Are sanctions against Russia really effective?

” It is a perpetual competition between the adoption of sanctions and their inhibition », breathes a European official. From February 24, 2022, the start date of the Russian invasion Ukraine, the West responded to the war with a battery of sanctions. Banning exports and imports, excluding Russian entities from the international banking system, freezing the assets of the Russian Central Bank… The objective is twofold: to limit Russia’s ability to finance its war effort and to force Vladimir Putin to the negotiating table. .

Despite Western sanctions, Moscow succeeded within two years in organizing a real war economy. At the beginning of the conflict, many observers predicted a collapse Russia. On the contrary, she shows surprising resilience. Gross domestic product growth in 2023 was close to 3% and public debt remained very low, hovering around 16% of GDP.

“Shadow Fleet” exports Russian oil

This is partly explained by the tightening of Western sanctions. Of the sectors that continue to operate despite sanctions, oil is the most iconic. The European Union and G7 countries have banned imports of Russian crude and imposed price caps for countries that are not members of their organizations. Concretely, if the latter use vessels registered in G7 countries to transport black gold from Moscow, they will have to pay less than 60 dollars per barrel.

But that was without counting on Vladimir Putin’s “shadow fleet”. An armada of ships that are neither registered nor insured in G7 or EU countries and that continue to transport Russian black gold, thus allowing Moscow to escape the price cap. This method is well known, as it has already been practiced by Iran and Venezuela, both under American sanctions. According to Kyiv School of EconomicsLast October, this “ghost fleet” allowed Moscow to export 2.3 million barrels of crude per day.

India also forms an important channel for the sale of Russian oil. New Delhi imports crude from Moscow in compliance with the price cap, then refines this black gold before reselling it at market prices. In December 2023, Alexander Novak, Russian Deputy Prime Minister and Minister of Energy, stated that previously ” There was almost no supply in India, but now it represents 40% of exports ”

More irritating for Brussels, some member states will be customers. In it Twelfth set of restrictions In December 2023, the EU announced “ Introduce new measures to more closely monitor the sale of petroleum products in third countries, as well as more detailed certification requirements “

Western components in Russian weapons

Another example of sanctions theft: diamonds. Although more symbolic, since it represents only a small part of the Russian economy, the trade in this precious stone continues. In December 2023, the import of Russian diamonds was banned by the G7 countries. But legally, when they are harvested abroad (for example in India or Dubai), they change their origin and can therefore be marketed without problems. A practice that the G7 countries want to end” From March 1, 2024 ”

The sanctions were also expected to weaken the Russian war machine. Since the beginning of the war, the sale of military equipment to the West has been prohibited Vladimir Putin. But here again, Moscow seems to have found a solution. According to the Kyiv School of Economics, in the first ten months of 2023, Russia imported $22 billion worth of equipment crucial to its military industry.

Inspecting about 2,800 pieces of destroyed military equipment, investigators found most of them Western components – for example, analog devices and electronic components from Texas Instruments companies. They are often imported by companies in China, Turkey or Hong Kong that buy them from American manufacturers under the guise of commercial use before reselling them to Russia.

And while Russia may not use external aid to circumvent sanctions, it can rely on internal mobilization. The most striking example is the Russian banking sector. However, excluding SWIFT, the global interbank messaging system, Russian banks made $37 billion in profits in 2023. This is 16% more than the previous year. This is partly explained by the rush by individuals and businesses to state-subsidized credit, which is partly created by the need to buy out Western companies that have left the country.

Russians affect their daily lives

The fact is that on a daily basis, Russians pay the price of war. Inflation in the country is high, around 7%. Of course, it is difficult to know what the sanctions are and what is linked to the international inflationary context. But some products, such as construction materials, have seen a significant increase in prices.

This has added to the departure of Western companies. Legally, nothing compels them to leave Russia. However, public pressure and restrictions on the services and banking and aviation sectors make trade very complicated. Therefore, it was necessary to fill the void left by a large number of companies: fake Coca-Cola, Fake McDonald’s Or even fake Ikeas have appeared in the country.

Several countries quickly moved to fill the void left by the West in Russia. Those who continue to export to Russia have also seen a significant increase in their trade. This is the case in China, whose automobile sector partially compensated for the departure of German manufacturers, rising from 8% to 55% of the country.

Turkey has also performed well. Ankara exports $11 billion to Russia in 2023, an 83% increase in two years. The technique is well established: Western goods are imported and re-exported to Russia before being resold. These are often so-called “dual-use” objects, such as household appliances, cars or even telephones, whose components can be exploited by the military-industrial complex.

” That doesn’t mean it will never be effective. »

Some Central Asian countries use a similar process. How to end it? This is the full purpose of secondary sanctions, which may target citizens of these states to prohibit them from doing business with Russia. Actions that the European Union is currently refusing to take in the name of international law. Brussels prefers to use other means of pressure. ” We have economic relations with Central Asian countriesA European official explains, So we have a pressure lever to make them change their policy. »

So, what conclusions can be drawn from the sanctions? A source within the European Union wonders. ” One goal was to change Russia’s policies. Obviously, it didn’t work. But that doesn’t mean it will never be effective: on the day negotiations take place, it will be an interesting lever. »