The economy of Russia is weaker than official figures show, and Western sanctions are yielding results, according to British Finance Minister Rachel Reeves and her Swedish counterpart, Elisabeth Svantesson, in an opinion article published by Politico.
The two officials call for intensifying economic pressure on Moscow and accelerating financial support for Ukraine, including the 90 billion euro loan promised by the European Union.
„Official statistics do not tell the truth”
Four years after the illegal invasion of Ukraine, the Kremlin is trying to project an image of a resilient economy, write Rachel Reeves and Elisabeth Svantesson. In reality, they argue, the situation is much more fragile.
A report commissioned last year by the Swedish government identified major imbalances in the Russian economy and raised suspicions about the manipulation of key indicators, such as inflation and real GDP growth.
„We have access to information confirming that the Russian government is deliberately lying to the world about the state of the Russian economy,” the two ministers state.
According to them, Russia’s economy is now „in its weakest position since the beginning of the war” and it is likely that the situation will deteriorate in the coming year.
„Inflation, depleted funds, and the population left to foot the bill”
While Vladimir Putin tries to undermine international support for sanctions, the internal reality is different, the article shows.
Inflation fueled by massive war spending has led to a decrease in purchasing power, and Russian households are forced to cut even food expenses.
An important signal is the situation of Russia’s National Wealth Fund, the financial reserve used for pensions, infrastructure, and other public expenditures. A large part of this fund has been used to finance the war.
The Russian government is no longer withdrawing money from the fund but relies on banks to buy government bonds, leading to an increase in public debt. And the remaining amounts do not even cover the estimated budget deficit for 2025.
„We estimate that Russia has lost over 450 billion dollars due to international sanctions – the equivalent of four years of war funding,” write Reeves and Svantesson.
„Energy, Moscow’s Achilles’ heel”
Finance ministers emphasize that Russia’s energy revenues have dropped by a third after the latest sanctions imposed on giants like Rosneft and Lukoil.
Reeves and Svantesson welcome the European Union’s decision to completely ban imports of Russian gas and the United Kingdom’s commitment to impose a total ban on maritime services for Russian liquefied natural gas (LNG).
The next step, they say, should be a broad ban on maritime services for all Russian oil and refined product exports.
„Reducing Russia’s remaining revenues will further diminish its ability to finance the war,” the article states.
„The 90 billion euro loan for Ukraine, a vital step”
In addition to sanctions, the two officials stress the need to strengthen financial support for Kiev.
They welcome the European Council’s agreement in December to provide a 90 billion euro loan to Ukraine and emphasize that the funds must reach Kiev quickly.
„By strengthening Ukraine’s position, we send a clear signal to Putin that he cannot wait for Ukraine to give in,” write Reeves and Svantesson.
The final message is a strong one: economic pressure works, but it must not be relaxed. „The data shows that pressure on Russia is working and must be intensified.”
The United Kingdom and Sweden, they conclude, remain united in their support for Ukraine.
G.P.