Serhiy Pyrozhkov*: Economic Situation in Russia: Current State and Possible Prospects


1. Analysis of the current state of the economy of Russia.

Current economic situation in real terms. Despite the continued favourable for the Russian Federation international economic situation at the energy markets in the first half of 2018, the development of its economy was characterized by the low rate of growth.

According to the results of the first half of 2018, the GDP grew by 1.7% in comparison with the corresponding period of 2017 (in the 2nd quarter of 2018 - by 1.8%).

Industrial production in the first half of 2018 increased by 3% (with the most dynamic growth in the main sectors of Russian industry recorded in the 2nd quarter of 2018). Production of minerals increased in comparison with the 1st half of 2017 by 1,9%, volumes of manufacturing industry - by 4%, electricity generation and gas as well as steam supply - by 1,9%.

At the same time, the GDP growth slowed down to 1.1% in June, in comparison to June, 2017 (against 2.2% in May and April). Industrial production slowed down from 3.7% in May, 2018 to 2.2% in June as compared to June, 2017. The reason for such dynamics was a slight increase in all types of industrial activities.

The growth of extractive industry in June accelerated to 2.8% (against 1.3% in May). Oil production increased by 1.2% [1]. Acceleration in the gas sector to 20.4% in June (against 12% in May) was associated with the increase in the production of liquefied natural gas. The dynamics of June was influenced, firstly by the growth of oil quotations at the world market since the beginning of the OPEC + agreement; and secondly, by easing the parameters of the agreement (the increase in average daily oil production) following the meeting of oil exporters in Vienna in late June. Positive dynamics can be also associated with the exhaustion of the effect of a high base in early 2017 and an increase in production in the gas industry.

The growth of production volumes in the manufacturing industry in June against June, 2017 slowed down to 2.2% (from 5.7% in May against May, 2017). The metallurgical complex contributed to the deceleration of growth of the processing industries. The output of metallurgical production in June decreased by 14.2% against the growth of 11.7% in May, as compared with May, 2017; the production of ready-made metal products, except for machinery and equipment, decreased by 7.6% (in May, 2018 the growth was 2.1%).

Positive dynamics was demonstrated by: food industry (+ 5%), due to increased production of food additives, drinks, and baby food); other non-metal mineral products (+ 11,9%), due to increased production of construction materials influenced by the recovery in the construction industry; woodworking (+ 14,6%); production of paper and paper products (+ 21.1%); coke and petroleum products (+ 2.5%); chemicals and chemical products (+ 4.4%); rubber and plastic products (+ 7.4%); machinery and equipment (+ 7%); motor vehicles, trailers, and semitrailers (+ 16.6%).

The volume of construction works fell to 1.3% in June, 2018 (after two months of positive dynamics). The slowdown was also recorded in agriculture - to 0.9% in June against 2.3% in May. The dynamics of crop production was decelerated due to the reduction of crop areas of most crops, as well as difficult weather conditions (drought, waterlogging of areas) in certain regions during the sowing period, which contributed to the delay of development and, consequently, the deterioration of crop yields [2].

In the 2nd quarter of 2018 the GDP accelerated to 1.8% after rising by 1.3% in the 1st quarter, industrial production grew by 3.2%.

The volume of works executed in construction in the 2nd quarter increased by 0.9% after weak results of the 1st quarter of 2018. Production of industrial goods for investing accelerated growth in the 2nd quarter to 8.9% against 6.8% in the 1st quarter of 2018. Production growth was observed both in the machine building and in the production of building materials. At the same time, the investment import of machinery and equipment from abroad amounted to about $ 8.7 billion in the 2nd quarter, while its growth slowed down to 10.4% from 25.1% in the 1st quarter of 2017. It made a major contribution to the slowdown in the growth rate of investment in fixed assets to 2.3% against the 1st quarter, 2018 (+ 3.6%).

According to the estimates of the balance of payments by the Central Bank of Russia, balance of current operations account amounted to $22.3 billion in the 2nd quarter, 2018 (11.7 times more than the balance in the 2nd quarter of 2017 - $ 1.9 billion, in the 1st quarter of 2018 – $ 30.8 billion). The growth was mainly due to the improvement of trade commodity balance, which in the 2nd quarter of 2018 amounted to $ 46 billion and it is 3.1% more compared with the 1st quarter, 2018 ($ 44.6 billion) and 83% more than the 2nd quarter, 2017 ($ 25.2 billion).

Balance of trade in services in the 2nd quarter, 2018 remained negative and amounted to – $7.2 billion ($ -6.6 billion in the 1st quarter of 2018 and $ -7.6 billion in the second quarter of 2017). The balance of investment income was formed at -$13.8 billion ($-13.3 billion in the 2nd quarter of 2017, $-4.2 billion in the I quarter of 2018).

Trade balance. Export of goods grew in the 2nd quarter of 2018 in comparison with the 2nd quarter of 2017 by 31.4% (oil and gas exports increased by 38.4%). The growth of hard currency earnings from oil and petroleum product exports was driven by the price factor [3]. In physical terms the growth of export of crude oil and petroleum products was close to zero compared with the corresponding period of the previous year. At the same time, other major components of raw material energy exports demonstrated growth in real terms.

The increase in average supply prices was observed for almost all basic goods of Russian exports. The exception was only aluminum, its value of the export unit decreased as well as physical volumes of supplies (Table 1).

Import of goods in the 2nd quarter of 2018 (against the 2nd quarter of 2017), slowed down the growth to 9.4% (from $ 58.7 billion in the 2nd quarter of 2017 to $ 64.2 billion in the 2nd quarter of 2018). It was primarily due to the dynamics of the exchange rate of the national currency. The real effective rate in the first half of 2018 compared to the 1st half of 2017 dropped by 2.3%. The slowdown in the growth rate of investment imports was significant. It is an indicator of a slowdown in the growth rate of investment in fixed assets in the 2nd quarter of 2018.


Table 1

Average export prices and physical volumes of supply of basic goods of Russian exports in the 2nd quarter of 2018


Share of goods in total volume of Russian exports, 2nd quarter 2018,%

Average export price, 2nd quarter 2017, US$/t

Average export price, 2nd quarter 2018, US$/t

Rise in average export price, 2nd quarter 2018 against 2nd quarter 2017

Growth, physical volumes of supply, 2nd quarter 2018 against 2nd quarter 2017,%

Crude oil





+ 2.9












$ 175 /1000m³

$ 208 /1000 m³
















































Source: Federal Customs Service of the Russian Federation, E. Gaidar Institute of Economic Policy.


