Who is more penalized by the sanctions against Russia: the Russians or us, the Westerners? The question arises more and more…
The question of the effectiveness of the sanctions against Russia arises, six months after their implementation. More and more. But the answer is not simple. Economists do not agree among themselves on the impact of these sanctions. The Russian economy is certainly suffering from this, but it is difficult to say to what extent and in any case to the extent that things have changed.
In relation to the announced objectives, we can already speak of the failure of the sanctions. Remember, after the invasion of Ukraine on February 24, 2022, Westerners, Americans, Europeans, Japanese, Australians, announced “never seen” economic sanctions.
On the program, an embargo on the bulk of Russian oil, bans on exporting a wide range of products, in particular technological, exclusion of Russian banks from the global interbank exchange system SWIFT and seizure of yachts and villas of more than one thousand billionaires, close to Putin.
All this was to bring the Russian economy to its knees. This was to impact the capabilities of the Russian military. And all this was to cause a crisis in Russia, even popular discontent that could turn against Putin. This was to embarrass Vladimir Putin to the point of forcing him to end the war. That was what was advertised and none of that happened, yet.
What is the actual effect?
But that does not mean that the sanctions have had no effect. Russian consumers have seen the price of sugar increase by 50%, the price of pasta by 25%. Inflation exploded in Russia and reached 15% this month. Before the war, Russia was growing, today it is in recession. The IMF predicts a decline of 6% in 2022. That’s a lot.
Sales of foreign cars fell by 95%. The embargo on electronic components handicaps the whole industry.
In short, the sanctions hurt, but not to the point of seeing Russian public opinion turn against Vladimir Putin. It’s almost the opposite, sanctions tend to unite Russians against the West.
Russian state coffers full
And meanwhile, the coffers of the Russian state are full. Currently, Russia is filling its pockets. We cannot say that it is “thanks to the sanctions”, no one being able to say what the price of gas and oil would be without them.
It was rather the war that caused prices to explode. But the result is there. Oil and gas have never been so expensive and Russia is benefiting greatly from it for now. It now receives 750 million euros a day thanks to energy exports. That’s 100 million more than before the war. 100 million a day.
The Europeans have set themselves the goal of buying almost no more Russian oil by the end of this year, but Putin replies: “not bad at all”. “Not even badly” because the Russians have found other buyers with China, India, Latin America.
India, for example, bought almost no Russian oil before the war in Ukraine. Today it alone buys almost 20% of Russia’s oil. To do what ? To refine it and resell it for more. Sell it to whom? Ours ! And even Americans. And it is Greek, therefore European, supertankers who transport this oil which circumvents the embargo.
Meanwhile, the Russians are raking in billions: 40% of state revenue comes from oil and gas.
This is why the Russian currency, the ruble, is doing well. This means that the world markets do not believe that the Russian economy will collapse because of the sanctions.
The risk of gas and electricity cuts
Can we suffer from our own sanctions? It’s very difficult to measure but it happened. For example in the agricultural sector. When pork exports to Russia were banned after the annexation of Crimea in 2014, Russians reorganized and managed to produce more pork. And it was the Breton breeders who ultimately lost out.
Today, France and Europe have to deal with very high inflation, very high fuel prices and the risk of gas shortages. But again, it’s very difficult to say whether it’s because of the sanctions or more simply because of the war. It’s actually because of both.
On the other hand, next winter, if we experience gas and electricity cuts, it will still be mainly because of these sanctions. Because it is because of them that the Russians turn off the tap. This is what Emmanuel Macron calls “paying the price of freedom”. We don’t really know what that price will be yet. Nor what will be the price the Russians will pay. In the end, it will probably be a lose-lose.