When Russia attacked Ukraine last year, the European Union came up with numerous sanctions. But the Russians proved tougher than expected and Putin’s war machine rumbled on. Yet cracks seem to appear in the walls of ‘Fortress Russia’.
De EU was vastberaden. Met ongekende sancties zou Rusland hard worden gestraft. Zo werden tegoeden van de Russische centrale bank bevroren, kwam er een boycot op allerlei goederen en werden Russische banken uit betaalsysteem SWIFT gegooid.
Deze en andere sancties zouden ervoor zorgen dat de oorlogsmachine van president Vladimir Poetin snel zou ontsporen. De Russische economie zou met 10, misschien wel 15 procent krimpen. De Amerikaanse president Joe Biden had het zelfs over een halvering.
Aanvankelijk leek Rusland inderdaad een klap te krijgen. De Russische centrale bank kon niet langer bij de 300 miljard dollar (283 miljard euro) die ze in het buitenland had gestald, veel Russische burgers wilden geld van hun bankrekening halen, de waarde van de roebel kelderde en de beurshandel in Moskou moest tijdelijk worden stilgelegd. Tot overmaat van ramp besloten meer dan duizend westerse bedrijven te vertrekken, waardoor miljoenen banen op de tocht kwamen te staan.
“De verdediging van het land heeft de hoogste prioriteit, maar we moeten niet de fouten uit het verleden herhalen”, zei Poetin. “We moeten onze eigen economie niet kapotmaken.”
Economy revived
After that first blow, Russia indeed seemed to bounce back quickly. The central bank raised interest rates, so many Russians left their money in the bank anyway. And many activities of Western companies fell into Russian hands. Wages also went up and some taxes were raised. Russia also had considerable reserves and issued bonds.
But what kept Russia going was the export of oil and gas. It soon became apparent that we in Europe could not do without Russian energy. Germany in particular was addicted to it. A boycott would have been disastrous. As a result, we continued to buy oil until December and even now, a year after the invasion, some Russian gas is still flowing to Europe.
Energy prices rose rapidly after the invasion. Oil became tens of percent more expensive, but the real pain was felt with gas. The price of this shot up even faster, while it was already high in the months before the Russian invasion. The European billions now flowed even faster to the Kremlin and instead of derailing the war machine, it was actually additionally financed.
Sanctions also hurt in the Netherlands
Meanwhile, more and more households in the Netherlands and other parts of Europe were having trouble paying their energy bills. And when Putin closed the gas tap to Europe last summer, the gas price went up even further. The energy bill also rose, as did the income for Moscow.
Criticism arose: don’t we ourselves suffer much more from those sanctions than Russia? For example, according to the International Monetary Fund (IMF), inflation in Russia was 5 percent last year, a lot lower than the 9.6 percent we had to choose from in the Netherlands. And the contraction of the Russian economy was limited to 2.3 percent, while a small growth is even expected for next year.
Meanwhile, India bought many times more oil than before last year and trade with China grew to a record high. For example, the Chinese bought more than twice as much gas, 45 percent more oil and 54 percent more coal.
3:12Russian economy hit
Although at first glance the Russian economy seems immune to Western sanctions, there are signs of decline. At the beginning of last year, for example, a small economic growth was predicted. But it was therefore a contraction of a few percent.
The country also has a budget deficit this year. This is mainly due to the large expenditure on defense equipment. A third of the budget goes to it. And possibly even more, because a quarter of the budget is secret. This means less investment in other parts of the Russian economy.
The auto industry is also on the brink. Many Western car manufacturers have left and the factories that are still there are finding it more difficult to get parts. Car production plummeted by tens of percent, as did sales. Russians also spent almost 7 percent less in shops. At the same time, aviation and the military are facing a shortage of parts.
Lower yields from oil and gas
In addition, revenues from energy sales are under pressure. For example, Europe is buying less and less Russian gas and there has been an EU boycott on Russian oil for several months. Other major economies have set oil price caps.
And while oil can still be sold relatively easily to other countries, it is much more difficult for gas. Many gas fields are only connected to pipelines that run to Europe. The construction of possible new pipelines, for example to China, will probably take years.
The oil boycott and the price cap also seem to be doing their job. Since the measures were introduced on December 5, the price of Russian Ural oil has remained below the $60 ceiling. In the months before, the price was actually higher. The Kremlin therefore expects to earn less from the sale of oil and gas this year than last year.
“We can definitely say that the picture is not black and white,” Russian analyst Alexandra Prokopenko told the news service Reuters. “Putin can be proud of ‘Fortress Russia’, but it was built at a high price.”
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