As a result, the trade balance increased by $ 20.8 billion, or by 82.5% (from $ 25.2 billion in the 2nd quarter of 2017 to $ 46.0 billion in the 2nd quarter of 2018).

Balance of trade in services. Export of services grew by 21.8% in the 2nd quarter of 2018 against the 1st quarter of 2018 (by the 2nd quarter of 2017 - by 16.9%), mainly because of tourism into Russia triggered by the football World Cup; import of services grew by 17.3% (against the 2nd quarter of 2017 by 8.9%) due to transport services and traveling abroad.

Balance of investment income. In the 2nd quarter of 2018, the negative balance of investment income practically did not change compared with the same period last year and amounted to $ -13.8 billion (-13.3 billion in the 2nd quarter of 2017).

By the end of 2018, the positive balance of current account operations is expected to increase under the conditions of maintaining the current dynamics of prices for the main exported goods and stability of the real effective exchange rate of the ruble [4]. It will happen due to the growth of the trade balance (increased export earnings as a result of rising prices for basic goods of Russian exports and slowing down import growth rates to zero), as well as due to the stabilization of other balances.

The increase in the current account surplus was accompanied by an increase in the financial account deficit, which in the 2nd quarter of 2018 was $ -9.9 billion ($ - 1.7 billion in the 2nd quarter of 2017). Net outflow of capital by banks and enterprises in the 2nd quarter of 2018 amounted to $ 0.4 billion (in the 2nd quarter of 2017 there was a net inflow of capital in the amount of $1.8 billion).

Capital outflow fell to $9.9 billion from $14.4 billion in the 1st quarter of 2018. Such trend was formed mainly by the reduction of public sector liabilities to non-residents. The 2nd quarter of 2018 saw a consistent escape of non-residents from Federal loan bonds, and such a situation was observed for the first time since early 2017. In the 2nd quarter of 2018, the share of non-residents declined by 369 billion rubles and amounted to about $ 6 billion.

The dynamics of capital outflow was largely determined by operations of the banking sector. Net capital outflows by banks in the 2nd quarter of 2018 reached $ 2.1 billion (in the 2nd quarter of 2017 the figure amounted to $9.2 billion). The outflow of capital in the banking sector was caused by the fact that simultaneously with the decrease in foreign assets in the amount of $ 7.4 billion ($ 2.5 billion in the 2nd quarter, 2017) banks reduced their foreign liabilities by $ 9.5 billion ($-11.7 billion in the 2nd quarter of 2017).

Net inflow of non-financial sector capital in the 2nd quarter, 2018 amounted to $ 1.7 billion ($11.0 billion the 2nd quarter, 2017). It was caused primarily by the growth of other commitments of $3.5 billion ($3.5 billion in the 2nd quarter of 2017) with an increase in other assets of only $0.8 billion ($2.6 billion in the 2nd quarter, 2017).

Direct foreign investment (FDI) to Russia amounted to only $1.7 billion ($ 12.6 billion in the 2nd quarter, 2017), while FDI from the Russian Federation reached $4.2 billion ($7.6 billion in the 2nd quarter, 2017). Reduction of foreign investment to the Russian economy will affect stability of the exchange rate of the ruble due to the increase in its volatility.

In the 2nd quarter of 2018, enterprises reduced debt obligations in the amount of $1.9 billion ($-2.2 billion in the 2nd quarter of 2017). Net outflow of portfolio investments amounted to $0.1 billion at the expense of the reduction of liabilities by $0.6 billion ($-1.0 billion in the 2nd quarter, 2017) and the reduction of assets by $0.5 billion (asset growth of $1.1 billion in the 2nd quarter, 2017).

Consistent negative expectations of investors continued to affect the state of the federal loan bonds market. In the 2nd quarter of 2018, investments of non-residents in the liabilities of federal authorities decreased by $6.6 billion (in the 2nd quarter of 2017 - an increase of $2.4 billion).

The increase in international reserve assets in the 2nd quarter of 2018 reached $11.3 billion ($7.5 billion in the 2nd quarter of 2017), which was primarily due to the purchase of foreign currency by the Russian Ministry of Finance for the amount of about 892.9 billion rubles at the domestic currency market according to the fiscal rule.

In the 2nd quarter of 2018, the exchange rate of ruble against the US dollar decreased by 9.6%, to 62.76 rubles per dollar. The sharp weakening of ruble in April was caused by the increased sanctions against Russia and an appropriate reassessment of investment risks in the Russian Federation. The situation was also aggravated by expectations for further strengthening of sanctions, including their possible extension to Russian public debt, as well as the military conflict in Syria. Despite the fact that  ruble is supported by oil prices, further weakening of ruble provoked the outflow of capital from emerging markets in the context of strengthening monetary policy in a number of developed countries. This is also facilitated by the operations of the Ministry of Finance of Russia in purchasing foreign currency.

In general, the weakening of the ruble, provided trade conditions are improved, causes a significant increase in the balance of the current account of the balance of payments. It is expected that in the 3rd and 4th quarters of 2018 seasonal factors will contribute to its additional growth. Unless there is a significant drop in energy prices or geopolitical risks, the ruble may have become stronger by the end of 2018. At the same time the scenario with the above mentioned risks is quite possible to be implemented.

The situation at the Russian financial market in July, 2018 remained stable. MICEX Index grew by 1.1%. Russian 5-year CDS spread reduced to 133 bp on average in July (in June - 140.1 bp). The ruble against the US dollar remained stable (62.9 on average since the beginning of July after 62.7 in June). The amount of operations of the Ministry of Finance at the currency market from 1 July to 27 July amounted to $5.3 billion (in June - $ 5.8 billion) during the period of high oil prices.

Indicators of foreign economic activity of Russia in 2018 also demonstrate the growth dynamics. Russia's external trade turnover in the first half of 2018 in comparison with the first half of 2017 increased by 21.6% and amounted to $330.6 billion.

In the total volume of goods turnover, the share of exports increased to 64.9%, in comparison with the second half of 2017, while the share of imports reduced to 35.1% from 37.7%.

Exports grew by almost a quarter to $ 214.3 billion, 12.2% of which was due to the CIS countries, and 87.8% - to other countries.

In the commodity structure of Russian exports, fuel and energy products prevailed, their share in the 1st half of 2018 increased in comparison with the 1st half-year of 2017 by 1,3 pp to 63.9%. (in the 1st half of 2017 - 62.6%). Both value (by 29.3%) and physical (by 3.4%) volume of export of these goods increased.

