The ICEF-FWE&IA Debate: Sanctions Impact on Russia’s Economy
The debate, held on the 2nd of April, was organized by ICEF in cooperation with the FWE&IA and had as its topic “The impact of sanctions on the Russian economy”. The debaters were asked to split into two mixed teams, each of which was then offered a stance to defend.
In the opening part, each team briefly presented their stance. The team led by ICEF student Daria Tochilina titled theirs as “Sanctions have had rather a positive effect on the Russian economy”, highlighting the example of the agricultural sector, which has shown significant growth since the onset of the sanctions in 2014. They also pointed to Russia’s financial sector having retained its sustainability and even demonstrating positive dynamics and sufficient degree of independence from the international payment system. The sanctions proved to be a good time for Russia to start its own payment system.
The team further argued that the firms that used to borrow on international markets and export their profits abroad are now dealing solely on the domestic market. Together with the imposed restrictions, this has led to a reduction in capital outflow, resulting in Russia now enjoying a higher savings rate — a major factor of growth. Another example is the petroleum industry: Russia’s diversification in the choice of trade partners has geared it to higher revenues while also strengthening the international relations.
The other team, led by Gleb Lopatin of the FWE&IA, defended the stance “Sanctions have had rather a negative effect on the Russian economy”, using as main argument the rising costs in re-directing commodity and finance flows. They also pointed to the SWIFT ban against many Russian banks, which made payment clearance problematic. Other downsides noted, which may affect Russia in the long run, include the limited access to innovation-driven products and the outflow of human capital.
In the second, less heated part of the debate, the teams took turns asking each other questions. When asked to comment the creation in Russia of the financial messaging system SPFS, an equivalent of SWIFT, and introduction of alternative forms of payment, the Downs Team argued these would still be challenging to use as pre-emptively banned abroad. The team also highlighted the example of the payments that got stuck in “payment processing” in India in 2023, indicating a lack of robustness in the financial system which was new to many of the challenges that arose back then. The Ups Team, when asked what good can there be in foreign companies leaving Russia, gave figures of accelerated growth within the Russian SMEs as their products filled emerging niches. They also cited the statistics evidencing the increase in wages and real disposable income of the Russian population over 2023-2024.
The final part of the debate was the most heated. Allowed to intervene and interrupt their opponents, the teams went back to good and bad effects sustained by individual industries and economic agents. The upsides such as Lukoil’s higher dividends and Russia’s growing IT and electronics market faced a counterargument that there are hindrances to payments and access to services. As to the foreign businesses’ exit from Russia, it opened up new opportunities for the Russian businesses but has affected negatively the workload of some local manufacturers (one example being lost orders from IKEA).
An important role in the debate was played by its moderator Andrey Dementiev, Director for Teaching Excellence Development. An experienced regulator of the level of discourse, Prof. Dementiev knew when to pose hard hitting questions. He started by asking the teams to define “sanctions”, insisting, in the course of the debate, that the Ups think carefully before defining sanctions as “ineffective” or “useful” and the Downs make it clear when they mean long-term duration and short-term effects.
Based on the results of the debate, the jury (consisting of Sergey Rashchukov, Deputy Director at the RF Ministry of Economic Development Department for Eurasian Integration; Vyacheslav Filippov, Monitoring Director at the RF Ministry of Finance Department for External Restrictions Control; Oleg Zamkov, ICEF Deputy Director; Alexandra Morozkina, FWE&IA Deputy Dean; and Natalia Kogutovskaya, Deputy Head of ICEF Research Methodology Unit) selected the winner — the Upsides Team. They managed to display a greater flexibility in adjusting to the course of the debate. What the jury looked at in the first place was how persuasive the teams sounded in presenting their arguments, not the positive or negative effects they cited. It was made clear during the debate that none of the effects could be identified as prevalent. While negative effects tend to be more pronounced over the short or long term, the positive ones do so in the mid-term perspective. That said, different industries and different economic agents sustain the impact of sanctions in different ways and to varying degrees.
Overall, the debate was highly energetic. Its participants seemed deeply engaged, their input and wide awareness highly appreciated by the jury. Cheers to your success, teams! We wish you further achievements.
