Speaking on LTV's Rita Panorama news show, Vilks said: “Russia's economy has been weakened. It seems in Russia there will soon be a voucher system. Just look at what is happening in Russian stores. A country with a weak economy that cannot feed itself cannot go against the whole world.”
Vilks, credited with helping to mastermind Latvia's own recovery from the world's deepest recession in 2008-9 also pointed out that sanctions would have a negative impact on Russian efforts to curb inflation as prices for in-demand goods inevitably rise.
There could even be a situation in which Russians begin driving across the border to the Baltic states to stock up on food, Vilks suggested.
However, with evidence growing that Latvia as well as Russia could be hit hard by the spate of tit-for-tat sanctions, Vilks resisted calls for VAT reductions on food products now banned by Russia, arguing that such a move could have counter-productive results by increasing cheap imports from countries such as Poland and Lithuania.
“It could have the opposite effect,” Vilks warned, though he did keep the door open to other measures such as tax holidays for companies seriously affected by sanctions.
Vilks spoke as Danske Bank released a briefing note predicting the current sanction regimes would not be long-lasting.
“We believe an escalating trade war would be unbearable for both Russia and the EU and that the EU will revoke the sanctions within one to three months, with Russia abolishing its own sanctions,” Danske said.