Non-primary product exports increased by 24.3% to $111.9 billion, while the growth of non-primary non-energy exports amounted to 23.2% ($70.3 billion), innovative goods - 14.3% ($14 billion). Export of machinery and equipment increased by 15.3% to $12.4 billion.

The volume of imports increased by 13.6% to $116.4 billion. The countries of far abroad accounted for 88.9% of its volume. Machinery and equipment prevailed in the commodity structure - 46.9%.

The main trading partner of Russia was the People’s Republic of China (the amount of foreign trade - $50 billion, which is 30% more compared with the same indicator in 2017).

In the geographic structure of foreign trade, the EU member states occupied a leading place, which accounted for 43.8% or $144 billion (in 2017 - 44.6%). The foreign trade turnover with the EU countries in the 1st half of 2018 increased by 21.5% (export growth was 25%, imports were 14.1%), in particular, with Germany - by 25.3% (to $29.2 billion), France - by 20.8% (to $8.7 billion), Italy - 11.3% (to $12.5 billion), the Netherlands - by 10.9% (to $22.8 billion). Turnover with the United States increased by 11.3% to $8.7 billion.

There was also an increase in volumes of foreign trade turnover with APEC countries - by 29.8% ($98.1 billion), BRICS - by 28.8% ($58.4 billion), CIS - by 15.3% ($38.9 billion), including the countries of the EAEU - by 13.5% ($27.3 billion).

Significant changes in trade turnover with partners were mainly due to the dynamics of fuel and energy products exports. The largest increase in exports of the Russian Federation in the 1st half of 2018 was observed to China - by 42.7% (due to the supply of crude oil and refined copper), Turkey - by 35.5% (petroleum products, crude oil and natural gas, waste and scrap of black metals, maize, wheat), the Netherlands - by 11.5%, Germany - by 33.0% (petroleum products, crude oil and gas) and Poland - by 45.3% (crude oil, gas and flat rolled steel ).

The largest decrease in Russian exports was observed to Latvia - by 24.6% and Singapore - by 24.3% (decrease in exports of petroleum products and gas), as well as Azerbaijan - by 22.2% (reduction in supply of land transport vehicles).

Thus, despite the sanctions pressure on the part of Ukraine and the West in relation to the Russian Federation, Russia's foreign trade turnover in 2018 hasn’t decreased; it has gained a certain increase.

In the context of strengthening US economic sanctions against Russia and the probability of further devaluation of ruble, the Russian Federation is taking measures to accumulate hard currency reserves. The 2nd quarter of 2018 saw the increase of the amount of the national welfare fund of Russia by $12 billion and international reserves of the country - by $1.6 billion.

In the first half of 2018, the Russian government and the Bank of Russia continued the policy of curbing inflation. Despite the low inflation rate of 2.28%, the dynamics of prices growth for a number of socially significant goods exceeded the average level - butter (by 4.5%), fish (by 3.8%), milk and dairy products (by 3, 3%). Also, prices for petrol (by 8%), construction materials (by 3.6%), and services in the housing and utilities sector (by 4.3%) increased.

Nominal wages increased in the first half of 2018 in comparison with the same period last year by 11.2% - to 45 840 rubles, real disposable income - by 2.6% [5].

Revenues of the federal budget of the Russian Federation in the 1st half of 2018 amounted to 8628.6 billion rubles (50.5% of the assessed income, in the first half of 2017 - 7120.8 billion rubles or 48.5% of the planned annual amount), including revenues of the oil and gas sector amounting to 3935.1 billion rubles. (54.4% of the planned annual amount). Expenditures for that period amounted to 7751.3 billion rubles (45.2% of the planned annual amount, in the 1st half of 2017 - 7608.4 billion rubles or 45.8% of the planned annual amount). As a result, budget surplus of 1260.8 billion rubles was observed (in the 1st half of 2017 the budget deficit was 487 billion rubles).

Given the increase in revenues, changes to the federal budget for 2018 have been made [6]. The law provides for an increase in the revenue part of the budget in 2018 by 1815.1 billion rubles and the expenditure part - by 61.9 billion rubles, which should provide a budget surplus of 481.7 billion rubles (0.5% of GDP) [7].

In accordance with the changes, the total federal budget expenditures in 2018 will amount to 17130.9 billion rubles (by 601.7 billion rubles more than the pre-set indicator). In particular, the expenditure part of the budget has been increased by sections: "National Defence" – for more than a third, "National Security and Law Enforcement" - by 87.4 billion rubles, for the needs of the Ministry of Defence of the Russian Federation - by 3.695 billion rubles (up to 1655,973 billion rubles).

The state of the financial and economic system of the Russian Federation. The Russian financial market is closely integrated with the global financial market, and players at the global capital market are attracted to financial transactions and investments in the country.

During 2007-2017, the Russian Federation substantially strengthened its investment position [8] in the world and maintained a minor level of governmental external debt obligations. 

Financial burdens of the Russian Federation, billion US dollars

Source: National Institute for Strategic Studies


At the beginning of 2018, Russia retained the 8th position among all countries in terms of the sufficiency of international reserves to cover its own imports (16 months) [9] and is one of the most solvent buyers in the world. The amount of international reserves of the Russian Federation is more than 27.4% of the country's GDP (more than $432.7 billion  - 17th position). At the same time, the overwhelming majority of debt obligations are long-term, and the peak of current payments fell on the previous two years (2016-2017 years).

A well-balanced policy of supporting the main financial indicators was the reason for maintaining the investment attractiveness of the Russian Federation before the aggravation of relations with Ukraine and the introduction of sanctions.

The financial market of Russia is characterized by high integration of the public sector into the banking system [10], and therefore, in case of deterioration of the economic situation, the burden of liabilities will be transferred to state assets (reserves), which can deprive the financial market of Russia of maneuverability.

Taking this into account, after the introduction of international sanctions, an increase in the share of independent Russian corporations' investments into projects abroad (in particular, energy) was recorded in Russia against the background of the existence of rather high state foreign reserves.

Russia's foreign reserves remain with a low mobility level in terms of discharging short-term crises - 62% of reserves are securities abroad. By the end of 2017, more than 22% of foreign reserves (over $96 billion) were fixed in US sovereign debt obligations. To resolve the imbalance, the Russian Federation reduced its savings in US debt obligations by almost twofold already at the beginning of May, 2018 (to $48.7 billion).

