Dinu Patriciu Eurasia Center Senior Fellow Anders Åslund published a report for the Bertelsmann Foundation on the current state of the Russian economy and US and European reaction to the crisis:

In December 2014, the Russian economy entered a crisis state that may be described as a perfect storm.1 This conundrum has at least three major causes: state and crony capitalism, the sharp fall in the price of oil and Western financial sanctions. Even if the real panic ended in January 2015, all economic data look poor. The natural outcome is a sharp contraction in the Russian economy this year.

The Russian government is reacting to the crisis, but not very well. Officials will not abandon the current policyframework, even though it offers few effective options. The government has adopted an anti-crisis program,but its measures are of limited consequence and crisis management is not very apt. Therefore, governmentpolicies are not likely to resolve the crisis. There is a chance to steer Russia away from the path towardeconomic disaster, but the kremlin is likely to balk at the necessary measures.

After exploring these problems, this paper considers what the US and European governments can and shoulddo in this situation. How can they act, and what impact are their alternative actions likely to have? The overallconclusion is that the current financial sanctions have great effect, and that it is difficult to see any majoravenues of new cooperation between Russia and the West until its military aggression has ceased.

Read the full report here.

Related Experts: Anders Åslund