Legal provision of national economic security in the face of unprecedented sanctions pressure

Vasileva Yana Valeryevna ORCID: 0000-0001-9434-7563 PhD in Law Associate Professor of the Department of administrative and financial law, North-West Institute (branch) of the Kutafin Moscow State Law University (MSAL) 160000, Russia, Vologda region, Vologda, Maria Ulyanova str., 18, office 203 yana.vasileva@list.ru Other publications by this author

For almost two years, the Russian economy has been adapting to new realities in the form of unprecedented sanctions and a trade blockade – it has been re-building logistics chains, reorienting the export and import market, and strengthening partnerships with friendly countries. How did the Russian economy manage to overcome all the difficulties of 2022-2023, despite the huge packages of Western sanctions?

The year 2022 was extremely difficult for Russia. Western countries imposed harsh economic sanctions, blocked the foreign exchange reserves of the Central Bank of the Russian Federation, disconnected large banking institutions from the SWIFT system, and forced many companies to withdraw from the Russian market. Due to sanctions, the departure of foreign firms ^{[1, pp. 144-156]} and the tense geopolitical situation, the ruble collapsed, which in turn caused a decline in industry, a decrease in GDP, an increase in inflation and prices, and a decrease in income for Russians. The year 2023 was also marked by a large-scale expansion of Western restrictions against Russia. Currently, almost the entire range of economic restrictions is used: financial, trade, transport, and visa bans. But still, the Russian economy has survived. Russian experts and analysts did not believe that everything would work out, and foreign leaders pointed out that the country would have to rebuild its strength for decades. 

Among modern researchers dealing with issues of national economic security as an institution of protection of the country's economy from external and internal factors adversely affecting economic functioning and undermining the standard of living of the population, such scientists as T. V. Letuta, E. I. Maksimenko ^{[2, pp. 7-10]}; S. E. Proletenkova, B. A. Bykov, ^{[3, pp. 36-39]}; I. I. Zvezda, I. V. Ustinova ^{[4, pp. 22-25]}; E. G. Bondar ^{[5, pp. 28-32]} and others. The scientific research of the following authors is devoted to the issues of undermining Russia's economic security as a result of the sanctions imposed in order to destabilize the political, financial and military spheres of the economy: I. A. Filippova, A. E. Kozhemyako ^{[6, pp. 355-356]}; N. M. Artemov, A. A. Sitnik ^{[7, pp. 48-62]}; A. G. Aksenov [8 86-100] and others, however, the works of these authors touch only on certain issues of the topic under study, scientific works are not complex.

The norms of law that have consolidated anti-sanctions measures are established by normative acts of different legal force: federal laws, decrees of the President of the Russian Federation, resolutions of the Government of the Russian Federation, normative acts of the Bank of Russia.

Despite the full range of problems that the Russian economy faced in 2022-2023, the decline in GDP was not as devastating as expected in the first half of 2022. This became possible due to high energy prices, government support measures, as well as many years of experience in the regime of imposed sanctions ^{[9, pp. 176-180]}.

So, in March 2022, by Decree of the Government of the Russian Federation No. 288 dated 03/04/2022, the Government Commission for Improving the Sustainability of the Russian Economy was transformed into a subcommittee on improving the sustainability of the financial sector and certain sectors of the economy of the Government Commission for Improving the Sustainability of the Russian Economy under sanctions. Within the framework of the Decree of the Government of the Russian Federation dated June 2, 2022 No. 1012, the parameters of regional support for industrial modernization and development have been expanded since 2023. The amount of reimbursement of enterprises for the purchase of new equipment increased from 20 to 50%, and the amount of subsidies doubled – from 10 million to 20 million rubles per applicant. The amount of compensation for expenses has also increased from 50 to 80% for the payment of services of resource-supplying organizations for connection to communal infrastructure and for the payment of the first installment upon conclusion of an equipment leasing agreement. This made it possible to increase the pace of renewal of production capacities in the regions, to stimulate the investment activity of enterprises.

If earlier Russia was focused more on Western markets, now resources are redirected to the East. This is a complex process that represents a complete transformation with impressive costs, a change of partners, a reorientation of the economy from the traditional raw materials sector, and an expansion of the participation of Russian business in cross-border production chains ^{[10, pp. 157-165]}.

