This is an account of comments made by Igor Shuvalov, Russia's Deputy Prime Minister in charge of the economy, last week in Sochi.

Western leaders might care to reflect on them and on what Shuvalov reports Putin telling Biden (see the two paragraphs at the end).

"Russian First Deputy Prime Minister Igor Shuvalov put forward the view that, if they last long enough, Western sanctions will be an impetus for modernization.

The very worst thing that the West could do now is to lift sanctions quickly. This would have the short-term effect of telling government officials and the heads of state enterprises that they need do nothing to change.

Russia would be caught in a more stringent liquidity crunch, as it waited for the end of sanctions to take effect, but still could not obtain credit cheaply or quickly. Shuvalov therefore concluded that, “the sooner sanctions are lifted, the worse for Russian modernization.”

He went on to list several reasons why conditions are now optimal for Russian modernization: Falling gas prices are forcing Russian producers to be more productive; sanctions are forcing Russian companies to search for new sources of international funding at a time when the emerging economies have more cash liquidity than their Western counterparts; low debt and high cash reserves means that Russian investment programs can continue without foreign borrowing – at most, he said, if further sanctions are imposed, Russia will delay full implementation of current programs for two years.

This year once again, he reminded us, the Russian government expects to have no budget deficit. Finally, Putin’s astonishingly high popularity means that he has a window of opportunity to push through unpopular economic reforms.

Shuvalov concluded by telling us of a discussion that Putin allegedly had with U.S. vice president Joe Biden several years ago. Apparently, Biden had just told Putin that Russia was simply too weak to compete for global leadership.

Putin replied that, while Russia might not be strong enough to compete for global leadership, Biden might reflect on the fact that Russia will still be strong enough to determine who that leader will be."