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The economic pressure of sanctions on Russia is very clear, according to EY's Joe Watt, who told RT that the Russian government is "pretty agile" in responding through many of its initiatives.

"It's the localization agenda and import substitution, and the government is also putting a lot of money into different sections. And you can see now that the number of domestic players is starting to really improve the quality of their production up to world standards," said Watt, the chairman of the Management Committee and Managing Partner for the CIS at EY.

According to him, import substitution is providing a lot of opportunity for local employment in Russia. The sanctions had a certain impact, but "I think maybe they were of some benefit to local industry."

Deoffshorization and the effects of sanctions are bringing a lot of money back to Russia, and there have been a lot of investments from Asia in the Far East of Russia as well, he said.


Talking about risks for foreign investors, Watt said there is a number of these, but the major risk is that the "super returns" that used to be generated in Russia are now a bit more subdued. He stressed though that in many sectors, returns are "still amongst the best in Europe."

Watt said the Russian government has spent a lot of time, money and effort to improve the country's position in the World Bank's 'Ease of Doing Business' index. "There have been a lot of changes made and a lot of are still to be made."


When asked about losses from the sanctions, he said that a number of countries and companies are being negatively impacted. He cited the Russian-German Foreign Trade Chamber which estimated the losses of German companies from the US sanctions on Russia at around €1.5 billion.

"So, a lot of international players that are here in Russia are also hurt by virtue of the sanctions and in some cases also by the countersanctions," Watt said, adding that "it's not a very comfortable existence for many companies."