Despite the Western response, the Russian economy has shown significant resilience. In its latest economic outlook published on January 30, the International Monetary Fund raised its growth forecast for Russia in 2024 to 2.6%, more than double the rate established in October 2023 (1.1%). The upward revision calls into question the effectiveness of economic sanctions as the United States and the European Union (EU) prepare to unveil new measures.
The Russian economy benefits from the massive financial boost represented by the war effort. The Moscow regime has increased its spending by $30 billion (27.74 billion euros) in 2023, despite being under Western sanctions, but not widening its budget deficit dangerously due to oil revenues. But the effect of the latter on a world economy not dominated solely by Western powers is limited.
Russia has redirected its gas and oil exports to China and especially India, increasing its purchases thirteenfold since the start of its invasion of Ukraine, according to the latest figures from the Finnish think tank Center for Energy and Clean Air Research.
Western control of the price of Russian oil at $60 per barrel has been circumvented by ghost fleets and transshipments or invoicing through intermediary companies that hide the origin of the hydrocarbon. The same applies to electronic chips and other so-called “dual-use” products, the export of which is banned, but which end up on Russian missiles after orbiting through Central Asia or China.
“Little Transparency”
Several thousand companies and individuals have also been targeted by the sanctions. “But these things are difficult to respect, Joydeep Sengupta, compliance and trial attorney for Mayor Brown, says: Because there is very little transparency in who controls certain companies in Russia. »
Added to this is the vagueness of the legal concept. “In the US, it is sufficient for a company to own at least 50% of a company under sanctions to be so.Notes Me Sengupta, Whereas in Europe, the concept of control implies a more detailed and case-by-case analysis, especially requiring information that is sometimes difficult to obtain from Russia. »
In early September 2023, the European Commission published a guide to help businesses identify risks of breaching sanctions by listing all possible warning signs. “There are few more investigations initiated in the EU compared to the US, M underlinese Sengupta. Member States do not have the same mechanisms or the same policies. » Violation of the bans is punishable only by administrative, not criminal, prosecution, and in some European countries fines do not exceed several thousand euros. Triggering the investigation depends on the states' will: if it concerns a Hungarian company, Budapest can be the only place of origin.
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