Chronicle of world’s economic war against Russia: EU prepares the sixth package of sanctions

Author

Valery Moiseev

After attacking Ukraine, Russia has faced economic problems and sanctions from a lot of countries and international organizations. In the Russian Federation itself, the authorities call it an economic war. For instance, at the moment, the European Union is preparing the sixth package of economic sanctions, Russian oil is rapidly becoming cheaper, Russians are losing their jobs, and the flow of tourists from the Russian Federation is decreasing.

has prepared a compilation of the latest reports on the economic downturn in Russia as of May 4th.

Downturn of Russia’s economy over war

The Ministry of Finance disclosed the average price of Russian Urals oil in April. It amounted to $70.52 per barrel. The average price of Brent futures for the same period was $105. Thus, the discount for buyers of Russian oil amounted to 33%. A month ago, the discount for buyers of Russian oil was about 20%.

Nearly 98,000 working Russians are currently "in idle mode," and about 110,000 more are "in part-time employment," the Minister of Labor and Social Protection reported. Another 675,000 Russians are registered with employment centers as unemployed.

The Bankoff service, which helped Russians bypass the blocking of Visa cards, has suspended its activities. Visa and Stripe have stopped supporting its virtual cards.

The United States has increased oil supplies to Europe to the maximum since 2016, when Washington allowed the supply of raw materials abroad. The EU is looking for alternative sources of oil and gas in an attempt to reduce its dependence on Russia.

The turnover of Russian companies in most segments of retail trade and services decreased in April compared to the same period last year. Movie theaters were hit the hardest having a 43% decline. The number of businesses closed since February 24 has decreased by 18% compared to the same period last year.

The Ministry of Transport warned of a possible outflow of Russian pilots abroad, which could lead to a shortage of flight personnel. Now 13% of pilots are idle over the sanctions and a decrease in passenger traffic. Every month, the ministry receives about 70 applications from foreign aviation authorities with a request to confirm the certificate of a specialist — so many pilots are looking for work abroad.

Since the beginning of March, most of the major foreign advertisers in Russia on television have frozen their activities. The composition of the leaders in terms of investment in television advertising has almost completely changed — Russian banks, pharmaceutical companies, and marketplaces have taken the place of Western players.

In Q1, timber harvesting in Russia decreased by 2.4%. Over the past five years, a decrease in logging in Q1 was recorded only in 2019, and even then it was insignificant — less than 1%. The largest decline of 34% was recorded in the Leningrad region. This is due to a decrease in the output of plywood mills and sawmills, whose products were exported.

State traders in China are refusing to buy Russian oil for fear of secondary sanctions. They transfer their quotas to private oil refineries, who buy Russian oil at deep discounts. This is facilitated by numerous problems with shipment and payment for supplies.

The American Corteva Agriscience (Pioneer brand), one of the major suppliers of plant protection products and seeds, is leaving Russia. It has already stopped new sales and is initiating a plan to shut down production and business activities.

Sanctions against Russia

As part of the sixth package of sanctions, the European Union will formalize the waiver to purchase Russian oil for six months and the cessation of imports of petroleum products from Russia by the end of this year. At the same time, Hungary and Slovakia will be given 20 months to waive Russian oil, while the Czech Republic and Bulgaria are claiming the same benefits.

The new package of EU sanctions will include a ban on Russians from real estate transactions. Only Russians with citizenship or a residence permit in the European Economic Area or Switzerland will be able to circumvent it.

The Australian authorities impose sanctions against 76 deputies of the State Duma and 34 members of the "governments of the DPR and LPR".

Britain imposes new sanctions against Russians and Russian structures. In particular, Russian state media and a number of journalists will be included in the sanctions lists: war correspondents Yevgeny Poddubny, Alexander Kots, Dmitry Steshin; TV presenters Nailya Asker-Zade and Mikhail Leontiev, VGTRK company.

British organizations have been banned from providing management consulting, accounting, and PR services in Russia.

Russia's isolation

One of the two leading international scientific citation databases Web of Science, which provides information about publications and their citations in scientific journals, has become inaccessible to researchers from Russia.

Hotels in the resort regions of the Russian Federation have begun to cut prices for accommodation by 15-45% in the summer months. Falling incomes during the crisis, restrictions on air travel to the south of the country, and an increase in general anxiety are forcing Russians to spend their holidays at home.

In Q1 of this year, Russia for the first time was not included in the top 3 leading countries in terms of tourist flow to Turkey. For instance, in March, the flow of tourists from Russia to Turkey amounted to 114,400, which is 52% less than a year ago. According to this figure, Russia lost to Iran (274,800 tourists), Germany (187,200), and Bulgaria (169,600).