Sanctions as Kamikaze Activity with an Economic Zugzwang


On June 2, the Valdai Club hosted an expert discussion, titled  “The Russian Economy and the Onslaught of the West: What Will Be the Response to New Challenges?”  Andrey Bystritskiy, Chairman of the Board of the Foundation for Development and Support of the Valdai Discussion Club, moderated the event.

Natalia Stapran, Director of the Department for Multilateral Economic Cooperation and Special Projects at the Ministry of Economic Development of the Russian Federation, described the sanctions imposed against Russia as "kamikaze actions". In other words, the side imposing sanctions is ready from the very beginning to incur damage itself, up to the destruction of entire industries. This approach reduces the effectiveness of counter-sanction instruments. Addressing longer-term trends, Stapran noted that the process of assessing strategic dependencies on foreign partners began throughout the world two years ago, with the onset of the pandemic. The issue of economic autonomy and resistance to external shocks became one of the key issues facing many countries some time ago. “Our task is also, despite all the difficulties, to build this aura of strategic autonomy,” the representative of the Ministry of Economic Development emphasised, adding that now there is a search for new partners on new frontiers, and China, India and other Asian partners are gaining special importance.

Sergey Krasilnikov, Vice President and Managing Director of the International Relations and Integration Directorate at The Russian Union of Industrialists and Entrepreneurs, noted that Russian business is optimistic about the situation and, by its nature, is determined to cope with emerging difficulties. “There are losses, but there are also certain opportunities,” he said. Among the urgent problems, he named the emergence of a large number of fake entrepreneurs, the underestimation and underdevelopment of the private sector, numerous bureaucratic obstacles facing private business, the lack of people who are ready to engage in practical activity and quickly bring the right ideas to life, as well as climate challenges.

Liu Zhiqin, Senior Research Fellow at the Chongyang Institute for Financial Studies at Renmin University of China (RDCY), noted that any action taken by Russia has elicited increased interest and empathy in China, especially in the past two months. In his opinion, Russia demonstrates a high degree of stability, both from an economic and a political point of view. The West, he believes, is now trying to isolate Russia from other partners, including China, in order to create its own system of world domination, and is also destroying the infrastructure of global business, seeking to exclude both Russia and China from the world market. “The challenges are numerous, but we can withstand them,” the Chinese expert believes. To do this, he said, Russia should invest more in its infrastructure and turn to the Far East.

Leonid Grigoryev, Academic Supervisor of the Department of World Economy and Head of the Master's Programme in World Economy at FMEMP, Higher School of Economics, recalled that the first sanctions against Russia were introduced under Ivan the Terrible’s rule and that the only period when the country definitely had no problems with technology imports was before the First World War. “Therefore, in principle, we have always lived under sanctions,” he concluded, adding that at the moment Russia’s problems are not related to resource sanctions, but to technological ones, and now business will have to solve the problems of missing links in technological chains. Speaking about the sanctions themselves, Grigoriev pointed to their chaotic and “convulsive” nature, leading the situation to an actual zugzwang. “The system of sanctions cuts normal logistics, and at the beginning of the processing chains,” the economist noted.