That is, total investment activity has decreased after the introduction of sanctions. The process of active withdrawal of Russian capital to the companies abroad began as well as the self-financing of Russian projects, along with the transition of foreign investors into the sphere of operating the loan capital (financial liabilities of enterprises), while the financing of Russian banking institutions and direct participation in the authorized capital of Russian enterprises decreased at the same time.


For reference: negative values - withdrawal of capital from the Russian Federation

Investment activity of the Russian Federation, billion US dollars.

Source: National Institute for Strategic Studies


Major investors in the Russian economy are the partners from offshore countries (58% in the overall investment structure) - Cyprus, Luxembourg, Jersey, Virgin Islands, Bahamas, Bermuda; the Netherlands - the country that carries out basic operations with Russian exchange hydrocarbons (10%); Ireland (6%); Switzerland (3%); Singapore (3%); Germany (4%); UK (4%) and France (3%).


Distribution of investment lines by offshore zones for Russia, %

Source: National Institute for Strategic Studies


The flow of investments from Russia shifts the emphasis on countries, corporations and companies involved in the implementation of a number of Russian energy projects in Europe - the Netherlands (13%), Austria (5%), Switzerland (5%), Turkey (2%), Germany (2%). Also, for individual projects, investments from offshore go to Russia (53%) - Cyprus, the Virgin Islands, Bahamas and Luxembourg.

Approximation of the shares of offshore capital into and from Russia could be observed against the background of the same approximation of the total amount of foreign direct investments into and from Russia. At the beginning of 2018, the amount of FDI in Russia amounted to $535.2 billion, from Russia - $470.8 billion. Total investments from Cyprus in Russia amounted to $159.6 billion, from the Russian Federation - $181.4 billion. Therefore a constant movement of Russian financial resources from Russia and back through the mediation of foreign jurisdictions takes place. In the banking sector of the Russian Federation, the significant proportion of foreign borrowings comes from Japan, France and Sweden. The features of lending (investing) of Russian banks are identical to investments in the real sector of the economy. The primary offshore for banks are Cyprus, Jersey (UK) and Luxembourg, as well as Virgin and Cayman Islands, Bermuda. Russia’s main borrower is Luxembourg (34% of the negative balance of assets), and it invests in Cyprus (41% of the positive balance).


The priority of withdrawal of capital by Russian residents, billion US dollars.

Source: National Institute for Strategic Studies


In total, at the beginning of 2018 Russian banks consolidated assets and liabilities (obligations) for the amount of $202.3 and $156.9 billion respectively abroad.

The main offshore for corporations is the Republic of Cyprus with an auxiliary role (depending on raw materials projects) of the Netherlands, Switzerland and the Virgin Islands (UK). Given the movement of residents’ capital and data as for the direction of the movement prior to the Russia-Ukraine war, immediately before (2013), and when sanctions started to be imposed, stipulate an early response to the change in the situation regarding Russia, its financial system [11].

State of foreign economic activity of the Russian Federation. Russia is pursuing a strategy to expand offers of raw materials at the world markets without any structural transformation of the economy. The problem of dependence of the country's revenues on exports of a limited range of commodities with high speculative activity to a limited range of consumer countries remains for the Russian economy.

The development of foreign economic activity of the Russian Federation takes place according to an inertia scenario. The country receives main benefits from trading mineral raw materials (coal, gas, oil and products from them), and metals and products from them, including non-ferrous metallurgy (ferrous metals, steel, aluminum, nickel, zinc, copper, titanium and primary billets from them, etc.), as well as precious stones.


Results of foreign trade of the Russian Federation (billion US dollars)

Source: National Institute for Strategic Studies


Structural imbalances in the economy were clearly traced in a situation when, in 2017, prices for raw materials remained at a moderate level, but in the structure of Russian exports there was an excessive preponderance of exclusively energy resources (60% of total exports) - crude oil and natural gas. At the same time, the domestic market imported services - tourist, business and transport.

Foreign trade with the CIS countries that traditionally consume various Russian products (not only energy raw materials and metals) remains stable [12], [13].

The main markets for Russian traditional goods remain those of the EU and Turkey; China, Japan, South Korea, USA (metals); CIS countries.

More than 65% of all benefits from trade in goods, the Russian Federation receives from interaction with only ten countries of the world, where 28% of the total surplus (or 42% among the main partners) makes a contribution to trade with the Netherlands at the expense of the commodity exchange for natural gas and crude oil. Key consumers or intermediaries in the supply chain (refining) of Russian natural gas and oil remain in Europe.

The real ability of substituting imported goods with products of its own production remains insignificant for all commodity groups other than metals, minerals, timber and products from them.

The main markets for the Russian real sector of the economy (without the raw materials sector) remain the markets of Belarus and Kazakhstan [14].

Turkey (tourism) and Ukraine (transit of natural gas) account for 31% of the overall structure of importing countries in the structure of import of services. Construction (construction of nuclear power plants, railways) and transport dominate in the structure of exports of Russian services.

Taking into account its basic interests, Russia tries to resolve its long-term strategic priorities in the traditional inertia (expansionist at foreign markets) way through the promotion of: their compensating energy projects in Europe and key energy regions of the world; initiatives for the formation of new transport corridors (including the Arctic and the support of projects in China); consolidation of the CIS member states around the Eurasian Economic Union; forming a state-corporate system of financial support and encouraging loyal countries to expand economic cooperation; and Russian covert protectionism (trade wars with their "allies", counter-sanctions, etc.).

To address the need for diversification of exports, Russia has chosen an extensive way - the geographical expansion of exports. To strengthen energy infrastructure, Russia continues to pursue its own energy infrastructure projects in several parts of the world: building and participating in crude oil and gas routes in the Middle East, Europe, India, America and China [15]. Estimated time for the implementation of the mentioned projects - late 2019 - early 2020.

To maintain the benefits of its transit potential, Russia takes part in the implementation of two key transit projects: the Northern Sea Route through the Arctic (implemented by the Russian Federation) and One Belt - One Way (initiated by the People's Republic of China).

With a view of conducting economic control in the CIS and the EAEU, Russia strengthens its leadership in the region, taking into account economic ties of most of the economies of the neighbouring countries of the former USSR.

In 2016-2017, the economic significance of the post-Soviet space has increased significantly for Russia. With the CIS share in 12.1-12.3% of the total trade with the world, the economic benefits of post-Soviet countries reached 27-32% ($20.5-24.5 billion) from the total positive balance of Russian external trade, including more than 65% of the benefit obtained through trade within the Union.

