Exterior view of the Moscow International Trade Center, Russia. (Source: AFP) |
Visitors to Moscow find people still shopping, with shelves stocked with goods. In Russia, daily life has remained remarkably unchanged, thanks in part to massive state subsidies.
However , the Washington Post said, the US and its allies still maintain effective ways to cut off the Kremlin's ability to fund its special military campaign in Ukraine over time - if sanctions are honed and strengthened.
Equally important, the West could double down on its success in squeezing Russia's most important source of revenue: energy.
According to a recent report in the Financial Times , US efforts to extend export bans to Russia have run into roadblocks in the European Union (EU) and Japan. As sanctions have multiplied, Russia’s efforts to evade them have become increasingly complex.
Since Moscow launched a special military operation in Ukraine, the US and Europe have banned the sale of many dual-use goods to Russia.
However, United Nations (UN) trade data shows that exports of these goods from the US and Europe to Russia's neighbors increased sharply in 2022. Exports of those goods from neighboring countries to Russia also increased similarly.
In total, US and EU goods exports to Armenia, Georgia, Kyrgyzstan, Uzbekistan and Kazakhstan increased from $14.6 billion in 2021 to $24.3 billion in 2022. These countries' exports to Russia in 2022 increased by nearly 50% to around $15 billion.
For those goods that Russia can no longer import directly from the West, it has found alternatives in friendly third countries that have served as transit points.
Analysts at the European Bank for Reconstruction and Development (ERDB) said the “Eurasian bypass” was a sign of Russia’s success in finding new ways to buy scarce, high-demand goods despite Western sanctions.
Imex-Expert, a Russian company, said it can “import sanctioned goods from Europe and America into Russia via Kazakhstan . ”
UN data also shows that in 2022, the US and EU exported more than 8.5 million USD worth of microchips to Armenia, more than 16 times higher than 530,000 USD in 2021. At the same time, Armenia's microchip exports to Russia increased from less than 2,000 USD in 2021 to 13 million USD in 2022.
To block this transit route, the Washington Post found, The West needs to target those transit countries and redouble efforts to disrupt the flow of electronics and other critical components to Russia.
In Europe's latest proposed sanctions package, the European Commission has for the first time proposed sanctioning companies in the region, including two from Uzbekistan and one from Armenia, for supplying dual-use products to Russia.
In late February 2023, during a visit to Kazakhstan, US Secretary of State Antony Blinken said Washington was “closely monitoring compliance with sanctions,” including with Central Asian partners.
The most effective Western measure so far, according to the Washington Post, was the imposition of a $60-a-barrel price cap on Russian crude last year, plus a similar cap on diesel and other refined petroleum products earlier this year.
Those restrictions have slashed Russia's oil export revenue by nearly a third in the first three months of this year, compared with the last three months of 2022, and cost it $15.7 billion in a fiscal year.
"Russia's economy — while it has shown remarkable resilience — cannot sustain such a loss of income forever," the Washington Post said.
The Belgium-based think tank Bruegel also said that Russia is the world’s eighth-largest economy and a major supplier of energy and many raw materials, so any belief that sanctions will immediately knock the country out is wrong.
But these experts also assert: "In the medium term, sanctions will deepen the weaknesses of the Russian economy. They will exacerbate weak links such as labor shortages, poor productivity growth and lack of investment capital."
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