Sanctions to cost Russia $106 bn

Russian prime minister Dmitry Medvedev giving a speech on Tuesday

The cost of the West-imposed sanctions to Russia has been estimated at $106 billion by Russian prime minister Dmitry Medvedev.

In a speech on Tuesday, he said the decision to annex Crimea had triggered a crisis that turned out to be "more difficult" than even the most pessimistic expectations.

Western sanctions imposed over Crimea and the support extended by Moscow to separatist rebels in eastern Ukraine had cost Russia $26.7 billion in 2014. He added, this year the costs would vault to $80 billion.

"There should be no illusions. Today we are faced not only with a short-term crisis," Medvedev said.

The latest trade statistics are a stark reminder of how grim the situation had become, say western commentators.

They add, the value of Russia's foreign trade fell 30 per cent in the first two months of this year.

Russia's trade with its biggest partner, the EU was down over a third.

Moscow struck back against European and US sanctions by banning most western food imports.

Overall, food imports were down 40 per cent in January and February, though reports say inflation rose nearly 17 per cent.

According to commentators, Medvedev's comments appear to run counter to comments by  president Vladimir Putin, who said only last week that the worst of the economic crisis facing the country had passed.

According to Medvedev's estimate, Russian GDP contracted by 2 per cent in the first quarter of the year.

If Medvedev's figures are right, it would be the first quarter of negative growth in Russia since 2009.

However, the Russian PM said the crises engulfing Russia could not have been avoided. He said, "Unprecedented political and economic pressure is payback for our position."

The former president asked, "Could Russia have avoided this economic scenario? The answer is no it could not."

The Russian rouble collapsed last year and inflation then moved into double-digits with food pricing rocketing and real wages falling by 9.3 per cent.

Official statistics last week revealed that Russia's foreign trade was down 26 per cent.

The Russian economy took a hit from the imposition of western sanctions in the wake of the crisis in Ukraine including the shooting down of flight MH17 amid a collapse of world oil prices.

Medvedev said, "Experts say that the overall damage to Russia was €25bn, that is 1.5% of the GDP, and in 2015 it could be several times that."

But the decision to annex Crimea was "the only one possible, and we all ... supported it, knowing the possible consequences," he added.