The Russia-Ukraine war continues and more and more sanctions are imposed on Russia. This is in order to influence the country’s economy and Putin’s chair. On this topic, we discussed the program “Where’s the Money” on Radio 103, with Prof. Yaakov Frenkel, former Governor of the Bank of Israel, winner of the Israel Prize for Economics and Chairman of the Economic Expert Cabinet of Finance Minister Avigdor Lieberman, who presented his doctrine and opinion In the country.
“These sanctions are unprecedented in that the pace at which they were imposed was unprecedented,” Prof. Frenkel declared at the beginning of the conversation. “European countries are proud that they have managed to unite significantly. “
According to him, it must not be forgotten that Europe is very dependent on gas coming from Russia. “50 percent of Germany’s gas comes from there, as well as in Italy, Poland and the EU in general very much depends. Sanctions are a double-edged sword, on the one hand it directly affects Russia and on the other hand it negatively affects the economies of those who impose the sanctions. That’s why the balance is very sensitive, “he said.
On the impact of sanctions on Russia, he claimed: “The impact there is really dramatic and I would not be impressed by all kinds of propaganda that comes from Russia and says it is not terrible. The ruble has collapsed, the Russian stock exchanges are closed and no international transaction can be made. Of the assets of the Russian central bank. “
“After the invasion of Crimea, Putin built up a very large pool of international reserves, close to $ 700 billion, which he thought would allow him to go through a rainy day. What he did not take into account was that sanctions would also be imposed on central bank reserves. “I do not believe that Putin took into account that the isolation would be so significant,” added Prof. Frenkel.
Later in the conversation, Davidov and Ayalon wondered whether we, in Israel, should fear the immediate damage and when the harm will be felt. Prof. Frenkel replied that “we are already seeing an increase in production costs. Let us not forget that they are major manufacturers in the field of metals, things that are very important raw materials in various industries. This will also affect the supply chain With the increase in fuel prices in the world, the increases in transportation will also increase. “
In response to his remarks, Prof. Frenkel was asked whether he recommends a tax reduction. “We need to look at this issue broadly,” he explained, detailing: “One thing is clear, the costs to the Israeli economy, especially of the things we import, will rise – there is no escape. There is no way any government can or should completely neutralize phenomena that affect us as they affect “For the whole world. We have to come and ask if one thing is made easier, then what is strict?” The whole question is who will pay for the costs that the Israeli economy will have to bear, and of course this is the Israeli economy. “
“Everything that is done is rising, and if it is rising we need to find a way to finance it. The Israeli economy relative to European countries is in a much better or worse situation today, we are less dependent on what is happening. However, there is no doubt that wheat prices are rising. “We use wheat. As I said – we are much less dependent,” he said.