Question: What impact have the sanctions had on the state of relations between Russia and the West?
Maria Zakharova: Unfortunately, the growing use of politically motivated, unilateral restrictive measures by a number of Western countries, primarily the United States, has become a reality of our time. We increasingly view the sanctions against Russia as a “gesture of despair” and a manifestation of the local elites’ inability to accept the new reality, abandon the stereotypes of their bloc-based thinking, and recognise Russia’s right to independently determine its path of development and build relationships with its partners. Apparently, they find it difficult to handle the obvious successes of the Russian economy, which is growing more competitive, internationally, and the greater presence of high-quality Russian goods and services in world markets.
The vicious practice of imposing unilateral political and economic restrictions, especially the extraterritorial application of such measures, is an infringement on the sovereignty of states and interference in their internal affairs aimed at keeping, at any cost, their dominant position in the global economy and international politics, which they are gradually losing. Diplomacy is being replaced by sanctions; sanctions help mask trade protectionism and attempts to divert attention from internal problems as well.
Indicatively enough, the West has ignored the calls of the UN Secretary-General and the UN High Commissioner for Human Rights to suspend unilateral, illegitimate sanctions on the supply of medicines, food and equipment necessary to fight the coronavirus during the pandemic. We also have not seen any interest from our partners in Russian President Vladimir Putin’s initiative proposed during the G20 summit to create green corridors in international trade, free from sanctions or other artificial barriers.
The restrictions introduced against our country undoubtedly have had a negative impact on our relations with the collective West. They are undermining mutual trust, and darkening the prospects for normalising relations. Although we do not at all support pushing the sanctions spiral upward, we nevertheless accept the challenge and respond promptly and in a targeted manner. Given the obvious fact that anti-Russia sanctions are a double-edged weapon that inflicts no less damage on the one wielding it, we do hope that common sense will prevail, and our partners will return to building ties with us, relying on the principles of justice and equality and relinquishing the “right of the strongest” and the invasion of sovereign affairs of other states. We have repeatedly made it clear that we did not start this sanctions war, but we are ready, at any point, to do our part in order to end this pointless confrontation, in which there will not be and cannot be any winners.
Question: How strong is the impact of the Western actions on the Russian economy?
Maria Zakharova: The escalation of reciprocal sanctions pressure is having an all-around negative influence both on the Russian and Western economies. Assessments of the reciprocal damage vary due to their objective nature but are still running into the hundreds of billions of dollars. Under the circumstances, we continue responding to restrictions in a balanced, appropriate manner, being guided by the interests of national economic development and domestic economic operators. In these actions, we proceed from the principle of “doing no harm to ourselves.” In part, we retain our special reciprocal economic measures, that is, restrictions on the import of certain products from the countries that have introduced anti-Russia sanctions. We are consolidating our national financial system and searching for new international partners, including regional ones. We are also taking other measures aimed to diversify our foreign economic ties. We are working on economic and legal mechanisms to reduce the negative impact of restrictions on the development of bilateral trade and investment cooperation. We have drafted legislation providing for measures to counter new potential unilateral steps by the United States and other countries. We have largely managed to adapt to the external challenges and turn the situation in our favour, as well as launch programmes for import substitution and the development of advanced, competitive domestic industries.
Question: What steps is Russia taking to reduce its dependence on Western financial systems?
Maria Zakharova: The discussion on the need to reduce dependence on the dollar as the world’s leading currency has been going on for at least a decade. The previous upheavals in the US financial market and the subsequent global financial and economic crisis exacerbated the vulnerability of the global economy to the dollar domination and called into doubt the sustainability of the world currency system based on the supremacy of one national monetary unit. Washington’s current sanctions “voluntarism” is making even more dubious the reliability of dollar transactions. In these conditions, the task of consolidating the independence and sustainability of the financial system to external threats is increasingly becoming a priority for any state.
Question: Is Russia always destined to be dependent on the US dollar?
Maria Zakharova: In order to reduce excessive dependence on foreign means of payment, states and financial market participants have to adapt to new realities, including by finding and developing alternative settlement mechanisms. From this perspective, the gradual departure from the US-centric configuration of the world monetary system is an objective response to a combination of factors. Consistent steps in this direction in coordination with our trading partners would help strengthen the national currencies, as well as minimise the potential economic damage from new restrictive measures Western countries might introduce. This work will undoubtedly require significant effort to reformat the established models of cooperation, to create mechanisms for the support and functioning of new systems of mutual settlements and pricing in the market. Russia has recently signed agreements to expand the use of national currencies in mutual settlements with China and Turkey. There are similar agreements within BRICS. Positive trends are observed in the EAEU, with a growing share of national currencies in mutual payments, as well as in trade and economic cooperation between Russia and the countries of the Asia-Pacific region and Latin America.
Russia’s possible disconnection from SWIFT is so far considered a hypothetical scenario. Nevertheless, interdepartmental work is underway to minimise the risks and economic damage to our country from restricted access to the usual international financial instruments and payment mechanisms. The Central Bank’s Financial Messaging System is one example of alternative instruments. Options are also being discussed for adding interface with its foreign counterparts, such as the European SEPA, the Iranian SEPAM and the Chinese CUP and CIPS.
Cooperation is growing between the Russian MIR payment system and its foreign counterparts, in particular, the Chinese UnionPay, the Japanese JCB and the international Maestro card. Such co-branded cards are accepted both in Russia and abroad. In particular, various operations with them are already possible in Armenia, Abkhazia, South Ossetia, Belarus, Kazakhstan, Kyrgyzstan, Uzbekistan and Turkey. At the same time, it is a long and laborious process. And it is too early to talk about any specific dates for putting together a comprehensive national toolkit for payment transactions or for its promotion to international markets.
At the same time, Russia is vigorously exploring the opportunities provided by modern digital technologies and the potential of their use to increase the sustainability, stability and independence of the national financial system and means of payment, with a clear understanding that digital money can become the foundation of an updated international financial system and cross-border transactions in the future.
Question: Can Russia ever truly insulate its economy from a hostile foreign policy?
Maria Zakharova: Only a small group of countries – to their own detriment – are pursuing a hostile policy towards Russia. In response, Russia will continue to use external challenges as additional incentives to increase the stability of its economy, mobilise the creativity of national business, modernise production, and diversify economic ties.
We will not shut out the outside world, which is something the initiators of the sanctions are persistently pushing us to do. On the contrary, we are always open for dialogue on all problems or concerns, and are ready for equal and mutually beneficial cooperation with all countries, but only on the basis of the principles of equality and mutual consideration of interests. This is how we actually see stable international relations.
For our part, we strongly support a broad international discussion of ways to counteract the illegitimate unilateral measures. We are confident that a systematic dialogue should help reduce the business community’s concerns regarding the uncertainty and instability in global affairs, which are provoked by the West’s one-sided and inconsistent policy. Even today, we can see that the initiators of the sanctions are starting to realise, albeit slowly, that any unilateral steps cause unacceptable damage to those taking them, and are pointless and counterproductive.