Sanctions from Russia: a list with banned product export to get released

Russia to stop exports to 'unfriendly' countries

The Russian government announced that it is preparing a list of raw materials and processed products that will be banned from export to "unfriendly" countries.

The list will reportedly include minerals and energy resources, as well as a relatively large list of products that are in demand in different world markets today.

Russia is examining the possibility of imposing export bans to ensure that Russian industries continue to develop and do not suffer from the restrictions^[1].

Russia announces that a concrete analysis of the situation on world markets and Russia's options has been carried out and that appropriate proposals will be made shortly.

Back in September, Russian President Vladimir Putin instructed the government to analyze the possibility of restricting the supply of uranium, nickel, and titanium to foreign markets for strategic raw materials.

We recall that Russia has recently adopted a list of countries where 'destructive attitudes contrary to Russia's spiritual and moral values prevail'.

The list includes 47 countries and territories that "implement policies imposing destructive neoliberal ideological attitudes contrary to Russia's traditional spiritual and moral values".

It includes the United States of America, the United Kingdom, Germany, France and many European Union (EU) countries. Only a few EU countries are not on the list: Slovakia and Hungary, while Turkey is not on the list among NATO countries.

Sanctions on Russia don't work, but could last for decades

While Russia is preparing to impose its own sanctions on some of the world's markets, it has been subject to sanctions by Western powers since the start of the large-scale invasion of Ukraine^[2].

Russian foreign ministry officials have recently stated that the economic sanctions imposed by the West on Russia could last for decades, even if a peaceful settlement is reached in Ukraine.

As a reminder, after February 2022, Russia has become the country with the highest number of Western sanctions, ahead of even Iran and North Korea.

However, despite the pressure, the Russian economy grew by 4.7% in the first half of this year.

Indeed, the sanctions imposed by the West after Russia's invasion of Ukraine did not hit Moscow's economy as hard as expected. Why did this happen? Oleg Itskhoki of Harvard University and Elina Rybakova of the Peterson Institute for International Economics argue that sanctions should have been imposed more forcefully in the immediate aftermath of the invasion rather than piecemeal^[3].

The researchers argue that Russia could have prepared itself for financial sanctions because it had learnt from the sanctions imposed in 2014 after the invasion of Crimea. Moreover, the impact was weakened by the failure to get more countries to participate in the sanctions and by the fact that economic powers such as China and India were not involved and came to Russia's aid.

The limited impact of sanctions on Russia has been evident for some time. Since the start of Russia's invasion of Ukraine in February 2022, the US has sanctioned more than 4 000 individuals and companies, including 80% of the Russian banking sector by assets.

However, it is notable that Russia has managed to evade the USD 60 oil export price cap imposed by the US and the G-7, the group of seven democracies supporting Ukraine. The US sought the price cap as a way to reduce Moscow's oil profits, but at the same time not to crowd out large volumes of Russian oil from the world market and raise oil, petrol and inflation prices. Similar concerns prevented the EU from boycotting most Russian oil for almost a year after the Russian invasion of Ukraine^[4].

On the other hand, EU sanctions have reduced exports to Russia to record lows and completely stopped the supply of some key industrial components. This was an important step, but at the same time, some countries—such as Turkey, the United Arab Emirates (UAE), and Armenia—began to act as intermediaries through which Russia still receives European goods and equipment.

According to Eurostat, the EU's statistics agency, the bloc's June exports to Russia totalled €2.4 billion. This is around a third of June 2021 exports and the lowest level since January 2003. However, third-country data show that imports of goods that Russia used to receive directly from the EU have increased sharply.

The latest package of sanctions attempts to curb Russia's cheating

New sanctions packages are trying to curb this situation. The 14th EU sanctions package, adopted at the end of June, aims to restrict the re-export of EU goods to Russia. Unlike the United States, the EU has traditionally been opposed to so-called "secondary sanctions", which aim to deter third countries from helping sanctioned countries to obtain banned goods, but these latest measures look remarkably similar in their aims^[5].

The EU now requires exporters and their subsidiaries to make every effort to identify the final buyers. This means that exporters must draw up contracts for the sale of dual-use items and high-technology goods to include a clause prohibiting their use in Russia or in producing goods for the Russian market. In addition, they must take specific measures, including risk assessments, to ensure that the goods do not enter Russia. However, it is doubtful whether this will change the current situation.