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Putin's fiscal stronghold protects Russia from recession, global unrest and the West

The latest arrival in France comes as U.S. lawmakers return to work this week and at least two sanctions against Russia are making their way through Congress.

But the question of policies and policies is whether further unilateral sanctions are an effective response to the Russian President. Vladimir Putin's venture, amid concerns that they could also damage relations with American trading partners and allies. Ukraine.

Since then, Moscow's policies have built a stronghold and financial evidence that values ​​stability and serves as a bulwark of Russian sovereignty, as well as helping the Kremlin's economic sanctions more than many analysts expect.

With the help of experienced technocrats like Elvira Nabiullina, the head of Russia's central bank, Putin built a foundation designed to insult the Kremlin from external pressures, such as sanctions, and strengthen the Russian economy's ability to withstand future economic storms ̵

1; if oil prices fall or a world recession.

"Putin's definitive response to sanctions is: We invest less, we invest less, we consume less but we build our reserves so I can continue my aggressive policy," Anders Åslund said, a senior fellow on the Atlantic Council who specializes in Russian economic policy.

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Despite the friendly rhetoric between US President Donald Trump and Putin, tensions continue to rise as a new warming arm race. Earlier this month, Putin said Russia would make missiles previously banned under a Cold War-era agreement with the US, and by late August the Russian president had promised a "symmetrical" response "after the US conducted a previous ban on missile tests.

But Russian military establishment, and foreign adventures in Syria, Ukraine and Venezuela, are not the only signs that the Kremlin has been digging for long stretches.

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Throughout the course of life of Putin, Russia has experienced a series of economic crises, beginning with the fall of the Soviet Union in the early 1990s, after the financial collapse of 1998, the world recession in 2008 and, most recently, the recession in 2014.

"When Putin looks at the challenges of the economy, I think he looks less at growth and more on survival through crises," said Christopher Miller, a assistant professor at Tufts University whose research focuses on the Russian economy.

Since 2014, Russia has increased its foreign currency reserves to $ 500 billion (the fourth highest in the world), repaid its foreign debt, "floating" (or in other words valued) the Russian ruble to boost competition by Russian exports, "de-bonarized" holders to insulate Russia from the US financial system, and balance the state's costs and revenues.

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Russia also has a low "break-even" oil price, set at around $ 40-45 per barrel, which is the price needed Russia's state to balance its budget every year. Oil is on the country's largest export and war chest bedrock.

"People are exaggerating, especially in Washington, the impact of gas on oil," said Edward Chow, a senior associate at the Center for Strategic and International Studies. "For every dollar that Russia earns from oil and gas, it's 80 cents oil and it's only 20 cents."

But the Kremlin's policies came at a cost, hitting the pockets of everyday Russians. GDP has remained sluggish since 2014 – hovering between 1 and 2% annual growth – since real Russian wages have stopped for the past five years and consumer debt has almost doubled over the same period. The Kremlin plans to spend trillions of rubles on "national projects" to stimulate the economy, but they are unlikely to significantly boost economic growth.

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"All this is wonderful, but very little has ever happened," said Angela Stent, a professor at Georgetown University and author of "Putin & # 39; s World: Russia Against the West and with the Rest. "

And if growth rates remain low after an economic recession reduce Russia's ability on the road to compete on the global stage with faster growing economies. Miller described its possible impact in this way: "You are now gaining foreign policy, but you are losing its impact later on." . But the Putin regime, while perhaps worried about its long-term impact, does not consider it an immediate crisis.

"Putin cares about macroeconomic stability because he focuses on sovereignty and wants to control the population in a different way," Åslund said. "He doesn't care about growth rates."

As Russia's President looks to the successors to SWIFT – the global payment system in the West – and closer relations with China, it is clear that being separate from the global world few clubs is important.

Policies and politicians in Europe and the US will continue to debate the best approach to addressing a revolutionary Russia, but they will ignore the Putin-led policies and the Kremlin policies that have been developed.

And if the US imposes additional sanctions on itself, without the consent of its allies and trading partners, it could damage the transatlantic relations rocked by Trump's unpredictable presidency.

"I just don't see where they have achieved so many results, and what they have done is – to the extent that they are overly territorially applied – further differentiating some of our allies," said Stent.

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