(Paris) Nearly two years after the start of the war in Ukraine, the Russian economy seems to be holding up despite an unprecedented avalanche of European sanctions, to the benefit of President Putin who will run for a fifth term, but Western officials are banking over the long term.
“We have overcome all the problems that appeared after the implementation of sanctions,” said Vladimir Putin in October, whose re-election next March is in little doubt.
Militarily and economically, Russia appears in a better position than two years ago, when it invaded Ukraine.
A twelfth package of sanctions is currently under discussion in the EU, after eleven sets of unprecedented measures against the 9th largest economy in the world: freezing of 300 billion euros of assets of the Russian Central Bank, oil embargo, export ban high technology…
In total, according to official European figures, 49% of European exports to Russia and 58% of Russian imports are under sanctions.
However, “the Russian economy has shown remarkable resilience in the face of these punitive measures,” notes a report in November from the German think tank Zois (Center for East European and International Studies).
Official Russian statistics, whose reliability is questioned by many Western experts, give GDP up 5.5% in the third quarter of 2023 and a growth forecast above 2% for 2024.
For Zois, the Russian economy, “under continuous pressure for 15 years” with the financial crisis of 2008, the sanctions linked to the annexation of Crimea in 2014, COVID-19 and finally the invasion of Ukraine, has developed the ability to adapt quickly. Particularly in terms of evasion of sanctions.
In this regard, Moscow has created a “shadow fleet and parallel financial infrastructure,” notes Carnegie researcher Alexandra Prokopenko, who worked at the Central Bank of Russia until early 2022. “Russia’s main income always comes from hydrocarbons”, thanks to “arrangements” with its main buyers, China and India in particular, she notes.
“Turkey and Kazakhstan have become real logistics hubs” for Russia, she adds, in particular to circumvent sanctions on technological goods, such as semiconductors essential to the defense industry.
Western technologies needed for drones, missiles and communications also come largely from China, according to a Ukrainian official.
European countries themselves participate in the system, with for example the explosion of their exports to the former Soviet republics Kazakhstan, Kyrgyzstan, Armenia… probably re-exported to Russia.
And in the area of ​​hydrocarbons, the EU increased its purchases of Russian liquefied gas (LNG) (not subject to embargo) by more than 40% in the first seven months of the year compared to the same period in 2021, for a value of some 5.29 billion euros, denounced the NGO Global Witness at the end of August.
“Yes, there are European inconsistencies, and yes, Russia manages to circumvent sanctions. However, I think they work. It’s a marathon, not a sprint,” assures specialist Agathe Demarais of ECFR, adding: “The sanctions are not intended to cause a collapse of the Russian economy or a change of regime, their aim is to limit the capabilities of the Russian war machine. »
“Sanctions have an impact. They are like a small puncture in a tire. It’s not immediate, but it works,” said a European diplomatic source.
The entire Russian economy has reoriented itself towards the war effort, with a 70% surge in military spending expected next year.
“The economy has become addicted” to military spending, points out Alexandra Prokopenko, for whom “all the signs of overheating are there”.
“How long can this war economy last? Social peace is also expensive,” notes Agathe Demarais, while inflation continues to increase rapidly. The sanctions, even if this is not their aim, certainly have concrete impacts on the daily lives of certain Russians: difficulties in traveling to EU countries (transport, visas, etc.), difficulties in paying and transferring money, etc.
Others are living their best lives, benefiting from war-related contracts: “Money is flowing freely in Moscow,” Russian political scientist Sergei Medvedev recently wrote on Facebook.
But, for the most part, the Russian people, who have remained poor, “have not experienced any improvement in their well-being since 2014”, and the first sanctions after the annexation of Crimea, recalls researcher Vladislav Inozemtsev in an article in Politics foreign. “No one expects growth to pick up again,” he says.
Sanctions are also only a tool in the strategy of support for Ukraine adopted by the West. But at a time when the front is frozen and aid to Kyiv seems in question, does Ukraine have time to wait for sanctions to work?
“That’s the whole question,” notes Ms. Demarais. Western countries are Ukraine’s main weakness. »
