MOSCOW — Six years ago, the United States and the European Union slammed the door on Western bank loans for Russian companies, starving the country’s oil and banking industries of financing. The harsh measures were intended to punish Russia for military interventions in Ukraine and Syria and for meddling in the 2016 American election to help Donald J. Trump.
Paradoxically, however, those sanctions and the policies Russia enacted in response prepared the Kremlin for what came this month: a universal dislocation of the global economy from the coronavirus pandemic and an oil price war that led to a collapse in oil prices and the revenues that Russia relies upon to support social spending.
Far from being a basket case, Russia enters the crisis with bulging financial reserves, its big companies nearly free of debt and all but self-sufficient in agriculture. After Russia was hit with the sanctions, President Vladimir V. Putin’s government and companies adapted to isolation and were virtually forced to prepare for economic shocks like the one hammering the global economy today.
“Russia will be a bit better off than other countries because of its experience, because of sanctions and because of reserves,” said Vladimir V. Tikhomirov, chief economist for BCS Global Markets, referring to the roughly $600 billion in gold and hard currency reserves the country has amassed.
To be sure, Russia has taken a hard hit from the collapse of oil prices, with the national currency, the ruble, losing about 20 percent of its value in recent weeks. Oil and natural gas account for about 60 percent of Russia’s exports.
It is still too early to predict how outbreaks of the virus will spread and how various governments will respond. Given the state of Russia’s ramshackle and underfunded health care system, the coronavirus outbreak could be catastrophic. With the state’s tight grip on the news media, many Russians suspect that the Kremlin could be hiding the scale of the problem or the extent of preparedness, hampering an effective response.
Still, some countries, Russia among them, seem better positioned than others. For Russia, that is linked to the Western sanctions.
Take, for example, a 2014 sanction limiting loans from Western financial institutions to a maximum of three months. Russian companies responded by paying down their debt so that total government and corporate foreign debt in Russia fell to $455 billion at the start of this year from $713 billion in 2014. By contrast, Western companies have taken advantage of low interest rates to run up trillions of dollars in debt in the past decade.
“Russia over the past six years has been living with a hostile foreign environment because of sanctions,” said Mr. Tikhomirov. When the virus threat passes, he said, “it’s possible things will come back to life faster in Russia than in other countries because there won’t be the negative drag of debt.”
The Russian government on Thursday published its plan to contain the virus and maintain economic activity. It said that all pneumonia patients would now be tested and that the country was making 100,000 test kits a day.
The plan revised rules for paid sick leave so that companies must pay an advance when an employee goes on leave. It will dip into the National Welfare Fund, the main sovereign wealth fund, to pay bonuses to medical workers.
Russia has 55,000 hospital beds available to treat coronavirus patients and 40,000 ventilators, which are critical in treating the sickest patients, the statement said. By Friday, Russia had reported 199 cases of Covid-19, the disease caused by the virus.
For now, Russia is relying on quarantines of individuals and contact tracking without major lockdowns. But measures to halt the virus’s spread will most likely bring Russia’s economy to a halt, as they have elsewhere, as companies send employees home. At that point, Russia’s treasure chest of hard currency will be of little help.
The reserves will come into play during a recovery, though, as Russia will not be competing for financing from capital markets to stimulate the economy.
For years, economists criticized Russian economic policy as overly conservative, emphasizing saving over spending. It seemed to reflect a deep-seated Russian belief: No matter how bad things are today, they can always get worse. Now, that policy looks justified, particularly in view of the country’s reliance on natural resource extraction for most of its hard currency earnings.
“Russia is more ready than ever before in its history,” said Vladimir Osakovsky, the chief Russia economist at the Bank of America, referring to the economic fallout from the virus’s spread.
Russia built those reserves throughout the sanctions period by writing into its budget an artificially low estimate for the global price of oil. All tax on profits above that level went into the national piggy bank. The policy starved the economy of investment — the gross domestic product grew at 1.3 percent last year — but put Russia in a solid position entering the coronavirus crisis.
Russia’s agricultural sector is also benefiting from changes introduced after sanctions on food imports. Before European agricultural products fell victim to the sanctions war, for example, Koza Nostra, a small company making gourmet cheese, was a barely viable family enterprise. But after sanctions cut off French cheese imports, the company doubled and then tripled its output in ensuing years.
“It was the right approach,” the general director, Aleksandr Asatryan, said of the Kremlin’s move to prop up Russian agriculture in response to sanctions, useful today as insulation against trade disruptions.
Since 2014, the share of imported food on the Russian market has fallen to about 10 percent today from about 25 percent. Russia is self-sufficient for most staples other than fresh fruits and vegetables. More than guaranteeing nutrition, the shift allows the government to reserve its hard currency for a recovery rather than expend it propping up the ruble to keep imported food affordable.
“Even in a bad scenario, Russia can survive this shock better than many other economies,” said Sofya Donets, an economist at Renaissance, a Moscow investment bank, who returned to work last week after a mandatory quarantine.