Vladimir Putin is “peddling lies” about the strength of the Russian economy that must be refuted, finance ministers from eight EU member states have said, with growing signs of deterioration in the face of biting sanctions.
They say there are signs that the economy is being “sovietised” with many hallmarks of the former USSR including expropriation of private assets to fund public spending, a “total disregard to the social and economic wellbeing of the population” and reorientation of the economy towards its war in Ukraine.
“If Putin stays on this path, the long-term damage to the Russian economy will be significant,” they wrote in a joint article in the Guardian.
It was imperative, they said, that western democracies turned the screw amid fears that if there were a ceasefire in Ukraine tomorrow, Russia would spend the next few years regrouping its weakening economy for a second attack on Europe.
“By re-Sovietising the Russian economy, Putin has put it on a path towards its own decline. Now it is time for the west to up the pressure even more. Supporting Ukraine and undermining Russia’s capacity to wage war at every turn should be the top priority of every democratic country,” they said.
“President Vladimir Putin and his authoritarian regime are peddling the false narrative that the Russian economy is strong, and that its war machine is unharmed by western sanctions. This is a lie that must be refuted.
“In fact, there are many signs that the Russian war economy is deteriorating. The sanctions and other measures to weaken the Russian economy are effective, but even more can be done. We must continue to increase pressure against Putin’s regime and support Ukraine.”
The article was written by the finance ministers of Sweden, Denmark, Estonia, Finland, Lithuania, Latvia, Netherlands and Poland, whose prime minister, Donald Tusk, has previously said Europe is in a “pre-war era” similar to 1938.
The ministers urged counterparts across Europe and the US to ensure greater vigilance on circumvention of sanctions. But they are also calling on them to get behind a “swift … operationalisation” of a G7 June agreement to raise up to €50bn (£42bn) in loans to Ukraine using windfall profits from Russia’s immobilised assets.
On Tuesday, the Kremlin said it would take legal action over what it called the “theft” of its cash reserves, which were frozen after the invasion of Ukraine in February 2022.
The ministers also want sanctions on energy, finance and technology products getting into Russia to be strengthened to close down circumvention routes. Both “border and source countries” of technology including many in the EU and the US needed to “continue working on closing the loopholes”.
This week, the UK pledged to help crack down on “phantom fleets” of tankers that are sneaking oil out of Russia and selling it for more than the $60 energy sanctions price cap and further fuelling Russia’s war machine.
