Western sanctions a strong punch but not a knockout blow, says key Putin ally

Head of defence giant Rostec tells ‘The National’ that, far from being destroyed by punitive economic measures, Russia is now planning to make itself sanction-proof.

Russia is working on a long-term plan to sanction-proof itself as the escalating punitive measures imposed by the West over the war in Ukraine destabilise global markets and inflate prices worldwide, the head of Russia’s largest state-run corporation has said.

In an exclusive interview with The National and the first to an international media outlet since the self-described special military operation in Ukraine in February, director-general of Rostec Sergei Chemezov acknowledged that the western sanctions have had an impact but vowed that Russia would emerge stronger.

“You know, I’m into boxing. So, the opponent’s punch was strong, but it didn’t knock us out. We’re still standing. For us, this is an opportunity to regroup, muster our forces, change tactics and continue the fight,” said the head of Rostec, a defence and civilian goods conglomerate with a turnover of nearly $23 billion in 2020.

“The current circumstances are a harsh reality that Russia has been forced into. But it is also an excellent chance to develop and strengthen our technological independence,” added the senior executive.

A close ally of Russian President Vladimir Putin, Mr Chemezov was one of the dozens of officials and businesspeople placed under sanctions by the West in response to Russia’s invasion of Ukraine.

Mr Chemezov says that western sanctions aren’t new to Russia but the scale of the recent measures imposed by the EU, UK and US and allies, including Japan, was tantamount to a ‘’declaration of war”.

Ever since 2014, Russia has been under some form of sanctions from the West over the annexation of Crimea from Ukraine. In response, Mr Chemezov says Russia has become focused on producing goods domestically, including crucial industries like defence and aeronautics.

“Since 2014, Rostec has carried out a deep modernisation, a serious re-equipment of our industry. And, look, we began to produce a lot of what we used to buy abroad,” the former KGB agent said.

“After the ban on the supply of composite materials for the MC-21 civil aircraft, we were able to switch to domestic substitutes quickly. The liner is equipped with a composite wing, produced entirely from domestic components,” added the head of Rostec, which is celebrating its 15th anniversary this year.

In 2007, Mr Putin signed a law to establish Rostec. It has become a conglomerate of dozens of state companies operating in various fields but mainly defence, smart cities, telemedicine, military aviation and online education.

The new sanctions “entail a revision of economic chains and the need to substitute a large number of parts and components that we used to import”, Mr Chemezov said. “This applies to the automotive industry, aircraft industry, electronics and other sectors.”

After the start of the invasion of Ukraine on February 24, the West imposed its harshest-ever sanctions on Russia with the aim of isolating it from the global and financial markets. The US and allies also provided Ukraine with military equipment.

The retaliatory sanctions mainly target Russia’s financial nerve centre — the central bank. Last month, the US added the energy sector — which is the backbone of the Russian economy, making up 45 per cent of last year’s budget — to western sanctions.