After four previous sanctions packages against Russia, the fifth sanctions package since the Russian invasion of Ukraine has been announced today. The European Commission wants to ban coal imports from Russia and block four Russian banks from accessing the European market.
Sanctions aimed at energy, in particular, can still have major effects on the Russian economy, says Maria Demertzis, economist and deputy director of think tank Breugel.
The coal import ban is the easiest of those energy-related sanctions for us, says Demertzis. “The European Union can more easily replace that itself, or get it from somewhere else. Oil and gas would really be the big measures, but that would also hurt us more.”
Sanctions that don’t focus on energy will have fewer effects, she says, because much trade is already at a standstill. “Many companies have left, investments are falling, consumption is falling,” she says. The Russian economy will shrink by 15 percent this year, the Institute for International Finance expects.
“If we also stop importing Russian oil and gas, it will have devastating effects on the Russian economy. My personal opinion is that we must do that to stop the war.”
She refers to figures from research organization CREA, which show that since the Russian invasion of Ukraine, the European Union has more than 19 billion euros to Russia for fossil fuels.
Increasingly complex
With the new sanctions that come on top of all the sanctions that were already there. it is becoming increasingly complex for companies that trade with Russia, says Rinske van den Brink, advisor at the sanctions counter of the Netherlands Enterprise Agency.
“There are sectors that in theory are still allowed to export their products, but they run into other consequences of the sanctions: the payments are not successful because their customer banks with a bank that has been expelled from SWIFT, for example.” In addition, some transport companies have stopped driving to Russia because of the war.
The European sanctions list also restricts trade between the Netherlands and Russia. That list now includes 877 persons and 62 companies that are prohibited from trading. “That in itself is quite clear,” says Van den Brink. “But you are also not allowed to trade indirectly with those persons and companies. And that is difficult, because there are sometimes very difficult constructions behind a company. Then there is a parent company and a sister company, and three links above that is a company of a sanctioned person. .”
If such a sanctioned person has less than 50 percent of the shares, or has no control over the company, then it may be allowed, says Van Den Brink. “But it’s getting more and more obscure.”
It is impossible to say which sanctions will have the greatest impact, says Van den Brink. “It is now becoming the combination that has the most impact. We also speak to companies that say: maybe it’s still allowed, but it’s getting so complicated that I stop.”
the ruble
According to the European Commission, the aim of all sanctions is to damage the Russian economy to such an extent that waging war becomes very difficult. Nevertheless, after a deep fall at the beginning of the war, the ruble exchange rate is more or less at the level of before the Russian invasion.
According to Elwin de Groot, macro-economist at RaboResearch, the policy of the Russian Central Bank played a role in this: it raised the interest rate to 20 percent, so that people would hold on to their rubles. “In addition, there were expectations that Russia would struggle to meet its payment obligations, but it has sailed through it with a number of tricks. And the gas payments, which Putin wants to be made in rubles, may also have had some impact. .”
Still, the question is what that ruble rate means now, he says. “How much is left in that market? We have to be careful not to draw too strong conclusions from the fact that the ruble is back to its old level.”
Demertzis calls the current ruble rate completely artificial. “This means nothing. The ruble is not traded at the moment, also because there is hardly any trade with Russia besides energy. The price of the ruble is rising, among other things because the market takes into account that Putin wants gas payments to be made in rubles. , but this does not provide any information about the state of the economy in Russia.”
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