Do sanctions work? Which Russian industries suffer, and which do not?
Information on current losses of the Russian Federation as a result of sanctions:
- 1. The Russian coal industry is on the verge of collapse. This year, it could experience losses of up to 450 billion rubles, which is more than the revenue from the previous two years. The crisis is caused by the decline in coal prices, increased logistics costs, and higher borrowing costs. Coal exports from Russia in the first quarter of 2024 decreased by 13 percent compared to the same period last year, to 45.2 million tons.
- 2. Employees of the Russian oil industry have failed to restart two-thirds of the refineries affected by drones. They have managed to restore one-third of the capacity of oil refineries damaged by attacks of Ukrainian drones in January, February, and March. By mid-April, oil processing plants with a capacity of 90.5 thousand tons per day were still in emergency shutdown mode due to external influences - or 9.9 percent of the total capacity of Russian refineries. In the last week of March, the total productivity of urgently stopped primary facilities reached 123,800 tons per day, or 13.6 percent of the total capacity.
- 3. The giant of the Russian metallurgical industry, "Rusal," could lose 1.5 million tons of exports (36 percent) due to sanctions imposed by the US and the UK in mid-April. Sanctions pose a risk to production, which could fall to the level of 2008. There is fear that many aluminum processors may completely abandon the use of Russian metal to avoid risking fines.
- 4. Maritime crude oil exports from Russia reached an 11-month high in the second week of April, with flows from all major ports near peak levels.
The flow of seaborne oil from Russia in the week ending April 14 increased by 560,000 barrels per day to 3.95 million, the highest level since May 2023. Weekly deliveries were about 365,000 barrels per day higher than the average for May and June or about 490,000 barrels per day above the Russian target in April, part of a broader effort by the OPEC+ alliance to reduce supply and support prices. The four-week average was about 200,000 barrels per day above the target. Cargoes from Primorsk, Ust-Luga, Novorossiysk, and Kozmino were near historical highs. Primorsk, on the Baltic Sea, handled 10 tankers in three of the past four weeks, reflecting the redirection of crude oil exports processed at refineries hit by Ukrainian drones. According to data, the port had not handled more than 11 tankers weekly since the beginning of 2022. As refinery repairs continue, the processing rate is falling to almost an 11-month low. The surge in flows, combined with higher Urals oil prices, increased Moscow's oil revenues. The gross value of crude oil exports rose to $2.15 billion for the seven days ending April 14 from $1.82 billion earlier. The four-week average added about $170 million to $1.92 billion for this week.
5.
In South Korea, a day before the premiere, the Russian ballet tour was canceled. This decision was made following a request from the Ministry of Foreign Affairs of Ukraine. The ballet performance involving Russian ballet artists was canceled a day before the premiere. The Ministry of Foreign Affairs of Ukraine emphasized that Russian "cultural" propaganda "should not have a place on international platforms, and Russian ballerinas - on the stages of world theaters."
6.
The US has imposed sanctions against 12 legal entities and 10 individuals from Belarus in connection with their support for Russia's war in Ukraine - according to the US Department of the Treasury. "Among the organizations sanctioned are a company producing machine tools that sells control systems to the Belarusian armed forces and a company producing radio communication equipment," the report states.
7.
Indian conglomerate Reliance is attempting to sell American oil as Russian flows increase.
Last week, Reliance Industries Ltd. offered American oil to other buyers in Asia, which is an unusual move for refineries that rarely attempt to resell oil within weeks of purchase.
India has shifted away from some of its more traditional suppliers following the invasion of Ukraine in 2022, taking advantage of cheaper Russian oil that other buyers have been avoiding.
Purchases have recently declined as the US tightened sanctions on Moscow, and cargoes of Sokol crude oil, a key grade, were in limbo.
The country recently resumed purchasing Sokol, which may have prompted major buyers like Reliance to sell more expensive alternatives.
It is still unknown whether Reliance's resale of American oil is connected to the resumption of Sokol purchases. It is also unclear whether Russian oil flows to India will return to last year's record levels.
8.
European businesses are assisting Russia in building ships. Russian military shipyards, which are under international sanctions, are receiving parts from European countries with the help of companies from Croatia and Italy. These shipyards are involved in building ships for the Russian military fleet, including those participating in the war with Ukraine.
One such company, Croatian Adria Winch, specializes in procuring deck equipment for civilian and military vessels. Despite the sanctions, Adria Winch has been operating in Russia for over 20 years and maintains partnerships with Russian companies. The spare parts supplied by Adria Winch are used in shipyards for assembling ships for the Russian navy and other military units. These deliveries are confirmed by project numbers from customs declarations.
After the start of the Russian invasion of Ukraine, Adria Winch ceased direct deliveries to the shipyard and began selling parts through Russian subsidiaries. For the year 2022, the amount of shipments to Russia amounted to over 700,000 euros – 21 percent of Adria Winch's total operations.
9.
Poland's exports to Kyrgyzstan increased 15 times (from three to 45 million euros monthly on average) after the start of the war in Ukraine and the beginning of 2024, and to Belarus, they doubled (from 140 to 300 million euros monthly on average). Most of this Polish merchandise (or that re-exported from other countries) is then delivered to Russia.
10.
The Swiss Federal Council does not yet see the need to formally join the international group for identifying assets of Russian REPOs under sanctions (Russian elites, proxies, and oligarchs). The group has been operating since March 2022, including G7 countries and Australia, with representatives from the European Commission participating in its work. "Cooperation between Switzerland and its international partners in implementing sanctions against Russia is currently well established at a technical level. For this reason, the Federal Council does not currently see the need to formally join the REPO," stated the council.
As of today, the total volume of reserves and funds of the Central Bank of Russia held in Switzerland amounts to around 7.4 billion Swiss francs. These funds are blocked, not frozen, meaning that any financial transactions with them are prohibited.
11.
Lithuania plans to exclude companies associated with Russia from public procurement.
The Lithuanian Parliament has approved amendments proposing the exclusion from public procurement of Lithuanian and foreign suppliers involved in the Government's list of Russian war supporters or associated with them
Residents and companies will be included on the list if they conduct business in Russia or Belarus, pay taxes there, participate in propaganda or mobilization campaigns, or otherwise contribute to Russian military actions.
The amendments were proposed in response to information that the company Autovici, associated with the "Viciunai" group and included on the international list of state sponsors of war in Ukraine, received 104 state procurements.