threat? Russia isn't likely to be worried

Additional Western sanctions against Russia could be back on the agenda.

But even if imposed, the impact of any new sanctions would likely be muted.

Megan Revell explains why.

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Sanctions threat? Russia isn't likely to be worried

Between Alexei Navalny's poisoning and the crisis in Belarus -- Russia may be hit with more sanctions soon from Western countries.

But this time, they may not be as worried as from previous hits.

The impact would likely be muted; Russia has been preparing for the possibility of future sanctions since the first wave in 2014.

These are the five ways it has moved to shoulder the hit, starting with its reserves.

Russia has the world's fourth-largest gold and foreign currency reserves, which have been steadily building over five years.

The central bank also let the rouble float freely in 2014, making it a safe valve against external shocks.

Secondly, is oil.

Oil is Russia's main export.

To shield itself from volatility in prices, the government changed its fiscal rule in 2017, so that any crude oil revenue over a certain price goes right into the state's coffers.

When prices dip, Russia sells foreign currency, supporting the rouble.

It's reduced its dependancy on external markets, slashing foreign debt exposure and boosting domestic borrowing.

Outstanding foreign debt has also shrank considerably over the years.

Russia's also come up with other buffers.

For example, it made its own credit card payment system, fearing it would get cut off from

Class="kln">Visa and MasterCard.

It's made its own bank messaging system, its own credit rating agency, and others - all reducing its dependancy on the global financial system.

Finally, it has reduced its reliance on imports.

Russia has become more self-sufficient in food since it banned most Western imports in 2014.

This ban and a weaker rouble have helped domestic producers flourish, reducing Russia's food imports by a third since 2013.

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