Western sanctions affect Russian modern sectors severely

ISTANBUL

Western sanctions on Russia due to its war on Ukraine have impacted the country's "modern sectors" severely, according to Pavel Baev, a researcher at the Peace Research Institute Oslo (PRIO).

After Moscow started what it called a "special military operation" in its neighbor on Feb. 24, 2022, many sectors and countries announced sanctions or restrictions in an attempt to exert pressure on the Russian economy.

Despite some claims that Western sanctions have been ineffective, Baev said their impact has wrongly been measured in terms of degradation, rather than destruction of the economy.

According to a report last month by Switzerland-based St. Gallen University, while many well-known global companies have exited Russia since the conflict began, the majority remain active.

Top brands like Amazon, Apple, Google, Microsoft, and Samsung, are no longer active in the Russian market or are implementing some restrictions due to its war on Ukraine since the last February.

"Every modern sector of Russian economy, from the IT sector to the aircraft building, is severely affected, and the degradation is set to accelerate," he added.

Since the beginning of the war, the EU has halted exports to Russia of cutting-edge technology, as well as machinery, equipment, services, and products crucial to the transportation, oil refining, energy, aviation, space, maritime navigation, radio communication, and unmanned aerial vehicle sectors.

Self-destructing position of power in energy

Underlining that sanctions have had a very significant impact that is still accumulating on the Russian economy, Baev said many experts focused on its exports and income even while the unavailability of many imports has hit modern technologies particularly hard.

"This disruption of supply chains very seriously limits the ability of Russian defense-industrial complex to produce the necessary weapon systems — and this is a major impact of the sanctions," he asserted.

On Russia's position as a key player in the energy sector, he said the country's counter measures on Europe over its support for Ukraine has caused some suffering but ultimately proved less impactful than expected, even helping the continent transition towards renewables.

Not only showing remarkable resilience towards Russia's threats to turn off the energy tap, the EU has also taken the opportunity to strike back, "weaponizing" oil and gas imports and causing Russia much pain, said the security expert, adding that the extent of this damage would become evident by the summer.

Essentially, Russia has self-destructed its position as a great energy power, he asserted.

After the announcement of Western war sanctions last year, Russia threatened to halt the flow of hydrocarbons, especially natural gas, to European countries that depended on these energy products.

With the end of the summer months last year, Russia cut off deliveries via the Nord Stream-1, claiming that malfunctions had occurred in the gas pipeline running from Russia to Germany under the Baltic Sea.

At the time of the decision, Russian gas giant Gazprom released a video of it turning off the valves amid threats of cold and famine in Europe with the oncoming winter.

Rebuilding economic links

Baev also pointed to the war's effects on the global economy, saying that Moscow had expected its actions to have a much more profound impact and had so far been unable to internalize the fact that its global economic profile contracted so much.

After the beginning of the war, the global economy has faced significant price rises in basic energy and food products, though the surge has since subsided through alternative solutions and measures.

"Russia needs to internalize the fact of defeat in this tragic and destructive war, and this is going to be a painful process.

"It is much easier to plan for rebuilding of Ukraine than to foresee the pattern of economic ties between Russia and the EU. Moscow will have a chance to rebuild many essential economic connections, but only if it accepts the responsibility for the aggression and agrees to contribute to Ukraine's revival."