The main partners are Belarus (5.2% of the total trade of the Russian Federation) and Kazakhstan (3%), which in varying degrees relate to the Russian economy. Belarus almost completely depends on Russian financial and economic assistance, the Russian consumer market and supplies of Russian energy raw materials (crude oil). Kazakhstan is controlled by the Russian Federation regarding logistic routes for supply of Kazakh energy resources to the European market.

Russia's interest in the development of the EAEU is due to the need to strengthen control of the domestic markets of the closest allies on the background of internal structural problems in the Russian industry. However, given the dynamics of trade with the CIS countries, the internal potential of expanding economic contacts is limited by the interest of the participating countries in Russian commodities.

Russia formed a new export strategy of combined protectionism in the context of the fall in prices in the commodity markets (2014-2016) and the introduction of the first general sanctions (2014). The new drivers of growth for the economy in the non-raw and non-energy sectors and the gradual change in the structure of the economy are the promotion of agriculture, energy (nuclear energy) and defence sectors of the economy. It is expected that over the next three years, energy export dependence will decrease from 54-60% to 45% of fuel resources in exports at low oil prices [16] and domestic production of food will expand.

To implement the strategy, the embargo [17] on food products from Europe was introduced, various modes of assistance and lending to partners - buyers of Russian arms, energy, construction services were established. However, there has been no serious recovery in the food industry [18], the progress of defence orders has slowed down, and the costs of promoting the nuclear industry have increased. None of the selected spheres has become the driving force for changing the structure of exports - the determining influence is exclusively caused by the situation at the energy and metal markets.

At the same time, after the introduction of the embargo on European food, domestic food prices have risen.

Thus, the Russian Federation is active in trying to maintain its current economic structure by expanding the circle of partner states in the world, in traditional areas for itself, in fact, through direct instruments of government-corporate agreements and mutual accords.

However, the use of such "manual" interaction mechanisms faces a number of significant challenges in the global economy: American protectionism, which is symmetrical to the business approaches of the Russian Federation to advance their interests, but on a different scale; the new energy policy of the USA; the impact of Chinese environmental policy on the steel and natural gas market; increase of competition between producers of crude oil at the oil market; the sequence of keeping (or expanding) economic sanctions against the current Russian regime.

American protectionism. The United States returns to the restoration of the traditional industrialized economy. In this context, the key sectors of the economy are metallurgy and energy as the basis for the operation of other industrial processes and industries [19], which is a significant challenge for the Russian metallurgy.

New American Energy Policy. With the growing exploration of shale oil and natural gas in North America and their industrial production in 2008, the United States has become one of the world's largest suppliers of natural gas. In the next two years, a fight is expected for 18% of the world market of this energy in terms provided the growth trend in its consumption in the world by 60% by 2025. Key competitors for the USA are Russia, Iran, and Qatar.

In 2017, the USA for the first time since 1957 became a net exporter of natural gas. The 11 times growth of US clean energy exports is expected in 2018-2020, which is equivalent to 10-15% of the natural gas market in Europe.

Also, the United States completely abolishes the ban on oil and natural gas production in the exclusive maritime zone of the country in the Atlantic, Pacific and Arctic Oceans to expand markets and increase exports [20].

Chinese environmental policy. In 2017, the global steel market (steel and aluminium and its products, ore) experienced a systemic effect from China's introduction of a new environmental programme, which assumes massive withdrawal from the exploitation of excess production capacities of obsolete and, accordingly, environmentally hazardous enterprises, in the first place in metallurgy and power engineering.

The new policy of the People's Republic of China was launched in 2015 in order to achieve a dual main effect for the country's economy against the background of the first signs of a noticeable suspension of its growth and aggravation of the risks of an internal crisis.

The actions of the Chinese expectedly provoked an increase in prices for metals and derivatives of raw materials at the world markets. Russian metal producers were expecting an increase in demand at the Russian market of rolled metal [21] and all over the world (which in fact began late in 2017). New US sanctions against Russian aluminium production have not only raised the price of aluminium in the USA, but also allowed China to increase its production in the country for export.

Given the Chinese environmental policy, the Chinese side announced a growing interest in increasing the supply of natural gas from the Russian Federation - the beginning of the transition to a widespread pure (in the first place, gas) electricity generation.

Thus, the Chinese ecological policy dynamically prompts the revival of external market trends, first of all, in the sphere of trade in metals. The Russian economy is gaining new prospects of consolidation due to the beginning of the structural transformation of the Chinese economy. Thus, according to estimates from Russian metallurgical companies, the current price for Russian metal in Europe has increased by 60% compared to the last year’s prices, and by 21% in the world. However, such an effect (the growth of prices for metals) can last no longer than till the end of 2022, which is the time of completion of the steel restructuring in China.


Summarizing, it should be noted:

1) economic activity in Russia is closely related with its offshore trends, when the resources received in Russia, are "protected" by other states. According to the average minimum estimates, the offshore segment of the Russian economy and the financial system amounts to over $700 billion, or up to 60% of the total GDP of the country. Through governmental purchases, including public corporations, and the budget about 36-38% of the country's GDP is formed;

2) the existing financial system has generated a number of intermediary structures that automatically reduce the level of any threat from other states to the Russian financial system as a whole structure.

3) business not only protects its capital from the state by means of offshore, but actively supports the functioning of this type of state.

2. Impact of sanctions on the Russian economy

International sanctions policy. The imposition of sanctions by countries of the world against Russia is one of the deterrent factors in the development of the Russian economy. The introduction of such restrictive measures has impacted the slowdown of economic growth. According to the estimates of Russian economists, in such a regime, the economy is not able to reach the acceptable dynamics of development (more than 4% of the GDP growth each year exceeding the average annual growth of the world economy). At this stage, the economy is at a stagnant level (1.5-2% of the GDP). This situation is caused by structural imbalances and negative external influences, in particular international sanctions. The current favourable situation at foreign commodity markets, which in turn allows to partially restore the volume of oil revenues, is not able to provide a significant increase in macroeconomic indicators.

The most efficient of all the array of international sanctions are restrictive measures by the United States. Since August, 2017, the United States has announced a move to apply extraterritorial restrictions as for pressuring Russian exporting government companies and corporations - the continuation of sanctions policy in addressing a number of global conflict situations, in particular, in Syria, DPRK, Ukraine. In this context, restrictions were imposed on cooperation with Russian companies, the prohibition of technology transfer, actions to block military contracts with the Russian Federation, etc.

