Putin Says EU Sanctions Hurting Russia's Gas Exports

Russian President Vladimir Putin has said in an interview that EU sanctions against his country are negatively affecting gas and oil export revenues.

In an interview published in German newspaper Bild on Monday, President Putin decried the sanctions, which he described as a "theatre of the absurd." 

"Concerning our possibilities on the international financial markets, the sanctions are severely harming Russia," he said. "But the biggest harm is currently caused by the decline of the prices for energy. We suffer dangerous revenue losses in our export of oil and gas, which we can partly compensate for elsewhere."

In an extended transcript of the interview published on the Kremlin website, President Putin said that the deficit from oil and gas, which he said had risen to "dangerous levels", was having too much of an impact on the country's overall deficit.

"The total deficit is quite small," he said. "But when you subtract the non-oil and gas deficit, then you see that the oil and gas deficit is too large. In order to reduce it, such countries as Norway, for example, put a significant proportion of non-oil and gas revenues into the reserve. It is very difficult, I repeat, to resist spending oil and gas revenues to cover current expenses. It is the reduction of these expenses that improves the economy." 

The president did see one positive effect resulting from the sanctions and the loss of energy revenue--the growth of domestic industry.

"The whole thing also has a positive side: if you earn so many petrodollars–as we once did–that you can buy anything abroad, this slows down developments in your own country."

The country is now slowly stabilising its economy, Putin said, with a strong focus on high-value exports.

"Last year, the gross domestic product had dropped by 3.8%," he said. "Inflation is approximately 12.7%. The trade balance, however, is still positive. For the first time in many years, we are exporting significantly more goods with a high added value, and we have more than $300 billion in gold reserves."

The European Union imposed economic sanctions on Russia following the illegal annexation of the Ukrainian region of Crimea in July 2014. Last month, the European Union extended the sanctions by a further six months, arguing that Russia has not fully implemented the Minsk peace agreement it has signed in relation to Crimea.