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, the European Union is now discussing the sixth package of economic sanctions. It may impose an embargo on oil supplies from Russia. The budget of the Russian Federation in April was deprived of 133 billion rubles of oil and gas revenues. Banks do not want to grant loans to the Russians.
Russian economy downturn over war
The budget of Russia in April was deprived of 133 billion rubles of oil and gas revenues, the Ministry of Finance estimated. In this regard, the ministry has reduced the forecast for windfall revenues for May to 414 billion rubles.
In March, amid a sharp increase in rates, the level of approval of loan applications by banks dropped to the lows of 2014. For example, in March, three-quarters of those who wanted to take out a cash loan were refused by banks. Approximately two-thirds of potential borrowers were denied car loans.
The major food producers sent explanations to the Prosecutor General's Office of the Russian Federation why they do not cut prices amid the strengthening of the ruble. They explained this by a fourfold increase in the cost of logistics and an increase in world prices for components.
The Ministry of Industry and Trade approved a 23-page list of goods that can be imported into Russia without the consent of the copyright holders. Gray import of products of the following brands is allowed:
- Apple, Samsung;
- General Motors, Porsche, Renault, Nissan, Bugatti, Tesla;
- Siemens, Microsoft, Logitech, Cisco, Dell, Hitachi;
- Xbox, Playstation, Nintendo
Sovcomflot, sanctioned by the West, will sell part of its fleet. The press service called the reports that the shipping company would have to get rid of a third of the fleet in order to pay off creditors were called exaggerated.
Japan will reduce its energy dependence on Russia by resuming the operation of nuclear reactors that were shut down after the Fukushima-1 accident in 2011.
The Austrian group Mondi intends to sell Russian assets worth 680 million euros. It has three processing plants in Russia and a plant for the production of pulp, packaging paper and uncoated fine paper. All these companies work mainly for the domestic market and continue their activities. In 2021, the share of Russian enterprises was about 12% of the entire group's revenue.
Germany has begun to fill the largest gas storage facility in Western Europe, previously managed by Gazprom.
The German service for remote device control TeamViewer announced a complete cessation of work in Russia and Belarus. It will not be possible to renew existing subscriptions after the end of the contract period.
Supplies of Russian oil to Finland in March collapsed by 70%. In monetary terms, imports decreased by 45%; they were replaced by deliveries from Norway.
Exports of goods from the United States to Russia in March decreased by almost five times and reached the lowest level since 2002. After the start of the "special operation" in Ukraine, the supply of American cars and medicines dropped four times, and the export of aircraft engines and jewelry almost zeroed.
Google Play has banned developers from downloading and updating paid Android apps in Russia since May 5. As of March 10, Google is suspending in-app purchases and subscriptions.
The Chinese national oil and gas corporation CNPC states it has no plans to buy Russian natural gas and oil yet, despite significant discounts.
Sanctions against Russia
On May 6, permanent representatives of the EU member states will discuss the sixth package of sanctions against Russia. The head of European diplomacy, Josep Borrell, said that he would convene the foreign ministers of the EU countries if the permanent representatives did not agree on an embargo on Russian oil by the end of the week.
According to Bloomberg, the European Commission, as part of the sixth package of sanctions, plans to veto all transactions of Russians and Russian companies with real estate in the European Union, as well as prohibit the transfer of property rights to them. The measure will affect all Russians who are not EU citizens or do not have a residence permit in European countries.
Sanctions against Russia can only be lifted in agreement with the leadership of Ukraine, German Chancellor Olaf Scholz stated.
Japan has decided to expand sanctions against Russia: it will freeze the assets of 140 Russians and extend export restrictions to Russian military enterprises.
Evraz (the main owner is Roman Abramovich) is included in the UK sanctions list. It operates in "strategically important sectors for the Russian authorities", providing 28% of the Russian market's demand for railway wheels and 97% — for rails. "This is critical, as Russia uses the railroad to supply ammunition and send military personnel to Ukraine," the authorities explain.
Cryptocurrencies will not help Russia to circumvent Western sanctions, Moody’s experts believe. They pointed to the low liquidity and limited nature of the Russian crypto market, as well as the growing transparency of crypto exchanges.
The French authorities did not invite Russian representatives to the celebration of the end of World War II on May 8, the Russian ambassador in Paris said. "This year we did not find a place on the podium. Although the ambassadors of those countries that fought on the side of Nazi Germany will sit there," the diplomat said.
Difficulties in imposing energy sanctions against Russia
EU sanctions against Russia's energy sector have become a "red line" for Hungary, Prime Minister Viktor Orban said. "I was ready to agree to the first five packages of sanctions, but from the very beginning I made it clear that there is a red line – this is the energy sector," he said.
European countries will not be able to fully replace Russian gas through alternative pipeline supplies from Africa and Norway and LNG purchases without an energy transition, Shell Corporation CEO Ben van Beurden believes.