In fact, the new restrictions have gained exclusively competitive features where American companies and banks are direct competitors of the Russian and are applied only to such an extent that they do not harm the USA. Like the EU, the USA does not intend to sacrifice its own interests in favour of a third party (in particular, Ukraine) [22].

At the same time, the United States have wide-ranging tools for options of excluding from sanctions (at the discretion of the US president), including through lobbying for joint projects [23]. Thus, the continuation of cooperation between the United States and Russia is allowed, but only in case of Russia being a junior partner. Negotiating opportunities for Russia are getting narrow and the potential expenses of Russian oil and gas companies are increasing, but options for achieving various "compromises" are maintained. Exceptions to the array of sanctions are very strict restrictions of the EU and the USA directly against the occupied Crimea and companies that carry out economic activities there.

Thus, the prolongation of the sanction regime for the Russian Federation can create double consequences. On the one hand, the policy of restrained isolation is built up; on the other - there are grounds for the return of Russian capital to the domestic economy and the formation of a strong network of shadow contacts. At the same time, the duration of such a regime of sanctions will remain under the influence of market circumstances.

3. Mid-term prospects for economic development of Russia.

Despite the improvement for exporters of the global oil market trends, it is expected that the growth rate of the Russian economy will be restrained by the exhaustion of the possibilities of increasing the country's GDP by increasing energy prices.

The Ministry of Economic Development of Russia forecasts the GDP growth at the end of 2018 at 1.9%, the Central Bank of Russia expects economic growth in the range of 1.5-2.0%.

According to the updated forecast of the International Monetary Fund on the development of the economy of the Russian Federation of 17 April, 2018, Russia's GDP growth is expected at the level of 1.7% in 2018 (increased by only 0.1 pp compared with the forecast for January, 2018 ). The growth rate of the world economy in 2018 increased by 0.2 pp - up to 3.9% compared to the January IMF forecast.

Such a slight correction in the GDP is due to the aggravation of structural economic problems in Russia and the deterioration of the investment attractiveness of the Russian economy as a result of strengthening US economic sanctions against the Russian Federation [24] In particular, it is expected in the course of sanctions imposed by the USA in September, 2018 for the fall of the ruble exchange rate to 75-80 rubles per dollar as well as the deterioration of some macroeconomic indicators.

The Ministry of Economic Development and Trade of the Russian Federation, at the end of June, worsened the forecast of GDP growth for 2019 from 2.2% to 1.4%, which is associated with a decision to raise VAT [25]. The Central Bank has also warned of a possible deterioration of the GDP by 2019. The analysts' consensus forecast for GDP growth in 2019 is 1.9%.

Russia will be forced to continue to accumulate foreign exchange reserves and maintain current defence spending under the above conditions, preserving the high volatility of prices at the world oil market and tense relations with the West. Achievement of above goals is foreseen due to toughening fiscal and social policy.

Unresolved structural economic problems will not allow Russia to achieve in the medium term the pace of economic development of the country above the average world level. In the event of an unfavourable foreign economic situation at the commodity markets, as well as the emergence of a threat of new sanctions against the Russian economy, there is a possibility of exacerbation of the problem of external control of third parties, the threat of a loss of the share of a broad resource base and manageability of the socio-economic situation. In this context, macroeconomic stability is a prerequisite for economic development, which in the presence of existing structural disparities in the Russian Federation is quite problematic.

Despite some attempts of transformations, Russia will traditionally adhere to a steady inertia development vector that will require new expansionism at international markets, expansion of its own resource base abroad to implement its domestic needs, and balance internal economic imbalances with foreign benefits. Thus, to achieve national interests, the Russian authorities will try to strengthen the existing economic benefits of the country through the active use of diplomatic channels of interaction, will use its own export opportunities for supplying energy resources as a lever of influencing external partners, while protectionist policies will continue to develop at the domestic market.

At the same time, the efficiency of Russia's economic policy is doubtful, since the authoritarian regime and the rigid power vertical substantially limit the freedom of development of market mechanisms. Given the certainty of political configuration in the Russian Federation until 2024, significant changes in approaches to addressing key issues in the development of the Russian economy should not be expected.

4. Possible threats to Ukraine and counter-measures from Ukraine, including "economic offensive" at Russia

Regarding the analysis of the economic situation in the Russian Federation, it is possible to state that the low, but steady GDP growth rates of the country (1.7%) are capable of fuelling the continuation of Russia's aggressive policy towards Ukraine. Russia is expected to take measures aimed at: further destabilizing the Ukrainian economy, discrediting this country and Ukrainian foreign economic actors at the international level, obstructing foreign trade operations of Ukrainian enterprises and limiting their access to financial resources, etc. That is, there are prerequisites for further use of the economic leverage as an integral part of the hybrid aggression of the Russian Federation.

Taking into account the situation in Ukraine, the efficiency of economic measures of influence on the Russian Federation in the framework of bilateral cooperation is low. At the same time, there is a significant potential for increasing the influence on the Russian Federation by Western partners, which at this stage are mainly observing containment policies. In this context, Ukraine can initiate, support and intensify a number of measures that can affect the economic and financial system of the Russian Federation by limiting the resources of ensuring aggression against Ukraine.

The reimbursement of funds for the annexation of the Crimea, which provides for the submission of financial claims to the Russian Federation regarding the loss of the Crimea as an asset, with a determination of the final assessment for the period of its usage by the Russian Federation.

It would be advisable for the general amount of the losses incurred in Ukraine to put pressure on states to block existing Russian state reserves in their countries, equivalent to the amount of damages, until the final decision of the issue. It is proposed to restrict operations with usage of blocked funds by Russia. In particular, it is suggested to make a proposal to the United States and France, taking into account their dual interests [26].

Strengthening pressure of financial centres (USA, UK, Germany, etc.) in the international financial system on offshore zones and capital that has a controversial origin, supplemented by business expectations before direct financial sanctions [27].

The symmetrical response of the Russian Federation should be taken into account, i.e. the announcement starting from autumn of 2017 of the promotion of the return of "incomprehensible" capital, its full amnesty (extended until 1 March, 2019) and the creation of a new financial instrument for the return of significant amounts of resources (special anonymous Eurobonds compensating currency risks in cross-operations with large amounts of finance), initiatives on the establishment of offshore zones in Russia, simplifying the procedures for currency control, and giving banks the right to hide data about their clients who were subject to sanctions.

