European economist says Russia's economy is strained due to the Ukraine war and sanctions

BRUSSELS (AP) — Russia’s system is nether increasing strain arsenic its invasion of Ukraine drags connected and Western sanctions are undermining President Vladimir Putin’s quality to prolong his war, a starring European economist said aft briefing concern ministers connected Tuesday.

The economist, Torbjörn Becker, Director of the Stockholm Institute of Transition Economics, warned that should Russia prevail, European Union governments would person to walk 2-3 times much than they presently bash connected defence for respective years.

Russia’s “financial system, their macroeconomic performance, is nether pressure. It’s not successful balance. Risks are mounting. But it doesn’t mean that we tin beryllium backmost and relax,” Becker told reporters astatine EU office successful Brussels.

He spoke aft briefing the bloc’s concern ministers to assistance supply a representation of “the existent information of Russia’s economy, which importantly contrasts with the communicative promoted by Russian propaganda,” the EU’s Polish presidency said.

It said that treatment would assistance “us to amended signifier punitive, fiscal and economical sanctions against Russia.”

Becker said Russia’s system lone accounts for astir 12% of the economies of the world’s biggest trading bloc. He underlined that it is highly babelike connected lipid and earthy state revenue, and connected imports of high-tech instrumentality to prolong the warfare effort.

Still, Russia’s system has outperformed predictions. High defence spending has propelled maturation and kept unemployment debased contempt fueling inflation. At the aforesaid time, wages person gone up to support gait with inflation, leaving galore workers amended off.

Large recruiting bonuses for subject enlistees and decease benefits for those killed successful Ukraine person besides enactment much income into the country’s poorer regions.

Over the agelong term, ostentation and a deficiency of overseas investments stay threats to the economy. The question is however agelong Russia’s militarized system tin support going earlier those issues wound and whether it tin clasp retired for longer than Ukraine and its Western backers.

To deed its system harder, EU envoys person drafted a caller acceptable of sanctions that would people much ships successful the shadow fleet of tankers that Russia has deployed to evade a terms headdress of $60 per tube imposed connected Russian lipid by the Group of 7 democracies.

They could besides frost the assets of the Nord Stream II state pipeline consortium. The pipeline is not successful use, but the EU believes the determination could assistance to discourage investment. The sanctions could participate unit arsenic soon arsenic Thursday.

“If we tin little lipid prices and state revenues and enactment tighter sanctions connected what they tin import, that’s great,” Becker said. He said U.S. President Donald Trump should property “China and India astir what they are paying for and what they’re exporting to Russia.”

Russia recovered caller markets for its lipid successful India and China aft the EU imposed a near-total prohibition and continues to gain a important portion of authorities revenues from exports of lipid and gas.

Becker besides urged Trump to deed Russia’s fiscal strategy by restricting planetary transactions. “If thing ruins an system beauteous quickly, it’s a banking crisis,” helium said.

In a caller report, his institute said that Russia’s lipid revenues decreased dramatically successful aboriginal 2025, notably owed to EU and G7 sanctions connected the shade fleet. This has forced Russia to retreat from its sovereign wealthiness fund.

The institute estimates that the liquid portion of the money is present equivalent to little than 3% of GDP. “If lipid prices enactment arsenic they are, they volition surely tally retired of these funds successful a year,” Becker said.

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David McHugh reported from Frankfurt, Germany.