Russian Sanctions Overview. What sanctions did the west imposed on Russia? What are the costs for Russia?
Sanctions are a form of punishment for breaking given rule or norm, a way to prevent from a country from breaking a rule or norm or a way to prevent the sanctioned country from profiting from their actions.1
As we’ve explained in our video on sanction’s effectiveness, economic sanctions are the restrictions imposed on one country by the other country or countries. Sanctions can take the form of tariffs (fees for trading), embargos (a ban on trade), quotas (restrictions on trade) or monetary restrictions (account blocking, currency transport ban).2
In March 2022 Russia became the most sanctioned country in the world. Even more than Iran and North Korea.3 Countries and organizations that adopted sanctions packages include: EU countries, the USA and Great Britain. Imposed sanctions are constantly changed and their range widens. Sanctions against Russia have one main goal: to compel Russian president Vladimir Putin, to at least cease-fire in Ukraine.
? Adopted sanctions against Russia (and Belarus) include:
▶ Asset freezing for individual people, lobbyists, propagandists and other subjects linked to Russian and Belarusian regimes. Individual sanctions were imposed on president Vladimir Putin, foreign affairs minister Sergey Lavrov, members of Russian State Duma who voted in favor of recognizing Donetsk and Luhansk People’s Republics, and oligarchs, for example: Roman Abramovich or German Khan. Their assets have been frozen in GB, EU and USA and a ban has been imposed on any transactions with them.4
▶ Credit rating is the classification and categorization grade for creditworthiness of a subject, debt or financial obligation or the issuer of this debt and financial obligation. Any credit rating service, and access to subscription services for credit rating activity for any person or subject in Russia was banned.5
▶ Banks and financial institutions’ access to capital markets was limited. Seven Russian banks (Otkrytije, Nowikom, PSB, Bank Rossija, Sowkom, VEB i VTB) and three Belarusian banks (Belagroprombank, Bank Dabrabyt i Development Bank of the Republic of Belarus) were excluded from the SWIFT system. Paypal stopped service transactions with sanctioned banks. Transactions with Russian and Belarusian central banks and delivery of Euro currency to Russia and Belarus was forbidden. Russia’s member rights in institutions such as the International Monetary Fund and World Bank will be suspended soon.6
▶ People linked with the Russian and Belarusian regime are forbidden to travel to the EU, USA and GB territories.
▶ EU, USA and the GB sky and EU airports are closed for Russian air carriers.7
▶ There is a ban on imports of some goods and trade-investment restrictions have been introduced in some sectors of the economy. It’s planned to completely ban imports of metallurgical industry (iron and steel). So far, Great Britain imposed 35% import tariffs on: iron, steel, fertilizers, wood, tires, railway containers, cement, copper, aluminum, silver, lead, iron ore, food waste, beverages, alcohols and vinegar, glass and glass products, grains, oil-seeds, paper and cardboard, machines, art, antiques, natural leather, artificial furs, ships and fish. These item imports amounted to 900 mil pounds.8
▶ Bans on exports of some commodities and technology. For example in Great Britain and USA it’s forbidden to export and re-export luxury products like luxury cars, arts and fashion, diamonds, expensive alcohols and seafood.
▶ Both exports and imports of weapons and double-use items were forbidden.
▶ Exports of products and technology for space and aviation industries were banned. Exports of naval navigation technology and radio communication technology was limited, as well as strategically valuable technologies and services, that could be used for oil extraction and production.
▶ Broadcasting and distribution of any content from Russia Today and Sputnik was banned. This ban requires that service providers block access to information provided by these subjects.9
▶ Outside the EU, GB and USA, sanctions were also imposed by, among others, Canada, Japan and Switzerland. Sanctions affect mostly trade and finance and mostly consist of exports bans on goods than can be used not only for civilian, but also military goals.
Apart from official sanctions, several dozen companies made a decision to withdraw from the Russian market, even if it wasn’t compulsory for them. This includes companies from various sectors, like raw materials, finance, automotive, electronics, food, clothing, telecommunications and legal consulting. Many companies suspended their investment activities on the Russian market. A decision to suspend or stop their operations in Russia was made by luxury brands like Louis Vuitton, Gucci and Chanel.10 Considering the large number of millionaires living in Russia, it was an important market for them. Polish clothing company – LPP – which owns such brands as Reserved, House, Mohito or Cropp also made the decision to stop shipping their products to Russia.11 Zara, H&M, Bershka, Pull&Bear, Massimo Dutti or Stradivarius have pulled out from the Russian market as well. Operations were suspended by Ikea, Apple, Volvo, McDonald’s and many more.
To sum up, adopted sanctions isolate the Russian economy from world trade, which prevents Russia from profiting from international trade based on the rules that Russia ignores. Present sanctions influence all economic activities in Russia, both directly and indirectly. Breaking links with the world economy brings negative and often unforeseen consequences for the Russian economy, which would be more visible with time. According to the Polish Economic Institute, Russian losses due to military equipment destruction and lost GDP, after 2 weeks of the war, amount to $15 billion. And the prognosis is, that at the end of 2022, the losses would exceed $250 bil.12