Fighting offshore in the EU. It assumes support and involvement of parties not interested in Russian projects in Europe (e.g., in the construction of North Stream-2; the United States, Poland, Denmark and the Baltic States), before conducting a broad European information campaign to combat offshore in Europe, first of all in the EU. Formation of reports and joint statements with interested states regarding the threatening activities of the Russian Federation in offshore zones (Cyprus, Luxembourg, Ireland, Virgin Islands, etc.). It is worth arguing the action as the promotion of international measures to counteract the legalization of unclear revenues and fight against the financing of terrorism.

First and foremost, it is necessary to focus on limiting offshore activities in the Republic of Cyprus and Luxembourg as the main operators of Russian financial flows.

The campaign can reduce the financial activities of Russians because of the high concern of business and their EU counterparts at the financial markets regarding the situation surrounding the public reaction in leading European countries.

Propagation of "toxicity" of financial and economic relations with the Russian Federation. A wide-ranging information campaign at the international level with a clear focus on using Russian resources to ensure the hybrid aggression of the Russian Federation in Ukraine and a variety of impudent acts aimed at promoting dubious Russian interests in the world will help to bring investors informed about the expediency of limiting economic cooperation with Russia, which in turn may accelerate the development of the already existing trend towards increasing the amount of withdrawal of finance from the Russian Federation.

Maintaining and maximizing the international sanctions policy against the Russian Federation.

Taking into account the willingness of Western powers to use the sanctions leverage against the Russian Federation as part of the containment policy, it is important to maintain, maximize and expand the use of restrictive measures against the Russian Federation, among which there may be the following.

Disconnection of the Russian Federation from the SWIFT system of international payments. According to expert estimates, the consequences of such measure would be sufficiently sensitive to the Russian economy - the emergence of a shortage of imported goods, an increase in their value by 5-10%, which in turn would lead to the cessation of activities of small companies whose operations depend on imports.

Preventing "big privatization" in Russia. It is in the establishment of agreements between Ukraine and the United States on the need for a systematic introduction of sanctions on financial transactions of Russians willing to participate in "big privatization" in Russia through their own offshore [28].

The arguments for such actions in the USA should not only be the general requirements of US law, but the unconditional interest of Americans in reducing the economic potential of Russian energy and weapons corporations in the world.

Concerted application of these measures will partially limit the sources of resources for the Russian Federation, its ability to respond to external influence in the economy and other spheres, as well as significantly impede the possibility of continuing hybrid aggression against Ukraine.



1. The improvement of annual indicators of the oil industry was also influenced in June, 2018 by the increase in average daily oil production as a result of changes in the parameters of the OPEC + agreement following the meeting of the oil exporters in Vienna on 22-23 June, 2018.

At the same time, in July 2018, oil prices began to decline after that decision. As of 31 July, 2018, the price of Urals brand of oil fell by 4.7% (to $ 73.1 a barrel at the end of the month). the oil quotations dropped below $ 70 per barrel during several days.

The OPEC data on the increase in crude oil production in Saudi Arabia in June (more than 400 thousand barrels per day) caused the pressure on the market. Oil production in the USA continued to grow: as of 20 July, 2018, it amounted to 11 million barrels per day.

In July prices fell on copper by 5.2% (-3.2% in June), aluminum by 4.3% (-5.9% in June), nickel by 6% (-2, 2% in June), gold - by 2.3% (-3.5% in June).

2. The slowdown in agricultural production growth is expected according to the results of 2018. It will be conditioned by the dynamics of crop production, against the background of a high comparable base of the past year. As a result, the contribution of agriculture to the growth rate of the economy will be around zero. This will be the worst indicator since 2014.

3. The increase compared to the first half of 2017 of the average annual price of a barrel of the Urals brand of oil by 37% - to $ 68.83 allowed Russia to obtain surplus income from oil exports.

Contribution of the price factor to the growth of commodity exports also remained significant. In April-May, 2018, the average contract price for oil and petroleum products was more than 30% higher than a year earlier, for natural gas - by 18.9%, for ferrous metals - by more than 16%, growth of prices for non-ferrous metals was also significant.

4. According to the experts of E. Gaidar Institute of Economic Policy.

5. At the same time, in the first half of 2018, a 17% (up to 8.1 million persons) increase in the number of Russians was recorded who received consumer loans from non-banking lending and financial institutions, which may be evidence of  deterioration in the material conditions of the population of the Russian Federation. The number of citizens of retirement age has increased most in the age structure of the clients of these institutions, due to the deterioration of their financial situation and restrictions imposed on banks in granting loans to persons over 55 years of age. Since the beginning of 2018, the proportion of clients of these institutions aged 56-60 has increased - to 29%, 61-65 years - 15%, 66-70 years - up to 8%.

According to the National Bureau of Credit Histories of the Russian Federation, the number of bank loans issued by banks increased by 64.7% by the 1st quarter of 2018, compared to the same indicator in 2017. At the same time, the amount of microloans to Russian households increased by 10%.

6. 03/07/2018, the President of the Russian Federation signed the federal law No. 193-FZ "On Amendments to the Federal Law" On the Federal Budget for 2018 and the Planning Period 2019 and 2020 "(No. 362-FZ dated 06.12.2017).

7. The advance of the schedule of filling the federal budget (by 260.7 billion rubles) with the simultaneous lag in spending its expenditure part (by 425.8 billion rubles) led to a surplus of the budget at 368 billion rubles or 1.5% of GDP (in quarter 1, 2017 the budget deficit was 274.2 billion rubles or 1.3% of GDP).

8. Difference in assets and liabilities

9. Ukraine occupies 43rd place (4 months) as for the level of sufficiency of international reserves to cover its own imports.

10. The main debtors of the banking sector are state-owned banks (69% of external debt); significant debt obligations of state corporations and enterprises (35% in the structure of indebtedness of all enterprises).

11. For example, in 2013, on the eve of the conflict, the withdrawal and accumulation of $62 billion to Virgin Islands was not typical. In 2017, residents of Singapore were among key buyers of Russian sovereign debt obligations, and in the same 2017 Singapore became a key recipient of Russian investments in the amount close to the amount of Russia’s external borrowings.

12. Since the beginning of the war with Ukraine, the trade profit with CIS countries amounted to 24-32% of the total surplus (from all the benefits of trade).

13. The contribution of Ukraine to the Russian economy since the beginning of the war has remained insignificant (without taking into account the occupied territories and shadow trade) - $330 million in 2017, despite the growth of mutual trade turnover by 25.6% on Ukraine's imports of coal and mineral fertilizers. The share of Ukraine in Russian trade remained steady - 2.1-2.2% (or 2 times lower than at the beginning of the war).