Among the complex of developed measures, means and methods of countering sanctions pressure, the most important role and importance are assigned to such a "tool" as optimization of legal regulation in the field of entrepreneurial activity ^{[11, pp. 29-34]}. Thus, by Decree of the Government of the Russian Federation No. 1473-r dated June 7, 2022, it was established that due to additional oil and gas revenues received in 2022, the size of the Reserve Fund of the Government of the Russian Federation was increased by 551.4 billion rubles. The funds are used, among other things, for the implementation of measures aimed at ensuring the stability of economic development in conditions of external constraints. Based on the decree of the Government of the Russian Federation dated June 9, 2022 No. 1491-r, an additional 9 billion rubles were allocated for preferential lending to small and medium-sized businesses. This made it possible to provide financial support to the business in the total amount of 100.7 billion rubles until the end of 2022.

The changes affected external relations, companies' access to technology, employment of citizens, and the state budget. Thus, by federal law No. 154-FZ of June 11, 2022, from June 15, 2022, Russian retail chains have the opportunity to buy or lease space of foreign trading companies that have left Russia, even if the share of the Russian network in the market of a constituent entity of the Russian Federation exceeds the 25% limit established by law. Decree of the Government of the Russian Federation No. 1031 of June 6, 2022 defines the requirements for banks that have the right to open special ruble accounts of the "O" type for settlements with copyright holders from unfriendly states, as well as copyright holders who have ceased their activities in the Russian Federation or support sanctions. The rules for the exchange of information on such accounts between authorized banks have also been established. Permission to transfer funds to the account of the rightholder held in a special account of type "O" is provided by the Government Commission for the Control of Foreign Investments in the Russian Federation on the basis of the recommendation of authorized federal executive authorities in accordance with their competence.

Russia is a major supplier of grain, gas, oil, metals and mineral fertilizers. All these goods have seriously increased in price in 2022, respectively, even with a reduction in supply volumes, the country has maintained the same level of income. The anti–crisis measures taken by public authorities have also shown maximum effectiveness - preferential loans, investments, various measures of state support for industry, the development of domestic tourism, and the legalization of parallel imports. Thus, by Government Decree No. 469 dated 03/25/2022, loans for small and medium-sized enterprises producing high-tech and innovative products became more affordable due to a preferential interest rate. The interest rate on concessional loans was 3%. The loans are aimed at investment purposes and replenishment of working capital for up to three years. The maximum loan amount is 500 million rubles. The federal budget provides almost 4 billion rubles for subsidizing such preferential loans in 2022-2024. The new financial instrument was launched as part of the federal project "Rise from startup to IPO".

Thus, the unpleasant events of 2022-2023 became one of the many economic crises that the country has experienced more than once. In addition, Russia has overcome them in many ways better than in previous years, despite Western sanctions. Currently, our country has become much stronger, less dependent on imports of goods, and has begun to produce more products on its own. Therefore, the overall situation in the economy is stable, and active growth is observed in a number of industries.

By the end of 2022, several sectors of the economy showed growth. These are mainly areas focused on domestic demand. The GDP of the agricultural sector continued to grow due to a record harvest in 2022 and a reorientation towards domestic consumption and new markets.

The construction industry has significantly revived in 2022-2023. Thus, according to Rosstat ^[12], by the end of 2022, 102.7 million m2 of housing were commissioned, which is 11% higher than the same indicator in 2021 and was an absolute record in the country's recent history. During a joint meeting of the Commission of the State Council of the Russian Federation on Construction, Housing and Communal Services, urban Environment and the State Duma Committee on Construction and Housing and Communal Services, Deputy Prime Minister Marat Khusnullin pointed to a new record in terms of housing commissioning in Russia and in 2023 - more than 103 million m2. Accordingly, anti-crisis measures relate to development and the construction industry. Thus, the decree of the Government of the Russian Federation No. 1062 dated June 10, 2022 established the possibility of issuing one construction permit for several land plots owned by the state or municipal and leased to one person. Also, by decision of the subject of the Russian Federation, the procedure for issuing one urban development plan of a land plot to adjacent land plots has been established. Until January 1, 2025, the right of a number of self-regulatory organizations to issue loans to their members from the funds of the compensation fund to ensure contractual obligations has been extended. The rule applies to organizations in the field of engineering surveys, architectural and construction design, construction, reconstruction and overhaul.

