Vladimir Putin Russia’s president has chosen the way of conflict with the West, when he acquired the Crimea area and supported rebel groups in the Eastern Ukrainian Donbass region. The Russian economy since 2011 has been hard-pressed for adequate growth figures. In 2011 Russia had growth rates of 4.3 % of GDP in the successive years that growth has slowed down to 1.3 % in 2013. The downing of the Malaysian airlines jet finally gave the EU and US no other options then to sanction Putin’s Russia. Most threatening for the Russian economy is the sanctions against state controlled banks. These sanctions make it harder for lenders to raise equity and debt in Western capital markets. In addition to that international capital into Russia has fallen from 25 billion to 7.9 billion if compared with last year’s first half. The question which arises is if Putin really wants to go further against the interests of his country and escalate the Ukrainian conflict even further. In alienating the West Putin is reliant on countries like China for financing and more investment, which would only come in exchange for preferential access to Russia’s vast pool of natural resources. Clearly then, Russia is going to have a difficult time the next few years with low economic growth.

Source:

http://www.economist.com/news/europe/21610322-cost-vladimir-putins-gamble-ukraine-going-up-he-shows-no-sign-changing?zid=295&ah=0bca374e65f2354d553956ea65f756e0