Putin ‘Destroyed’ Russian Economy Save For Oil, White House Says

Topline

Russian President Vladimir Putin has divested his country’s economy of ever-profitable oil exports, a Biden administration official said Monday, as Russia retreats from the global economy amid its invasion of Ukraine.

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Key facts

“All he has is oil, so that’s what’s funding this war,” Amos Hochstein, an adviser to President Joe Biden, told CNBC.

“Putin destroyed the rest of the economy,” Hochstein added.

Russia’s gross domestic product will shrink 3.4% this year, according to projections by the International Monetary Fund, far worse than the growth is still positive, but stagnation is expected in 2022 GDP of other world powers such as the United States (1.6%), China (3.2%), United States. United Kingdom (3.6%) and Japan (1.7%).

Much of Russia’s decline comes from the impact of sanctions from the United States, the European Union and its allies, stopping almost all exports to the opposing countries, but Russia’s oil business remains booming for the oil-rich country: Russia’s energy export revenue will grow 38% this year to almost $ 340 billion, according to Kremlin documents seen by Reuters in August, thanks to high prices for crude oil and eager buyers in China and India.

Key background

After Russia invaded Ukraine on February 24, energy prices rose as uncertainty grew over what the West’s next response would be to the world’s second-largest oil exporter, and by far Europe’s largest supplier of oil and natural gas. , would mean for global markets. International benchmark Brent crude was $92.51 per barrel on Monday, up 12% from a year ago, while US crude prices rose 11% in the period. Rising energy prices have sent inflation already soaring to levels not seen in the United States and Europe in more than 40 years, bringing the global economy to the brink of recession.

Big Number

20%. This is how much Russia’s exports have shrunk since the launch of the invasion, according to the New York Times.

Tangent

The war also caused global food prices to rise as Russia blocked grain-carrying ships from leaving the ports of Ukraine, one of the world’s largest agricultural producers. Over the weekend, Russia backed out of a long-standing agreement to continue exports, sending wheat prices up more than 5% on Monday.

Further Reading

How Russia Pays for War (New York Times)

Global food crisis back on? Russia bails out of grain deal, blames Ukraine drone attack (Forbes)

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