Wholesale and retail trade, as well as household activities, faced significant difficulties. This was due to a drop in demand from the population amid economic uncertainty. The low results of the manufacturing sector were affected by Western sanctions and disrupted logistics chains. But thanks to the rapid reaction of the manufacturing sector and the search for new suppliers of materials and components, as well as new sales markets, the decline was not as significant as expected at the beginning of 2022.

In December 2023, Federal Law No. 625-FZ "On Amendments to Article 98 of the Federal Law "On State Control (Supervision) and Municipal Control in the Russian Federation" and Certain Legislative Acts of the Russian Federation" was adopted. The specified act extended the effect of special regulation, including in the field of control and supervision, urban planning and land relations, public procurement, medical care, corporate relations, securities circulation, insurance, pension provision, social protection. In particular, until 2025, legislation on compulsory insurance of civil liability of the owner of a dangerous object for causing harm as a result of an accident at such an object, the carrier for causing harm to the life, health, and property of passengers will not be applied in the new regions. Russian insurers are prohibited from entering into transactions with individual insurance companies, reinsurers and insurance brokers who are counterparties from countries that commit unfriendly actions. The exception is transactions for the export of food and mineral fertilizers. In exceptional cases, such transactions may be carried out on the basis of a special permission from the Bank of Russia.

2023 turned out to be a difficult year for the domestic economy, but after the crisis of 2022, it turned out to be a year of recovery, and in many economic indicators significantly exceeded forecasts. According to the assessment of the Ministry of Economic Development of the Russian Federation ^[13], following the results of 11 months of 2023, Russia maintained the growth of industrial production, manufacturing, construction, wholesale and retail trade. The further development of the situation in the Russian economy depends on a number of internal and external conditions. So, in September 2023, the Central Bank of the Russian Federation presented a forecast for the development of the Russian economy. The development strategy includes three scenario plans: basic, alternative and risky.

In the basic scenario, the global economy continues to develop within the framework of established trends and the absence of new shocks. The growth of the global economy will slow down, which will lead to restraining price growth in most commodity markets. At the same time, the sanctions imposed on the Russian economy will remain on the entire forecast horizon. Russian export goods on the world market will continue to be sold at a discount. In 2024-2025, the transformation of the Russian economy will continue. At the same time, the growth rate may be more moderate than in 2023, given the completion of the recovery phase. In 2026, the Russian economy will return to a balanced growth trajectory of 1.5 – 2.5%.

The alternative scenario of "Increased fragmentation" implies a further intensification of the process of deglobalization (fragmentation) of the division of countries into blocks. This process began back in 2018-2019, and intensified in 2022 due to rising geopolitical tensions. A possible further increase in fragmentation will be expressed in the desire of countries to localize production in their territories, build partnerships on geographical proximity and friendliness on the geopolitical agenda. The sanctions pressure on the Russian economy may increase. The division into regional blocks will negatively affect world trade, restrain the growth of the global economy and lead to a decrease in demand for Russian exports. As a result, the Russian economy may shrink in 2024. Growth may resume in 2025, but its pace will be lower than in the baseline scenario.

A "risky" scenario. Deglobalization in this scenario will increase the negative effects of the financial crisis. Further strengthening of sanctions pressure is possible for the Russian economy. Against the background of a recession in the largest economies, global demand will fall. Oil prices will decrease significantly. The reduction in output of the Russian economy will last two years. The economy will move to recovery growth of 2.0–3.0% only in 2026, and its return to balanced growth will occur outside the forecast period.

Thus, the economy of the Russian Federation in 2022-2023 faced a number of challenges and prospects. Successfully overcoming these challenges required wise political and economic decisions, as well as national and international efforts. The country strives for a diverse and sustainable development that contributes to the prosperity of all its citizens and strengthens its position in the global economy.

The regulatory framework defining the targets, ways to achieve the required level and the state of economic security as a whole is formed. It should be agreed with T. E. Rozhdestvenskaya and A. G. Guznov ^{[14, pp. 90-102]} that sanctions pressure from unfriendly countries, as well as the negative consequences of the imposition of sanctions, are increasing, respectively, the stability and development of national economic security will depend on constant monitoring of the situation, and the promptness of measures taken to reduce this pressure.