Every spring, the world’s business and economic elite descend upon the beautiful city of St. Petersburg for an economic forum that is often referred to as “the Davos of Russia.”

However this year appeared to be different, following Russia’s annexation of Crimea and bellicose positioning toward neighbouring Ukraine which prompted a wide range of sanctions against individual Russian officials and businessmen. Under pressure from their respective governments, many top CEOs and bankers decided to book other plans during the week. Nevertheless, there were still quite a number of European firms who were still eager to do business as usual with Russia despite events along her borders.

This problematic situation of Russia’s politics scaring away its business opportunities could not come at a worse time, argues Chris Weafer, a founding partner of Macro-Advisory and the former chief strategist at Sberbank-CIB.

“Instead of celebrating the progress made in 2013 and setting out plans to pull the economy out of last year’s decline, which has extended into this year’s first quarter, the focus now is about damage limitation and planning remedial actions,” Weafer writes on CNN.

Even if all the political troubles ended tomorrow and if all issues with the West were to be suddenly resolved, Russia has still lost 2014 in terms of growing its economy, he writes.

“Under that best-case scenario, the economy may still grow between 0.5% and 1% especially if the price of Urals crude stays above $105 per barrel,” Weafer writes. “At that level in combination with the current ruble-dollar exchange rate, the federal budget will earn more oil tax revenue than forecast and allow the government to boost spending in social categories.”

And that is assuming that the West does not introduce broader, industry specific sanctions, which could be crippling for Russia’s economy.

There is, however, just one bright spot – the challenging circumstances created by Russia’s political troubles might just provide the impetus for more aggressive reforms and a higher standard of business governance. If Russia can’t deliver the kind of predictable legal frameworks, property rights guarantees, or accounting standards, it will be pretty difficult to attract the kind of investment needed to achieve diversification.