Russia’s Prime Minister Dmitry Medvedev
Russia acknowledged the surging cost for its takeover of Crimea from Ukraine, with Prime Minister Dmitry Medvedev blaming the standoff and sanctions that followed for helping push the economy into its first recession since 2009.
The land grab, which prompted the U.S. and the European Union to levy penalties against Russia, exacted a price estimated at 1.5 percent of gross domestic product, or 25 billion euros (USD27 billion) in 2014, and the toll is set to grow multifold this year, Medvedev told lawmakers at the lower house of parliament in Moscow. The economy contracted about 2 percent last quarter from a year earlier, he said.
“The unprecedented political and economic external pressure is the price for our position,” he said on Tuesday. “But everyone – authorities and our society – understood that we had no other way, whatever threats we may face.”
The economy of the world’s largest energy exporter is entering a recession after an almost 50 percent crash in oil prices and the ruble’s worst crisis since 1998. The sanctions curbed access to international financial markets and stoked capital outflows. Even with a tenuous cease-fire in Ukraine and stabilizing oil prices, the central bank predicts the economy will shrink as much as 4 percent this year.
“The losses from the restrictions that have been imposed are significant, let’s not hide that,” Medvedev said. “There’s practically not a single sector of the economy that hasn’t been affected by some of the political measures, ranging from the financial sphere and limits on access to foreign credit to the import of technologies.”
The absorption of the Black Sea peninsula in March 2014, which followed a disputed secessionist referendum facilitated by Russian troops, was the “only possible” choice, according to Medvedev. While conceding the damage done to the economy, Medvedev hailed the “restoration of historical justice,” comparing its significance for Russia with the fall of the Berlin Wall and Germany’s reunification and the handover of control over Hong Kong and Macau to China. Andrey Biryukov and Anna Andrianova, Bloomberg
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