14. In 2017, goods from Russia made up in Belarus 55.4% of the total commodity market of the country, in particular, mineral fuels (oil) - 98.9%, mineral fertilizers - 91.0%, and zinc - 88.5%. In Kazakhstan - 36.3% (first of all, in the markets of timber and paper raw materials - 89.2%, meat and fish products - 85.8%, food waste and pet food - 84.5%), the markets of Armenia, Mongolia, and Kyrgyzstan - from 20 to 31%. In other post-Soviet countries, the share of Russian goods at domestic markets does not exceed 15%.

15. Routes of Nord Stream 2, Turkish Stream, Kurdistan-Indian Ocean, and Sila Sibiri (Power of Siberia). In addition, the northern Yamal LNG reloading complex (supply of liquefied natural gas to Northern Europe and America) has begun operations, and the Sakhalin LNG project is expanding (Japan and South Korea are the main consumers of liquefied natural gas). The implementation of long-term agreements (up to 2035) on the extraction of fuel resources in Iran (in the Kurdish territories) and the expansion of networks of extractive and oil refining capacities in Venezuela, Argentina and India began.

16. It is planned to achieve this through the expansion of exports: machinery and equipment (by 23% in the structure of exports or 2.5 pp); metals (8.7% or 1 pp); chemistry (20% or 1.8%); precious metals and stones and wood and timber (20% or 0,7 pp and 23% or 1 pp, respectively); as well as food products (21% or 1.7 pp).

17. Draft Federal Law On Amendments to Certain Legislative Acts of the Russian Federation No. 318825-7.

18. The lack of modern agrarian technologies, seed funds, special fertilizers, food substitutes, as well as the closure of the market for cheap external borrowings, almost completely offset the expectations for a significant revival of domestic agricultural production of non-raw material character.

19. The new economic policy is introduced by the Decree "Buy American, Hire American" (of 18 April, 2017), which recommends American companies to refuse to import goods of foreign origin, and recommends the government to indicate the activities of foreign companies that limit the success of American firms.

In addition, the United States has returned to the active application of trade law legislation since the beginning of competition with Japanese and other producers at the domestic market - On Trade Expansion to the Domestic Markets of the USA and amendments to the law On Trade. The provisions of these normative acts give the president the right to put into action restrictive measures himself (without the Congress) against enterprises of the trading partner countries.

20. The idea of the expansion of the markets is to fight for the outbreak: which country will be the first to consolidate at a larger part of the world (European) market in 2019-2025 will receive significant profits in the next 10-15 years. Other countries will sell gas and oil after switching to new sources at the lowest prices.

21. The basic Russian metallurgical corporations Severstal, NLMK, Evraz and MMK expect to overcome the crisis in 2018.

22. Direct co-ownership, providing technologies, and providing services for new projects are prohibited. However, the approved US law on the application of sanctions to "ill-wishers" of America (including Russia) contains some exceptions-mitigations for Russian companies. The first one - American companies are allowed to participate in joint projects in Russia, if the share of Russian companies is not more than 33% in the project (previously there was a total ban). The second is that prohibitions are only extended to new projects in and outside the Russian Federation, which were planned, e.g., in the Arctic, Venezuela, Libya, or Iraq and Syria. The third is a flexible time frame for the "novelty" of such projects from the "posterior" (12 March, 2014) to the moment of signing (2 August, 2007) or when the changes in the regulatory documents were made (no later than 1 November, 2007). Fourth, the president is able to withdraw certain operations and projects from the sanctions without Congress with the help of special general and model licenses (permits) of the Ministry of Finance if the general US policy "will not be violated".

23. EU-Russia projects: Baltic LNG, Shell (the Netherlands, UK) and Gazprom; Blue Stream pipeline to Italy, Eni (Italy) and Gazprom; Caspian Pipeline Consortium, Shell, Eni, Rosneft; Nord Stream and North Stream 2, Gazprom and a number of German and Austrian companies; LNG expansion for the Pacific market (Japan) Sakhalin-2, Shell, Gazprom; South Caucasus gas pipeline and Shah Deniz field, BP (UK), Lukoil; extraction from Zohr deposit in the Mediterranean, BP, Eni, Rosneft. In addition, sanctions do not restrict the joint production of heavy shale deposits (heavy duty oil), which is now being sought by Norwegian Statoil and the British BP in cooperation with Rosneft in the Russian Federation.

24. At the beginning of April the United States has imposed new sanctions on 24 persons close to Putin and 15 related companies and state-owned banks.

25. In accordance with the Federal Law of the Russian Federation On Amendments to Certain Legislative Acts of the Russian Federation on Taxes and Duties of 03.08.2018 № 303-FZ it is envisaged to increase from 01.01.2019 the basic rate of VAT from 18% to 20%. According to calculations of the Ministry of Finance of the Russian Federation, the increase will provide the federal budget in addition to 2019 633.5 billion rubles, in 2020 and 2021 - 678 billion rubles and 728 billion rubles respectively. In general, it is expected to get about 2 trillion rubles in addition for 6 years.

26. According to experts, freezing only in the US and France, Russian state assets and gold and hard currency reserves can block roughly (in view of previous losses of Ukraine - $96-98 billion), at least $95-100 billion or 20-25% of all international reserves.

27. Along with the announcement in the United States of the complex law on the application of sanctions, the Parliament of the Russian Federation ratified the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism of 16/05/2015, which approved the consent of the Russian Federation to exchange tax and banking information with other countries of the world for further confiscation of obscure property and incomes.

In addition, the United States actively began restricting for some reasons activities of key offshore zones for Russia and Ukraine (Cyprus, Virgin Islands, Latvia, etc.). in the first half of 2018.

28. The Federal Law "On Amendments to Certain Legislative Acts of the Russian Federation in regard to clarification of the notion of" foreign investor "dated May 31, 2018, No. 122-ФЗ in the Russian Federation offshore companies are allowed to participate in the privatization of state corporations, if they declare their ultimate Russian beneficiaries.


*Information about the author:

Serhiy Pyrozhkov - Ambassador Extraordinary and Plenipotentiary, Vice-President of the National Academy of Sciences of Ukraine, expert of the CRS.

The article is based on the address at the International Conference «Russia in the CRS’s researches: the main results and perspectives»


21.12.2018 08:00:00