Since 2022, Western countries have imposed a variety of sanctions against Russia.
The effect fell short of expectations.
What resources does the West still have?
Moscow – entry restrictions, trade bans, frozen money.
The list of sanctions imposed by the West against Russia is long.
However, their effect is controversial.
Internationally they seem to be making an impression; countries like India are already cautiously distancing themselves from trade with Russia.
Russia, on the other hand, appears to be resilient.
Experts are calling for a deeper dig into the West's bag of tricks.
Amount of Russian funds frozen in the West |
Around 300 billion euros |
|---|---|
So many people and companies are affected by Western sanctions |
1718 people and 419 facilities |
Actual start of the war in Ukraine |
March 18, 2014 (Crimea invasion) |
Russian presidential election |
March 15-17 |
How Russia circumvents Western sanctions
Background: Western sanctions have – at least in the public perception – two fundamental problems.
Firstly, they are broadly designed to have a more long-term impact.
This means that its full effect will only become apparent in years.
Second, Russia has found many ways to circumvent the sanctions, surprising international economists.
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Vladimir Putin in Moscow.
Since 2022, Western countries have imposed a variety of sanctions against Russia.
The effect fell short of expectations.
What resources does the West still have?
© IMAGO / Russian Look
An example of this would be the sanctions on Russian diamonds, which Russia simply funneled to the West via India and other willing transfer countries.
This worked because of a peculiarity of the international diamond trade, whereby diamonds of international origin ended up in “mixed” shipments when being cut.
Russia is currently doing something similar with oil trading.
A “ghost fleet” that the USA is currently hunting is ensuring that oil deliveries are “anonymized” so that Russian oil gets to the West despite sanctions.
Experts call for sanctions against Russian gas
Economists are now calling for further measures from the West - ones that cannot be so easily sabotaged.
Business
Insider,
for example, writes, citing Russia expert Owen Matthews, that the Nord Stream explosions damaged Russia significantly more than any German sanctions.
Matthews sees further potential for new sanctions in Russian gas.
The West had not touched this before.
In addition to direct sanctions against Russia, the West would also have a lot of leeway in sanctioning third countries that help circumvent the “primary sanctions”.
“Russia does not need foreign loans, but it does need foreign exchange in the form of energy exports to finance the budget, pay for imports and stabilize the ruble,” said Liam Peach, an economist at Capital Economics.
However, the West is likely to refrain from doing so - the risk that Russia could assume a dominant position in energy is too high.
However, Matthews believes it is possible to sanction non-oil exports, including industrial metals and liquefied natural gas.
Further measures from Europe – what do new sanctions look like?
The European Council said the EU will take further action to address the “increasing evasion” of EU sanctions.
For example, the confederation of states has decided to strengthen cooperation with third countries and the provision of technical services.
In cases where cooperation “does not lead to the intended results,” the EU wants to take “quick and targeted” measures to deprive Russia of resources.
This should make it more difficult for the country to continue its war of aggression against Ukraine.
If Russia continues to circumvent Western sanctions, despite all individual sanctions and measures, the EU wants to resort to “extraordinary last resorts”.
For example, the Council could decide unanimously to limit the sale, transfer or export of already sanctioned goods and technologies to third countries with a special trust status.
Specifically, this would mean a trade restriction to those countries that are currently helping Russia to circumvent sanctions.
Another measure still on the table is the direct use of Russian money in Ukraine.
To explain: The EU has frozen around 300 billion euros in Russian assets in European banks.
Handing this over to Ukraine has long been an idea of supporters.
However, there is still no legal basis for this.
Russia's prosperity is melting away
What's next?
Currently, the West's sanctions are primarily appearing in places that the public does not always see.
For example, Russia had to withdraw a lot of money from the prosperity fund to support its own economy.
New economic data is expected to come from Russia this Wednesday (March 13th).
Caution is always advised when it comes to this data - especially in view of the upcoming presidential election, Vladimir Putin is unlikely to publish any incriminating figures.
Category list image: © IMAGO / Russian Look