Russia Feeling The Pinch Of Western Sanctions
Updated: 11:11pm UK, Friday 28 March 2014
By Sam Kiley, Foreign Affairs Editor
Russia's foreign minister came close to quoting Marx, not Karl, Groucho, in his reaction to the blackballing of Russia from the G8 community of rich nations by the remaining members of the G7.
"The G8 is an informal club, with no formal membership, so no one can be expelled from it. If our western partners believe that such format is no longer needed, so be it," said Sergei Lavrov.
"We aren't clinging to that format and we won't see a big problem if there are no such meetings for a year, or a year-and-half."
So there.
Well, not quite.
Russia may be trying to shrug off the limited sanctions the international community imposed in response to the Crimean annexation – but the cat-like claws of asset freezes and visa bans are already digging into the Russian economic body.
Andrei Klepach, Russia's deputy economics minister, has been an Eeyore ever since the Crimean adventure got under way.
This week he warned that capital flows out of Russia for the first quarter of this year were likely to soar to $70 billion (£42.4bn) - that's $7bn more than the total outflow from Russia last year.
He had already warned of declining growth, pressure on the Rouble and growing inflation.
"Capital outflow was already significant before this, and, of course, growing tensions and cooling relations make it even worse," said Klepach.
He hasn't joined the triumphalist parades and Soviet-style Putin praise parties which have gummed up local TV channels since the Crimea was taken from Ukraine.
Putin's move on the Peninsula might have been a strategic plan. Or a visceral response to the revolution in Kiev which seemed to drag the country, finally, away from the Russian sphere of influence.
He may have calculated on the loyalty of the oligarchs closest to him. Some of whom have, indeed, said they see the sanctions imposed on them as a badge of honour.
But investors want money, not medals.
So already, according to the Financial Times, companies which left profits in Russia to be used for future investment are now repatriating them fast.
They are fearful that their assets could be confined to Russia if a trade war breaks out in earnest.
Russia's economic position has also been weakened with China.
Putin has been looking to expand trade with the Asian giant - and especially to secure a deal to supply it with more oil and gas.
He's expecting, perhaps, to ink such an agreement in May.
But it had been negotiated before the West decided to start seeking alternatives to Russian gas, which supplies around a third of Europe's needs.
Now the Chinese can drive a harder bargain because they are not an additional buyer - but an alternative one of Russian fossil fuels.
Vladimir Putin's foreign minister may agree with Groucho's principal that "I don't care to belong to any club that will have me as a member".
But in the long term, Russia's economy will cool as it presses its face against the G7 club window.
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