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  • 2018-04-13 (xsd:date)
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  • based on these measures (en)
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  • Elvira Nabiullina, the head of Russia’s central bank, said on April 9 that the Russian economy would feel the impact of the latest U.S. sanctions on Russian officials and businesses because it is an open economy with significant exposure to global markets. She also said the central bank would be able, if necessary, to mitigate the sanctions’ effects on inflation.Nabiullina’s comments came three days after the U.S. imposed sanctions on more than a dozen senior Russian officials, heads of state-controlled companies, and business tycoons with ties to the Russian government and Russian President Vladimir Putin.The U.S. sanctions were in response to a series of Russia’s actions, ranging from the seizure of Ukraine’s Crimean Peninsula in 2014, alleged meddling in the 2016 U.S. presidential election, and the alleged poisoning of ex-double agent Sergei Skripal and his daughter in Britain last month.U.S. Treasury Secretary Steven Mnuchin testifies on Russia and economic sanctions before the Senate Finance Committee on Capitol Hill in Washington, February 14, 2018.The measures freeze the financial assets of the sanctioned entities on U.S. territory and prohibit U.S. individuals and groups from engaging in business transactions with them.The mere announcement of the sanctions by the U.S. Treasury Department has created jitters in the Russian economy and in the financial markets, causing significant sell-offs of shares in the sanctioned companies and downward pressure on the Russian currency.There are fears that, absent a calming of the market or effective counter-measures by the Russian government, inflation, currently running at about two to three percent, could reach double digits, as it did at the peak of the 2014-2015 financial crisis, which followed the collapse of global oil prices.Russian Prime Minister Dmitry Medvedev leads a cabinet meeting, Moscow, Russia, April 9, 2018. Medvedev ordered his Cabinet to draw up measures to support the companies in the energy, metals and arms sectors that were sanctioned by the U.S. on April 6.Nabiullina’s assessment of the impact of sanctions is therefore correct, as are her claims that Russia’s trade value is large relative to its overall economy and that its exporters are integrated into global markets. But her claim that Russia has an open economy is only partially true, resting solely on the absence of trade barriers while ignoring qualitative assessment criteria.Countries pursue varying degrees of economic openness. An open economy is mostly free of trade barriers and has a large share of exports and imports relative to the GDP. An open economy also has a flexible and transparent regulatory environment, competitive economic and political environment, and unimpeded investments, labor and technology flows, enabling innovation.According to Anders Åslund, a Swedish economist and a Senior Fellow at the Atlantic Council, Russia’s foreign trade value was $591 billion out of the GDP of $1.4 trillion in 2017, and its tariffs are relatively low -- in the 7% range.Russia has hardly any quotas or other absolute non-tariff barriers (en)
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