Sanctions will hit Russia even harder over time

The EU's sanctions against Russia will intensify over time and have an increasingly long-term impact on the Russian economy. Source: Bloomberg, citing the relevant report of the European Commission, reported by European Pravda Quote: "These effects will further intensify over time, as the measures have a structural, long-term impact on Russia's budget, financial markets, foreign investment and its industrial and technological base."

Details: The report notes that sanctions, which have halted imports from Russia to the EU worth about EUR91 billion, have "significantly degraded Russia's industrial and technological capacity".

The report estimates that almost a third of Russia's federal budget will be spent on defence and internal security this year. The authors argue that thanks to measures aimed at minimising the consequences for member states, the impact of sanctions on the EU has been contained, but in some areas it has been "tangible", mainly due to Russia's countermeasures as well as the Russian-Ukrainian war and the resulting price increases. EU exports to Russia and imports from Russia fell by more than 50% compared to 2021.

At the same time, as the document says, Moscow has been able to stockpile some materials, as well as obtain some banned goods and other substitute technologies from third countries, including China, Kazakhstan, Turkiye and the United Arab Emirates.

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Background: Earlier, it was reported that Russian oil imports to the EU countries decreased by 90% compared to the volumes before the start of the full-scale war. On 23 June, the EU Council approved the 11th package of sanctions against Russia, which is mainly aimed at combating the circumvention of existing sanctions.  Among other things, it includes a ban on entry to EU ports and gateways for vessels suspected by the competent authorities of involvement in the transportation of sanctioned oil or oil purchased at a price higher than the price cap.

The temporary exception from sanctions for Germany and Poland to supply crude oil from Russia through the northern section of the Druzhba pipeline is also coming to an end.

At the same time, it will be possible to pump oil from Kazakhstan or other third countries through this route.

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