A price cap on Russian oil, more than 300 billion euros in frozen Russian bank balances and more than 1,200 Russians now on the European sanctions list. These are just a few of the measures the EU has taken against Russia. This week, the EU presented its eighth sanctions package this year. But do the sanctions make sense?
If you look at the indicators of the Russian economy, you will not see any shockingly bad numbers. The International Monetary Fund (IMF) expects the Russian economy to shrink by only 4-6 percent this year. Inflation in Russia is currently about the same as in the Netherlands. The value of the Russian ruble is even slightly higher than before the war.
In recent months, the figures have caused a number of European politicians to doubt the effectiveness of the sanctions.
That’s exactly what Putin wants, according to Eugene Nivorozhkin, a professor of Russian economics at University College London. A divided Europe is weaker. “He says he is at war with the West and NATO,” said the originally Russian economist.
According to Nivorozhkin, the fact that the ruble has increased in value does not mean anything. The ruble cannot be exchanged for foreign currency at this time. The currency is of value only in Russia, and it is mainly the state that determines the value. In addition, according to the economist, Putin paints too rosy a picture of the economy.
The Russian president regularly boasts about low unemployment rates. He wants to keep the Russians happy. “But those numbers are not correct at all. Production is much lower. Many Russians now work part-time and many people are at home. Yet they still get paid,” says Nivorozhkin. All this Putin can afford for the time being because a lot of money is still coming in from gas and oil sales.
“Russia still has some trump cards, such as the national asset fund. It is estimated that there is still about $200 billion in it,” said Morena Skalamera, assistant professor of Russian studies at Leiden University. She emphasizes that we should therefore not expect the sanctions to have an immediate effect.
In addition, Russia has been unable to procure spare parts for Boeing and Airbus aircraft for months. Currently, diplomats are no longer allowed to take domestic flights for that reason. And smaller equipment would also be available on the battlefield.
Both experts expect that another three to four years may pass before the treasury in Russia is so empty that it has major consequences. “Sanctions really shouldn’t be seen as a means to force regime change quickly,” says Skalamera. According to her, above all, we must see the sanctions as a stranglehold on the Russian economy, which is getting tighter.
All bullets on Russian oil
In the latest sanctions package, the Russian oil industry is tackled more harshly. This is a good thing, the experts believe, because it is by far the biggest source of income in the country.
Nevertheless, Skalamera also has reservations about this measure. She says that, like many other sanctions, it will be very difficult for the countries to ensure that they are complied with. “In addition, Putin still manages to strike a blow in the energy war.” Major oil-producing countries, including Russia, announced just before the announcement of the eighth sanctions package that they would pump less oil to cause a price increase.
In the EU, hope that Putin will eventually end the violence because of the sanctions has long since faded. In particular, EU leaders hope that the punitive measures will make Russia less powerful on the battlefield. In the long run, Ukraine will gain the upper hand in any negotiations with Russia.