Sanctions clip wings

When opening a recent Moscow English club meeting, Oleg Matveev introduced his guests – members of business association Congress Collegium led by its chairman Yuri Raskin and English club partner ArcosJet.

Ivan Veretennikov, Sales Director at ArcosJet, talked about business aviation from the perspective of the discussion on ‘New economic sanctions and the future of Russian business elite’. The connection is obvious: potential business jets’ byers may in the future or have already found themselves on the ‘Kremlin list’. Some participants made jokes, saying that today one not only needs to consider the means to buy business jet, but where to fly and most importantly why even use a business jet. Sanctions clip wings, and importers are not the only ones affected.

However, it is difficult to maintain this sense of humor when it comes to the ‘Kremlin report’. It is evident that the accent has shifted from sanctions aimed at different sectors of economy to sanctions targeting certain individuals and their families. In other words, our elite will face some tough times. The question is for how long? Is there any way to downplay the effect caused by the sanctions?

According to the famous Russian political expert Boris Makarenko, who was one of the key speakers at the meeting, as long as the status quo remains in Crimea and Donbass, the West at large cannot sacrifice its principles, even though some countries might be tempted to do so. Russia’s attempts to play with Tsipras in Greece, Orban in Hungary amid hopes that they would split the show of unity proved to be unsuccessful. Did we not realize how united the West and its political elites were? Why did we think that Trump rising to power would make a difference?

The sanctions on Russia, stressed Mr.Makarenko, were imposed by Americans with much competence, considering every past experience and with EU’s back-up. The sanctions are smart – they don’t affect constituents, but selectorate, those who decide who’s going to become the next president, ergo the political elite.

Despite West’s expectations, there haven’t been any social implications, the establishment hasn’t strained relations with the government. Hopes of splitting the elites didn’t come true. Economic diversification helped considerably to soften the impact of sanctions. The regime in Russia is non-democratic, there is no opposition that would use such opportunity to its advantage.

New sanctions are a long-term message. A sign to its own elite – don’t do business with the ones on the sanctions list. The aim of the sanctions is really scary, they are directed to cause hesitation in political and economic decision-making. The defense industry has already started hiding contracts, and there is a list of companies that no one is allowed to deal with…

The most important thing is, says Mr.Makarenko, the tension inside the Russian elite is building up. Reconfiguration of current politics, considering the sanctions, is feasible in the near future. 

In the long-term this will lead to decreasing of transparency and economic closure in Russia. With full aftermath…

Leonid Grigoriev, the famous economist, analyzing the current political situation said that he doesn’t see why the sanctions would be lifted. And explained his thought “They cannot understand people who for thousand years haven’t lived in peace”. Mr.Grigoriev showed an exquisite sense of humor, great associative thinking and some healthy pessimism. “I don’t believe that even the stabilizing of situation in Donbass would help lift the sanctions. They would immediately revive the ‘Crimean issue’.

During the discussion it turned out that involvement of Russian hackers and trolls in U.S. election meddling caused serious paranoia in the States. The Congress is now stocking up on new voting machines that instead of electronic recording, use paper ballots.