Analytical Bulletin, Issue 7/8 (26/27), July/August 2014

August 14, 2014

The Institute of Contemporary Development has published its most recent analytical bulletin. The main topics of this issue are: the sanctions war, results of the BRICS summit, and the IMF on the prospects for the global economy.

The annotation of Analytical Bulletin No. 7/8 (26/27), can be found below. The full text of the bulletin in Russian can be found here.

Issue 7/8 (26/27), July/August 2014

Igor Yurgens. Sanctions Again...

About the latest turn in the “sanctions war”: what’s next? For now it seems that the possible Western responses will not suffocate the Russian economy. However, anyone who remembers the war of sanctions and bans which followed the Soviet military incursion into Afghanistan in 1979 understand that the winner in such a confrontation will be the side with the more powerful economic potential. It follows that the downward spiral needs to be stopped in time and acceptable face-saving solutions need to be founds.

Igor Yurgens. Sanctions with an Unclear Target

The view from Moscow on the possible consequences of the sanctions imposed by the West. The sanctions will not cause substantial damage to the Russian economy. In any case, the economy’s internal ailments will cause damages of the same sort but only on a much larger scale. The sanctions will not undermine the stability of the Russian political regime… However, the sanctions will push Moscow to find new markets and new creditors. Is the West interested in Russia’s pivot in another direction? This is a question for Washington and Brussels, where work continues incessantly on the next round of sanctions. But we would like to them to work a little more definitively on the question of the target of the sanctions. For now they are creating a number of problems for the current Russian authorities which are capable of dealing a serious blow to Russia’s future.

Sergey Kulik. Results of the BRICS Summit

An assessment of the current and future possibilities for the BRICS with regard to facilitating the development and modernization of the Russian economy, expansion of export markets for non-energy products and improvement of their competitiveness. The new development bank and reserve currency pool which were announced at the most recent summit represent a signal to the West that developing economies have a sense of their own potential to resolve problems with relative self-sufficiency without paying much attention to world financial structures where Western countries hold the reins. This signal has been received, but its impact should not be overestimated, as these structures are not opposed to working with other development institutions to overcome the looming challenges facing developing countries.

Nikita Maslennikov. The IMF Reports Another Economic Slowdown

Updated IMF forecasts as a reason to give thought to the prospects for the global economy over the next one and a half years. On the anniversary of the centenary of the start of World War I, there are signs of the beginning of the first global economic war and the global economy stands at a crossroads. It would be prudent to evaluate the possible acceleration of the conflict in terms of current and future opportunity costs. The international community is facing far too complex tasks to rebalance the global economy and achieve sustainable growth to allow new hot spots to emerge and smolder unresolved, and the IMF’s forecasts underscore this fact.